HD Supply Home Improvement Solutions are an American-based company that sells a range of building materials to contractors, do-it-yourselfers, property managers and builders. The company is majority owned by the private equity firm. For many years, HD Supply had been the largest supplier of building products in the U.S., providing products for home improvement and construction activities.
Specialty of HD Supply Home Improvement Solutions
With a number of home improvement categories in their product range, HD Supply Home Improvement Solutions are considered one of the strongest players in the home improvement sector. The company sells the products it produces in the U.S. and Canada through the following channels:
- High-Performing Supply
- Appliance-Fix-it
- Appliance-Repair-Parts
- Tool-Box
- Machine-Carry
- Storage-Store
It is worth noting that these products are made by other manufacturers and sold under different brands. Some of the products are made by a third party and sold under the HD Supply brand. HD Supply Home Improvement Solutions does not own these brands. The company is likely to benefit from the growth of the housing market as housing recovery continues. As a result, housing sector will be a growth catalyst for the company’s top and bottom line.
What Are The Weaknesses of HD Supply Home Improvement Solutions?
HD Supply Home Improvement Solutions is by no means a perfect business. As mentioned earlier, there are a number of potential risks associated with the business. There is a risk that the housing market will experience a downturn in the future. Housing markets in the U.S. and Canada have recently rebounded strongly after a few years of slow growth. The U.S. and Canada housing markets are booming once again. However, the long-term strength of the housing market is uncertain.
The stronger U.S. and Canadian economies have helped prop up HD Supply’s bottom line over the last few years. However, these positive economic trends could be losing momentum. Many of HD Supply’s customers are likely to reduce spending on non-essential items. As the economy continues to grow, people are more likely to postpone spending on repairs and maintenance. It is likely that there will be less need for products from HD Supply Home Improvement Solutions in the future. This is a risk the company has to take into consideration in its business planning.
What Are The Businesses Of HD Supply Home Improvement Solutions?
The company has a diversified product range with different price points. It has carved a strong market position in the home improvement sector. HD Supply Home Improvement Solutions is a supplier of products to different types of companies that work on home improvement projects. These include:
- Builder, Real Estate, Contractor
- Supplier to Gas/Oil Extraction/Energy
- Commercial & Industrial
- Private In-House Contractor
- Millwork/Architectural Framing
- Motor Vehicles
- Supplier to Professional
- Insurance Companies
- Entertainment & Commercial Buildings
- Insurance Related
- Construction Hardware
- Home Furnishings
HD Supply has established a large distribution network that sells the product to end-users. The company’s end-customers are mainly its current customers. The company’s business model has become very dependent on its existing customers. If the growth in the overall housing market slows, it will likely hurt the top line growth of HD Supply Home Improvement Solutions.
What Does the Market Think About HD Supply Home Improvement Solutions?
The future is bright for the housing sector in the U.S. and Canada. The U.S. housing market has been recovering after bottoming out in 2012. The recovery has been driven by a steady rise in the number of people who are either in the market to buy a home or who have been buying a home recently. This number has increased steadily from 2012 to 2022. Most of the economic recovery in the U.S. and Canada has come from a rebound in the housing sector.
Moreover, the housing markets in both the countries are experiencing robust demand. These positive long-term economic trends have lifted investor sentiment on the housing sector in the U.S. and Canada. For example, there has been a strong rally in the shares of Home Depot (HD) and Lowe’s Companies (LOW) in the last few years. These are the two leading home improvement chains in the U.S.
Final Verdict
In our view, HD Supply Home Improvement Solutions is a decent business with strong brand recognition and an expanding customer base. The company has an enviable business model. The company derives a significant part of its revenue from repeat customers. HD Supply has been expanding its operations aggressively in the last few years. The company has a good track record of revenue and profit growth. However, the company’s rising concentration in the auto sector is a concern. The increased dependence on the auto sector also increases the risks from economic slowdown.
