While sales were down in the first quarter at The Home Depot, the home-improvement retailer noted its HD pro ecosystem markets are outperforming other large pro markets. In the company’s earnings call, The Home Depot laid out its future plans for pro ecosystem market growth in the future.

“Our more mature markets with this pro ecosystem have seen great success, so we’re expanding to other markets,” president and CEO Ted Decker said during the company’s earnings call. “As you heard last quarter, we’ll have the foundational elements of our ecosystem in 17 markets by the end of the fiscal year. And while these 17 markets are currently at different maturity levels, they are outperforming our other large pro markets in aggregate.”

Decker underscored the company’s focus on creating an interconnected experience, growing pro wallet share, and building new stores moving forward. He highlighted the company’s recent acquisition of SRS Distribution, which was heavily discussed during the earnings call.

“SRS is complementary to the ecosystem we’ve been building, giving us another avenue to more effectively serve the complex project occasion. They also give us the right to win with especially trade pro customers,” Decker said. “SRS does an exceptional job serving the specialty trade pro, who typically only shops one category and needs specialized capabilities to complete their project.”

Decker added: “In addition, SRS is an exceptionally well-run business with a world-class management team. As we build out our own ecosystem, we can leverage their expertise in deep product catalog in the verticals in which they operate. We have significant growth opportunities in front of us, and we are very happy with the operational execution in our core business.”

Decker said The Home Depot’s total addressable market is approximately $950 billion; with SRS Distribution’s strength in roofing, speciality trade, pool, and landscape, that opens up an additional $50 billion in total addressable market for The Home Depot, according to Decker.

“We look forward to being able to engage with [SRS] and learn from them. But then they can also serve our customers,” Decker said. “Our customers will benefit from their deep, broad catalogs in those verticals, and we can cross-sell their product into our residential focused pro customer. So, we look at this as just a great opportunity to expand market, to expand capabilities, and to better service our customers.”

Decker said with The Home Depot generating approximately $150 billion in sales in a $1 trillion total addressable market, the company has “so much share to gain with our consumers” through its own efforts with in-store and online shopping experiences for pro customers as it builds out the pro ecosystem.

“SRS gives us a whole new white space to go play in three other verticals to take even more share,” Decker said.

Pro Initiatives

Ann-Marie Campbell, executive vice president of U.S. stores and international operations, said The Home Depot developed new capabilities within its pro intelligence tool in the first quarter, which feeds into the CRM to provide better insight to the sales team.

“These tools are helping us to both assist in identifying the optimal pro target in a market as well as the highest value cross-selling opportunities to drive action and sales,” Campbell said.

The retailer also made strides to improve its post-sale experience for customers, particularly with its returns process. Campbell said over 70% of online orders are now able to be self-service returns digitally.

“Now, our customers can create their own return of an online order and drop it off at a UPS with a scan of a barcode. Later this year, we will enable job site pickup or returns back to our flatbed distribution center, which will be a game changer for the pro shopping experience,” Campbell said. “This enhancement will allow our customers, primarily the residential pro, to initiate a return from their job site versus having to return big and bulky items to the store.”

Quarterly Results

The Home Depot generated sales of $36.4 billion for the first quarter of 2024, a 2.3% decrease compared to the prior-year period. Comparable sales in the quarter fell 2.8% on a year-over-year basis. The retailer generated net earnings of $3.6 billion, down from $3.9 billion in the first quarter of 2023.

Decker said the quarter was impacted by the delayed start to spring and continued softness in discretionary project spending. According to executive vice president of merchandising Billy Bastek, building materials posted positive comps, while outdoor garden, paint, lumber, plumbing, and hardware all posted comps above the company average.

Comp transactions fell 1.5% year-overy and the comp average ticket declined by 1.2%. Big-ticket comp transactions—those over $1,000—fell 6.5% compared to the first quarter of 2023.

“We continue to see softer engagement in larger discretionary projects where customers typically use financing to fund the projects, such as kitchen and bath remodels,” Bastek said. “Pro and DIY customer performance was relatively in line with one another, but both were negative for the quarter. While pro backlogs remain stable, we hear from our pros that homeowners continue to take on smaller projects.”