Home Depot targets $100 billion market with new deal

Many retailers share a secret that consumers may not fully understand. Companies make a higher profit margin selling services compared to goods. "

All these big MSPs are starting to have two-thirds of their revenue being services-led because you double profitability compared to the traditional resale model," said Bob Skelley, CEO of The Channel Company at XChange 2019, according to CRN.com. Walmart actually expects to drive more profit from selling services than goods in the next five years, according to its CFO David Rainey. ”

Today, the vast majority of our overall profits are attributable to in-store brick-and-mortar in the U.S.," John David Rainey, Walmart's CFO, said at a Raymond James Conference. ”

If you fast forward 5 years, we are much less dependent on that as an income stream than some of these other faster-growing parts of our business," he said at a conference in 2023, per Investing.com. Lowe's does not specifically break out service revenue in its earnings reports. ”

Services, such as fees Walmart collects from third-party sellers on Walmart.com, the cut it gets if Walmart fulfills those orders to shoppers and the dollars that advertisers spend through Walmart's growing retail media business, are the higher-margin, faster-growing parts of Walmart's business," Rainey said. Now, another big-box retailer, Home Depot, has made a major purchase that will add both traditional sales and increased service revenues. Home Depot makes a major purchase SRS Distribution Inc., a subsidiary of The Home Depot, has agreed to acquire Mingledorff's, Inc., a leading wholesale distributor of heating, ventilation, and air conditioning (HVAC) equipment, parts, and supplies, serving residential and commercial customers through 42 locations in five states across the southeastern U.S. This purchase allows Home Depot to better support its network of professional HVAC installers.

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Mingledorff's brings an extensive product portfolio, robust distribution network and established customer relationships that are highly complementary to SRS's existing business, positioning the company to win greater share of wallet in the fragmented building materials distribution industry. HVAC distribution represents a total addressable market of approximately $100 billion and will increase The Home Depot's total addressable market to $1.2 trillion," the chain shared in a press release. And, while the chain did not address the topic in its media statements, buying will also support the company's HVAC installation and repair services.

Analysts at Telsey Advisory Group say Home Depot's investments in professional services and service-oriented acquisitions could support long-term earnings growth, a point noted in Investing.com coverage. Home Depot's arrow has been pointing up Despite a challenging operating environment, Home Depot has delivered strong results. Sales for fiscal 2025 were $164.7 billion, an increase of 3.2% from the same period last year.

Comp sales increased 0.3% from the same period last year and comps in the U.S. increased 0.5%. Adjusted diluted earnings per share were $14.69 compared to $15.24 in the prior period.

In the fourth quarter, comp sales increased 0.4% from last year and comps in the U.S. were up 0.3%. Adjusted diluted earnings per share were $2.72 compared to $3.13 in the prior year. Source: Home Depot fourth-quarter earnings call "

As we shared with you at our Investor and Analyst Conference in December, we are uniquely positioned to grow share of wallet with all our customers. We are investing across the business to drive our core and culture, deliver a frictionless interconnected experience and win the Pro," CEO Edward Decker shared during the call. Home Depot (and Lowe's) face a challenging market Both Home Depot and Lowe's have been operating in a challenging market. "

Building materials and garden supply retailers saw year-over-year sales drops of at least 4% each month from May to July, even as most others posted growth, according to data from the National Retail Federation (NRF)," told Investing.com. "

Right now, the consumer is more focused on essentials, and pricing is a key driver of activity," said Mark Mathews, chief economist at NRF. "I'm not sure there is enough impetus, or need, to drive spending in the building material & garden supply space right now." Lowe's has also managed the challenging times well, but sees ongoing headwinds. ”

While our outperformance in the fourth quarter demonstrates our team's disciplined execution, our outlook for 2026 remains cautious, given the persistent volatility in housing macro. This uncertainty continues to pressure big-ticket discretionary DIY projects as many consumers are reluctant to make significant investments in their homes," CEO Marvin Ellison said during his chain's fourth-quarter earnings call. He also noted that service has been a growing category. ”

Now turning to home services, where we delivered high single-digit growth. This is another example of a customer experience that we have overhauled at Lowe's by removing the friction for what was a time-consuming process through digital tools and enhanced service to create an intuitive installation solution for our do-it-for-me customers," he added. Related: 78-year-old furniture chain closing all stores and liquidating The Arena Media Brands,

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is a registered trademark of TheStreet, Inc. This story was originally published March 27, 2026 at 5:37 PM.