Executives with The Home Depot say the retailer won’t implement price increases due to tariffs and expect SRS Distribution to be an engine for growth in the coming years.

During The Home Depot’s Q1 2025 earnings call, executives said the retailer doesn’t plan on raising prices due to tariffs, a stark contrast to fellow retail giant Walmart's position that it will issue price hikes at the end of May to cover higher costs from tariffs.

Billy Vastek, The Home Depot’s executive vice president of merchandising, said during the earnings call that the company’s scale and partnerships will allow it to “generally maintain” pricing throughout its portfolio.

“We'll continue to use the portfolio approach that we've talked a lot about in the past. But we don't see broad-based price increases for our customers at all going forward,” said Vastek.

Vastek clarified that there are items that could be impacted by a tariff that they “won’t have going forward if it doesn’t make sense” inside the company’s line structure.

More than 50% of the company’s purchases are sourced in the United States. Decker said the company is taking actions that, in 12 months, will result in no single country outside of the U.S. making up more than 10% of The Home Depot’s purchases.

Among Home Depot’s plans are to continue improving the service it provides to its Pros, especially for large, complex projects. CEO Ted Decker said SRS Distribution will play a role by managing the trade credit program, saving Home Depot from building it in-house. The Home Depot acquired SRS Distribution in June 2024 for $18.25 billion.

“As we started to build out that capability in-house, we said, ‘Well, geez, SRS, that's their business model.’ They have 90,000-plus accounts on trade credit,” Decker said. “They have an extraordinarily capable set of managers and team members running that program for them.”

He notes the company is still in the early days, though Home Depot does have “thousands” of accounts onboarded to a credit program with the Home Depot Core Pro.

The Role of SRS at Home Depot

The announcement of forgoing tariff-related price hikes came amid an earnings report showing Home Depot reported first-quarter sales at $39.9 billion, up 9.4% from the same period last year. Compared to Q4 2024, sales were up by 0.5%.

Comparable sales for the first quarter of fiscal 2025 decreased 0.3%, and comparable sales in the U.S. increased 0.2%.

Decker said a perfect storm of high interest and mortgage rates and consumer uncertainty about the economy is stagnating the home improvement market.

“There's stubbornly high interest rates that people are painting again and working in their yards and doing smaller projects, but just have not engaged in the larger projects,” he said.

Richard McPhail, executive vice president and CFO, said in the first quarter, the company’s gross margin was 33.8%, a decrease of approximately 35 basis points from the first quarter of last year. He said this reflects a change in mix as a result of the SRS acquisition, partially offset by benefits from lower shrink and supply chain productivity.

“We're adding the SRS expenses to our expense base that didn't exist in Q1 of last year. And so, when you take that noise out, we levered expenses exactly how we would have expected to in a comp environment like this,” said McPhail, later adding, “We will own SRS 12 months this year; we owned them for about seven months last year.”

Decker said Home Depot is “super pleased” with SRS’ performance, noting growth in its three verticals — roofing, pool and landscape — has exceeded expectations. He added SRS continues to operate from its playbook of organic growth, opening new branches and tuck-in acquisitions.

According to McPhail, SRS delivered $2.6 billion in sales for the quarter and expects the distributor to meet Home Depot’s mid single-digit growth for the year. Though hesitant to discuss SRS’ influence on 2026, McPhail said SRS has a track record for rapid growth and expects the distributor to be an “engine for growth.”

“That acquisition is one to be proud of and we're making, as Ted said, a lot of progress with SRS,” McPhail said.

Inventory for Home Depot is up about 15% this quarter, the majority of which was adding the SRS inventory into its base.