Home Depot Concentrates On Its Décor Business
Home Depot (NYSE:HD) has announced the acquisition of The Company Store, an online provider of textiles and home décor products. While the terms of the deal were not disclosed, it was reported that the deal did not include the company’s five retail locations. It was stated that The Company Store has had considerable success with its online business, besides having “strong relations and industry leading capabilities in the development and sourcing of high quality textiles across bedding, bath, and related categories.” This acquisition signals not only the focus of Home Depot on its online business, but also shows an emphasis on the decor business, as this deal follows a partnership with digital decorating platform Laurel & Wolf earlier this year.
We have a $172 price estimate for Home Depot, which is below the current market price. The chart below has been made using our new, interactive platform.
Impressive Growth Seen In The Home Décor Market
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The home accents market, which is the home furnishings and décor market, has taken off because of the economic recovery, falling unemployment, rising wages, and a recovery in the housing market. This momentum is set to continue in the near future, making this industry an attractive destination for investments. The home accents market, which grew at 2.3% in 2016, is expected to improve by 3% this year, as a result of an improved economic outlook. Meanwhile, the online home accents market has boomed, with growth recorded at upwards of 14%. This segment is expected to reach $440 billion in 2017, and $562 billion in 2020, with the share of the online channel increasing to 21% of the total market. Within this space, decorative accessories sales were estimated at $22.75 billion in 2016, reflecting a 2% growth in 2016, while wall decor outpaced the rest of the industry posting a growth of 2.4%, taking its sales to approximately $7.4 billion.
For Home Depot, its décor business has been growing at a faster rate than that of the industry, at 6.5% in 2016 and 6.9% in 2015. With the tremendous opportunity available in this market, Home Depot is attempting to go to where the consumers are, that is, the online channel. In this regard, its purchase of The Company Store and deal with Laurel & Wolf makes sense. With the latter partnership, the company is able to connect its customers, through its Home Depot Pro Referral Service, to designers that can help “transform” their space online, using Home Depot supplies, by paying a flat fee. As more and more consumers are lured by the convenience of online shopping, it is a logical next step for a company like Home Depot to also try and make a mark in this space.
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Have more questions about Home Depot? See the links below.
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