HD Becoming “Hard Duty”

As most will remember, a few years ago Home Depot went on a buying spree, acquiring a number of wholesalers in the construction industries. After purchasing Hughes Supply, they went on to purchase a couple of electrical distributors before Home Depot sold HD Supply to three private equity firms.

At the time, many industry observers questioned the acquisition price.  It seems to be coming home to roost.

HD announced that it is closing 25 locations and laying off 350 employees according to a report in the Atlanta Business Chronicle.  The article doesn’t mention which divisions are affected, but it would be hard to believe that their electrical division can be overly important to the business.  It is a small percentage of revenues, was not widely distributed and, based upon a number of its acquisitions, was more residentially-oriented.  With business in the Southeast and Southwest, this is probably not a growth segment for HD.

Further, we’ve heard that morale is “challenged” and that the PE firms are hesitant about future investments.

The company is in a number of good segments (utility, facilities maintenance, waterworks to name a few). With the industrial and institutional segments expecting to rebound sooner than the commercial market, perhaps these other divisions will be the future of HD with electrical becoming less and less important.