QUICKREAD

• Q2 2025 sales rose 4.9% to $45.3B, and comparable sales grew approximately 1.0% for the comparable 52-week period.
• SRS exceeded expectations, fueling growth in roofing, pools, and landscaping while strengthening Home Depot’s Pro ecosystem.
• Home Depot to acquire GMS for $5.5B, expanding SRS’s reach to 1,200-plus locations, 3,500 sales staff, and an 8,000-truck fleet.
• Economic headwinds persist with housing market slowdown, tariffs, and uncertainty, though tax reform and rate cuts may provide relief.

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As roofing and construction continue to struggle against economic uncertainty, the Home Depot reported its second-quarter sales at $45.3 billion, an increase of $2.1 billion or approximately 4.9% from last year.

According to the retailer’s Q2 earnings report, it saw comparable sales growth of approximately 1.0% for the comparable 52-week period, and comparable sales in the U.S. increased 1.4%. Home Depot stock rose as high as 4% today following the release of its report.

The home improvement giant reports its acquisition of SRS Distribution plays a role in both current and future gains, and anticipates further success with its latest acquisition of GMS, a distributor of specialty building products including drywall, ceiling and steel framing.

It’s been just over a year since Home Depot acquired SRS, with the company entering the total company comp base in late June. Home Depot Chair, President and CEO Ted Decker said the move gave Home Depot a “right to win” with specialty trade pros and provided cross-selling opportunities.

“Over the past year, SRS has exceeded our expectations, driving market-leading growth, accelerating our organic ecosystem efforts, and driving revenue synergies. We could not be more pleased with their performance,” said Decker during the earnings call.

With roofing, pools and landscape being SRS’ biggest verticals, he said Home Depot has benefited from bringing on the specialty trade distributor.

“From what we saw in public company announcements in Q2, we took share. We won in the marketplace in each of those three verticals,” Decker said. “We’re building out with our own organic Pro ecosystem.”

Part of building out that ecosystem was Home Depot’s bid to acquire GMS. The retailer beat out QXO, bidding $5.5 billion to QXO’s $4.3 billion, with SRS playing a crucial role in the deal.

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Decker said GMS will add a complementary adjacent vertical to SRS’s business model with small branches, truckload delivery, high inventory turnover and effective sales management. It will broaden SRS’s operations to over 1,200 locations, increase its sales force to more than 3,500 associates and create a nearly 8,000-truck fleet.

“[CEO] Dan Tinker in the SRS team had been in contact with John Turner in the leadership at GMS for some time. This was not something that happened overnight,” Decker said. “This is something we’ve been engaging with them and thinking about how these two businesses could add value working together.”

When asked what is motivating Home Depot to take these big swings to improve its Pro ecosystem, Decker said part of it was fueled by feedback from Pro customers having to deal with multiple suppliers.

“They’re dealing with 20, 30, 50 different suppliers on a jobsite. If we can make their job easier to take out five different sales calls, five other delivery trucks, five other invoice payment cycles, that is making their business easier, and that is our value proposition is that you can get a lot more from one supplier,” he said.

Richard McVeil, executive vice president and chief financial officer, said many of Home Depot’s investments are more “capital light” and offer higher returns, including SRS.

“When you think about an SRS branch, comparatively speaking, the capital required and then the return on that capital through time, is actually lower capital required on a percent of sales basis than a Home Depot store would be,” McVeil said.

Rate Cuts, Tax Reform and Tariffs

Though sales and earnings both saw improvements for Home Depot year over year, they fell short of expectations, with revenue coming short of the anticipated $45.41 billion, according to Reuters.

Decker noted that interest rate cuts would certainly help improve Home Depot’s numbers. A frozen housing market with 40-plus-year low turnover rates and struggling new housing starts are impacting the construction industry at large.

Decker said tax provisions in the Big Beautiful Bill will likely help as well. Thanks to a lowering of taxes and increases in provisions like child tax credits, customers will likely have more discretionary money. Even so, there are still hurdles to overcome.

RELATED: Roofing Industry Braces as Trump's Tariff Increases Take Effect

“When we talk generally to our customers, each of our sets of consumers and Pros, the number one reason for deferring the large project is general economic uncertainty,” Decker said. “That is larger than prices of projects, labor availability, all of these various things we’ve talked about in the past.”

Tariffs are significantly higher than they were in May when the company reported its Q1 results. Billy Bastick, executive vice president of merchandising, said over 50% of Home Depot’s products are sourced domestically and therefore aren’t subjected to tariffs, though “modest price movement” is to be expected on imported goods.

“We’re going to take a portfolio approach … and we’ll have a price leadership in home improvement,” Bastick said.

He said tariffs are included in the company’s go-forward guidance. Home Depot’s fiscal 2025 guidance does not include assumptions on impacts from the pending GMS acquisition, fluctuations in foreign exchange rates, the interest rate environment, or recovery in demand for larger remodeling projects.

“As we look to the remainder of the year, we are confident in our ability to manage through the macroeconomic environment as it stands today,” said McVeil.