VOL. XCIV, NO. 247
★ WIDE MOAT STOCKS & COMPETITIVE ADVANTAGES ★
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Wednesday, December 31, 2025
The Home Depot, Inc.
HD · New York Stock Exchange
Weighted average of segment moat scores, combining moat strength, durability, confidence, market structure, pricing power, and market share.
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Overview
The Home Depot is a North American home improvement retailer with a dense store footprint and scaled omnichannel operations in its Primary segment. Its main moats are physical network density, distribution and fulfillment capability, and purchasing inertia driven by a large Pro customer base. The company also owns specialty trade distribution operations (reported in "Other," including SRS and subsequent acquisitions) that increase exposure to professional contractor spend. Key risks include housing and macro cyclicality, intense price competition, and acquisition or integration execution risk.
Primary segment
Primary segment - North American home improvement retail (stores + online)
Market structure
Competitive
Market share
—
HHI: —
Coverage
2 segments · 5 tags
Updated 2025-12-30
Segments
Primary segment - North American home improvement retail (stores + online)
Home improvement retail (omnichannel)
Revenue
96%
Structure
Competitive
Pricing
weak
Share
—
Peers
Other - Specialty trade distribution (SRS: roofing, landscape, pool)
Residential specialty trade distribution
Revenue
4%
Structure
Competitive
Pricing
weak
Share
—
Peers
Moat Claims
Primary segment - North American home improvement retail (stores + online)
Home improvement retail (omnichannel)
Revenue and operating profit shares are computed from FY2024 Form 10-K segment reconciliation (Primary net sales $153.108B of $159.514B; Primary operating income $21.313B of $21.526B).
Physical Network Density
Supply
Physical Network Density
Strength: 4/5 · Durability: durable · Confidence: 5/5 · 1 evidence
Large store footprint creates local availability and convenience (pickup and returns) and supports last-mile fulfillment from nearby inventory.
Erosion risks
- Shift toward online-only purchasing for commoditized items
- Store footprint becomes a fixed-cost drag if traffic declines
Leading indicators
- Comparable customer transactions trend
- Store count trend (openings and closures)
- Online sales % of net sales
Counterarguments
- E-commerce and local specialty players can match selection in specific categories without big-box overhead
Distribution Control
Supply
Distribution Control
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Meaningful digital channel scale plus store inventory enables flexible fulfillment (delivery and pickup) and high product availability versus smaller competitors.
Erosion risks
- Third-party delivery networks commoditize fulfillment
- Vendors increasingly ship direct, reducing retailer differentiation
Leading indicators
- Online sales growth rate
- Fulfillment costs as % of sales
- Gross margin trend
Counterarguments
- Buy-online/pickup and fast delivery are increasingly replicable by large peers
Procurement Inertia
Demand
Procurement Inertia
Strength: 4/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Pro ecosystem (loyalty, account support, delivery to job sites, credit, rental, quote tools) can embed Home Depot into contractor workflows and recurring purchasing routines.
Erosion risks
- Pros remain price-sensitive and may multi-source purchases
- Specialty distributors can win on expertise and service
- Credit tightening reduces big-ticket Pro demand
Leading indicators
- Pro loyalty enrollment and activity
- Average ticket trend
- Jobsite delivery utilization
Counterarguments
- Pros can switch quickly if local alternatives offer better service, terms, or product availability
Other - Specialty trade distribution (SRS: roofing, landscape, pool)
Residential specialty trade distribution
FY2024 Form 10-K discloses SRS operating segments in "Other" (not reportable segments). Revenue and operating profit shares computed from FY2024 segment reconciliation (Other net sales $6.406B; Other operating income $0.213B).
Physical Network Density
Supply
Physical Network Density
Strength: 3/5 · Durability: medium · Confidence: 4/5 · 1 evidence
Branch-based distribution footprint improves delivery speed and availability for trade customers and supports local contractor relationships.
Erosion risks
- Fragmented competition limits sustained share gains
- Integration complexity and route density execution risk
Leading indicators
- Organic sales growth in Other
- Delivery lead times and service levels
- Branch footprint expansion or consolidation
Counterarguments
- Local distributors can defend share through relationships and niche specialization
Procurement Inertia
Demand
Procurement Inertia
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Trade distribution relies on repeat purchasing, service reliability, and jobsite delivery, creating relationship-based inertia in time-sensitive categories like roofing.
Erosion risks
- Customers switch based on availability and price in tight supply conditions
- Contractors consolidate purchasing with fewer suppliers if incentives improve elsewhere
Leading indicators
- Retention and share of wallet in key contractor accounts
- Gross margin trends in Other
Counterarguments
- Trade buyers may be more willing to switch suppliers than DIY consumers
Scale Economies Unit Cost
Supply
Scale Economies Unit Cost
Strength: 3/5 · Durability: medium · Confidence: 3/5 · 1 evidence
Acquisitions expand distribution scale, potentially improving purchasing power, logistics efficiency, and category breadth over time.
Erosion risks
- Synergies fail to materialize due to operational complexity
- Supplier consolidation shifts bargaining power back to vendors
Leading indicators
- Operating margin in Other over time
- Distribution cost per unit delivered
- Post-merger integration milestones
Counterarguments
- Scale advantages in distribution can be competed away if pricing becomes the primary lever
Evidence
total store count of 2,356
Documents the physical footprint scale that underpins local density advantages.
represented 15.2% of net sales
Shows digital sales are large enough to matter operationally, supporting omnichannel scale benefits.
Pros make up about 10 percent of The Home Depot's customer base and approximately half of our sales
Company states Pros drive about half of sales, supporting the strategic importance of Pro retention and reduced friction (delivery and account services).
branches located throughout the U.S.
Supports a local branch footprint as a key operating asset for trade distribution.
professional roofer, landscaper and pool contractor
Confirms SRS focuses on professional trade customers where repeat purchasing and service reliability can drive inertia.
Showing 5 of 6 sources.
Risks & Indicators
Erosion risks
- Shift toward online-only purchasing for commoditized items
- Store footprint becomes a fixed-cost drag if traffic declines
- Third-party delivery networks commoditize fulfillment
- Vendors increasingly ship direct, reducing retailer differentiation
- Pros remain price-sensitive and may multi-source purchases
- Specialty distributors can win on expertise and service
Leading indicators
- Comparable customer transactions trend
- Store count trend (openings and closures)
- Online sales % of net sales
- Online sales growth rate
- Fulfillment costs as % of sales
- Gross margin trend
Curation & Accuracy
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