The conventional wisdom that The Home Depot must eventually buy its way into the pro dealer market to have any real shot at contractors' business got a new boost last month, when competitors and suppliers were buzzing about rumors that the industry's largest home improvement retailer was on the verge of signing a deal to acquire Williams Bros. Lumber, a Suwanee, Ga.–based pro-oriented retailer with 18 yards, all in Georgia. Last year Williams Bros. supplied 315 million board feet of lumber to its customers and generated $444 million in revenue, a 53.1 percent increase over 2003.
At press time, officials from both companies declined to comment about whether they've entered into an acquisition agreement, or even if they've been discussing one. Spokesman Jerry Shields reiterated The Home Depot's standard response that “We don't comment on speculation and rumor.” Jerry Johnson, Williams Bros.' chairman, said that “It's all speculation and I can't say anything about it.” He declined to comment as well about whether there have been any negotiations between his company and Depot.
For the past few years, the industry has been flush with speculation about The Home Depot's supposed search for a pro dealer operator that would establish its credentials with contractors and home builders. (An estimated 35 percent of Depot's $73.1 billion revenue last year came from pros.) Depot's May 2004 acquisition of Costa Mesa, Calif.–based White Cap Industries gave the retail giant a substantive foothold into that sector, although White Cap, with 80 locations in 21 states, caters as much to commercial accounts as it does to residential builders and remodelers. And there was plenty of talk—none of it substantiated—about The Home Depot's interest last year in acquiring Builders FirstSource, rumors that became moot when BFS decided to take itself public in June.
If The Home Depot were to buy 83-year-old Williams Bros.—whose operations include four truss plants, eight I-joist design and production facilities, and a construction division that provides turnkey services for framing, decks, siding, roofing, windows, and housewrap—the retailer would be adding another arrow to its increasingly potent pro-focused quiver. The retailer's The Home Depot Supply division currently operates five subsidiaries—Apex Supply, Your Other Warehouse, The Home Depot Supply, White Cap, and HD Builder Solutions Group—that support its business with these customers. In addition, last year Depot installed its Pro Initiative program—which beefs up products and services specifically for contractors—to 207 stores, bringing the total number of locations with this program to 1,563. The company intends to add the Pro Initiative to 165 stores in 2005.
In addition, last year The Home Depot reported that its “services” revenue—essentially its installed sales, which are handled by captive installation companies and subcontractors—rose 28 percent to $3.8 billion. —John Caulfield is a contributing editor for PROSALES.