Home Depot’s Product Portfolio and Supplier Relationships

Home Depot (HD) is the largest home improvement retailer in the world. Its products include building materials, lawn and garden products, and home appliances, among other things. The company aims to provide a broad range of innovative and value-oriented products to its customers. Kitchen and garden products are the best-grossing product categories. These accounted for nearly 27% of revenues in fiscal 2014, which ended January 31, 2014.

Products include both proprietary brands as well as some that have been externally sourced. These are some of the major brands at Home Depot:

• Behr for paints
• Cree for lighting
• Glacier Bay and Martha Living for kitchen cabinets
• SoftSpring and Martha Living for carpets
• Plantations Patterns Patio for outdoors

Certain product lines retail exclusively at HD such as Brown Jordan patio furniture. Home Depot also sells its own products under the Home Decorators Collection brand.

Home Depot is a major customer of certain firms. The retailer’s purchases have a significant bearing on the financial performance of these suppliers. Here are some of HD’s major suppliers:

• Masco (MAS) for architectural coatings and paint products including the Behr brand
  • HD and Lowe’s (LOW), HD’s major competitor, are respectively Masco’s number one and two customers. MAS made sales worth $2.3 billion to HD in 2014
• Mohawk Industries (MHK) for flooring and carpets

• Fortune Brands Home & Security (FBHS) for kitchen and bath cabinets, plumbing, home security systems and locks and doors, among others
  • HD and LOW respectively accounted for 15% and 14% of FBHS’s revenues—$4 billion in its last fiscal year
• Scotts Miracle-Gro (SMG) for lawn and garden care products
  • HD and LOW respectively accounted for 36% and 19% of SMG’s net sales—$2.8 billion in its last fiscal year
• Cree (CREE) for lighting
  • HD accounted for ~13% of CREE’s revenues—$1.7 billion in its last fiscal year

HD also sources household appliances from companies including Whirlpool (WHR), Samsung (SSNLF), General Electric (GE), and Stanley Black & Decker (SWK), among others.

On top of its large range of products, Home Depot offers services including installation. Service is a key element of its enhanced customer strategy.

HD and LOW are part of the top ten holdings in the iShares U.S. Home Construction ETF (ITB). Together, they constitute ~8.4% of the ETF.