Home Depot's B2B Business Nears 50% of Revenue Amid DIY Slowdown

Core Insights - Home Depot is shifting its focus towards professional customers, which now account for nearly half of its revenue, through a multi-year "Supply House" strategy aimed at embedding itself in contractors' workflows [1][5][19] - The company reported fourth-quarter 2025 adjusted earnings per share of $2.72 on revenue of $38.2 billion, which, despite being down 3.8% year over year, exceeded Wall Street expectations [3][4] - The growth of Home Depot's professional business reflects a structural repositioning rather than a temporary shift due to market conditions [5][7] Business Strategy - Home Depot is evolving from a traditional big-box retailer to a construction-supply distributor by integrating digital tools and direct job-site delivery [1][6] - The company has developed a "parallel distribution system" with Specialized Distribution Centers and a logistics fleet of over 8,000 trucks to facilitate direct delivery to construction sites [13][14] - The introduction of the AI-powered "Blueprint Takeoff" tool aims to streamline the estimation process for contractors, enhancing operational efficiency [16] Market Dynamics - The professional contractor segment, referred to as "Complex Pro," is characterized by longer project cycles and needs-based repairs, making it more resilient compared to the discretionary DIY market [7][15] - Home Depot's financials indicate a decline in transactions by 8.5% year over year, while the average ticket size increased by 2.4%, highlighting a shift in consumer behavior [9] - The company plans to limit new store openings to about 15 locations in 2026, focusing instead on enhancing supply chain capabilities and digital tools [19] Industry Trends - The retail landscape is shifting, with major players like Home Depot blurring the lines between merchant and service platform, similar to trends seen in eCommerce [6][8] - The divergence in performance between Pro-heavy categories and consumer-driven renovations underscores the impact of housing turnover on retail home improvement demand [18] - If successful, Home Depot may redefine its role in the construction economy, transitioning from a cyclical retailer to a hybrid distributor [20]