Home Depot

Home Depot's fourth-quarter fiscal 2024 broke an eight-quarter streak of declining comparable sales, posting 0.8% growth (1.3% in the U.S.) as consumers grudgingly accepted that mortgage rates near 7% represent the new climate, not a temporary weather pattern. Annual 2024 revenue reached $152.7 billion despite a 3% decline from 2023—the equivalent of a forest canopy contracting during drought while root systems prepare for eventual recovery. The organism serves a niche constructed by homeowners and professionals who must maintain dwellings regardless of economic headwinds. CFO Richard McPhail noted "housing is still frozen by mortgage rates," yet consumers stopped delaying projects as adaptive response replaced waiting for rate cuts that never materialized. For fiscal 2025, Home Depot projects 2.8% total sales growth and 1% same-store sales growth, signaling gradual metabolic recovery.

The $18.25 billion SRS Distribution acquisition in 2024—Home Depot's largest ever—represents resource partitioning into the professional contractor niche. SRS supplies roofing, pool, and landscaping specialists, a segment with stickier demand than DIY consumers who defer kitchen remodels when rates spike. To finance the deal, Home Depot raised $10 billion in debt, pushing total debt above $53 billion—a metabolic cost justified by the belief that professional revenue provides drought resistance. The company operates 2,350 retail stores plus 790 SRS branches across North America, employing 470,000 associates. This distribution network creates economies of scale in purchasing and logistics that rivals like Lowe's struggle to match, similar to how ant colonies optimize foraging through pheromone trails that encode collective knowledge.

Yet volume declines persist: Q2 fiscal 2025 saw customer transactions down despite revenue growth, meaning fewer customers spending more per visit—like beavers making fewer dam repairs but using larger logs each time. Home Depot invested in value brands (Chester's, Santitas) and added more product per package to signal affordability, a form of costly signaling to retain price-sensitive customers. The housing market's low inventory and 7% mortgage rates create a coordination problem: sellers won't list because they'd surrender sub-3% mortgages, buyers can't afford new rates, so turnover stalls and home improvement projects stagnate. Home Depot's bet: professionals maintain steady demand while DIY customers eventually exhaust their ability to defer maintenance, creating a demand backlog that will flush through the system once psychological acceptance replaces hope for rate relief.