Home Depot has long towered over Lowe’s in the home improvement space. As of early 2025, Home Depot’s market cap was roughly $381.7 billion, nearly three times Lowe’s $139.2 billion.
It also claims roughly 47% market share to Lowe’s 28%.
Yet despite Home Depot’s dominance, Lowe’s has been narrowing the gap through targeted moves.
This week, a blockbuster acquisition by Lowe’s upended expectations. An unexpected strategic shift leaves investors and analysts reassessing which retailer will lead the race for professional contractors.
Performance Divergence
Last week’s earnings drove the divide between the rivals. On August 19, Home Depot reported second-quarter results with revenue of $45.28 billion and adjusted EPS of $4.68, coming in just below analysts’ forecasts.
While 6% year-over-year net income growth was respectable, the slight misses signaled slowing demand.
Investors had been expecting roughly $4.70–$4.72 EPS, so the shortfall on both sales and profit left Wall Street cautious.
This set the stage for a dramatic reversal when Lowe’s stepped into the spotlight the very next day. Meanwhile, contractors and industry observers braced for tomorrow’s news.
Professional Push
Both chains are now pinning their hopes on pro contractors. With do-it-yourself spending soft, Home Depot and Lowe’s have each been aggressively courting builders and tradespeople.
Home Depot already derives about half its sales from professionals – from roofers to plumbers – whereas only roughly a quarter of Lowe’s revenues come from pros.
That gap is worth billions in missed revenue. As one construction foreman put it, “Contractors live and die by supply – we noticed Home Depot’s pros really stocked our job sites, but Lowe’s is trying to catch up fast.” The professional segment is seen as the new growth frontier, and each company is reinforcing pro-focused services, credit programs and sales teams to win loyalty.
Acquisition Arms Race
Big acquisitions have become the weapons of choice in this battle. In mid-2024, Home Depot closed its massive deal for SRS Distribution, an $18.25 billion investment that instantly added thousands of specialized outlets in categories like roofing and landscaping.
Lowe’s answered with bolt-on targets of its own. In April 2025, it agreed to buy Artisan Design Group for about $1.33 billion.
ADG provides in-house design, finishing and installation services, giving Lowe’s an entry into high-end kitchen and bath projects.
These deals signaled that both retailers see the fragmentation of professional supply as a green field: whatever advantage one gains, the other is compelled to match or exceed.
The Bombshell
Here’s where it gets interesting: on August 20, Lowe’s dropped a true bombshell. It announced an $8.8 billion cash acquisition of Foundation Building Materials (FBM) – a North American distributor of drywall, ceilings and related products.
The deal was unveiled alongside Lowe’s surprisingly strong quarterly earnings, in which it reported adjusted EPS of $4.33 vs. $4.24 expected.
Lowe’s stock popped over 3% on the news, reflecting how the market viewed the combined impact. The FBM purchase dwarfs Home Depot’s recent expansions.
“Pro is basically the new battleground for home improvement,” said Neil Saunders, a retail analyst at GlobalData. “Naturally, with two big giants in the arena, there are likely to be some bruising battles ahead.
Geographic Expansion
Beyond scale, the FBM deal instantly rewrites Lowe’s geography. FBM’s network includes over 370 branches across the U.S. and Canada, especially concentrated in California, the Northeast and the Midwest.
These regions are areas where Lowe’s retail store density has been relatively thin.
By integrating FBM, Lowe’s gains direct routes into local pro markets it has long missed. For example, existing Lowe’s branches in the Midwest can now draw on FBM’s Midwest distribution hubs for large contractor orders.
A Lowe’s supply-chain manager notes that consolidating these outlets “will greatly improve delivery speed and inventory availability” for professional customers.
CEO Vision
Lowe’s CEO Marvin Ellison framed the acquisition as a leap forward for the company’s strategy. Ellison said, “With this acquisition, we are advancing our multi-year transformation of the Pro offering,” pointing out that it lets Lowe’s serve a “$250 billion total addressable market” of professional spend.
He added that combining FBM with Lowe’s recent ADG purchase “will significantly enhance our Pro offering”.
This rhetoric underscores Lowe’s “Total Home” plan: to build a one-stop shop for contractors, from raw materials to custom design. It’s a bold vision.
As Ellison puts it, joining forces with FBM “strengthens our solutions for our growing Pro customers.” Whether execution matches the promise, investors will soon find out.
Financial Powerhouse
FBM’s numbers help justify the high price. On a pro forma basis, FBM generated about $6.5 billion in revenue in 2024 with roughly $635 million in adjusted EBITDA.
That works out to compound annual growth rates around 25% for sales and 30% for EBITDA since 2019 – extremely healthy metrics for a distributor.
Even by itself, FBM is highly profitable, with a 2024 EBITDA margin north of 9%.
By combining FBM’s earnings stream with Lowe’s own financial strength, Lowe’s expects the deal to be immediately accretive to earnings per share.
Market Dynamics
The timing of all this reflects broader industry shifts. The professional construction market in the U.S. is enormous – on the order of $450 billion or more annually – and still growing.
Meanwhile, high interest rates and affordability pressures have dampened headline DIY home improvement activity.
In that environment, professional contractors have become the cornerstone for both retailers’ growth strategies. Pro customers spend more per project and have steadier demand than weekend DIYers.
As one contractor in New York put it after hearing the news, “Having Lowe’s in the pro-distribution game with FBM could mean quicker deliveries on big jobs – it’s a competitive edge.”
Hidden Winner
The immediate stock-market reaction picked a clear winner. After Lowe’s announced the FBM deal and beat Q2 estimates, its share price jumped around 3% on the news.
The company also lifted its full-year revenue outlook to as much as $85.5 billion from $84.5 billion.
Investors cheered the EPS beat of $4.33 (vs $4.23 expected) along with the deal.
“These acquisitions allow us to drive incremental revenue and EBITDA with cross-selling opportunities,” said Lowe’s CFO Brandon Sink, reflecting confidence that integrating FBM and ADG will boost results. The market clearly took that to heart.
Competitive Pressure
With Lowe’s scaling up, the spotlight swings back to Home Depot. After Lowe’s move, analysts note Home Depot’s recent acquisitions look modest by comparison.
In June, Home Depot announced a roughly $4.3 billion deal for specialty distributor GMS, following its $18 billion SRS acquisition in 2024.
That footprint in roofing, framing and millwork was meant to match Lowe’s pro push. But now that Lowe’s has secured FBM, even GMS’s $4–5 billion price tag seems like small change.
Observers say Home Depot may feel forced to up the ante.
Private Equity Exit
The FBM sale also marks a big win for its private-equity owners. American Securities and Clayton, Dubilier & Rice (CD&R) have shepherded FBM’s growth since 2011 through dozens of add-on deals.
Under their watch, FBM’s revenues soared at roughly a 27% compound annual rate, and EBITDA at 31%, transforming the firm into a national leader.
CEO Ruben Mendoza called the partnership with AS and CD&R “incredible,” noting the company stayed “true to our values and culture” even as it expanded aggressively.
With Lowe’s acquiring FBM at a rich valuation, AS and CD&R are cashing out. This exit demonstrates how professional distribution has become a prized asset class – any PE fund seeing that growth can now point to FBM’s success as proof.
Integration Strategy
Now comes the hard part: integration. Lowe’s says it will combine FBM’s vast wholesale network with its recent Artisan Design Group (ADG) unit to create full-spectrum pro services.
The idea is to offer contractors everything from drywall and framing (via FBM) to custom cabinets and countertops (via ADG) – all under one roof. This cross-selling could be powerful.
Lowe’s CEO noted that FBM’s broad product platform “combined with our recent acquisition of ADG will significantly enhance our Pro offering”. A builder could work with Lowe’s on materials and finishings in a single package, simplifying projects.
Executing this vision will require new systems and training. Lowe’s is beefing up its digital tools – for example, integrating FBM’s MyFBM ordering app with Lowe’s “Pro Extended Aisle” platform – so pros can more easily place and track bulk orders.
Industry Skepticism
Not everyone is convinced the integration will be smooth. Some industry experts note Lowe’s doesn’t have as much experience as Home Depot in merging large professional distributors.
They worry that folding FBM (and ADG) into Lowe’s operations without disrupting service will be a tall order. One retail-services consultant remarked, “The key question is execution – can Lowe’s preserve FBM’s hands-on customer relationships after the deal?” ̶ FBM’s success was built on local branch managers and tailored service, whereas Lowe’s is a big-box chain with standardized processes.
Maintaining customer intimacy amid corporate bureaucracy will be a challenge. Financial pundits have pointed out that acquisitions of this scale can strain margins in the short run.
Integrating IT systems, warehouses and corporate cultures will require time and money. In other words, the potential is huge, but the road ahead has pitfalls if Lowe’s missteps.
Future Outlook
Even with those risks, the FBM deal positions Lowe’s well for the future. As mortgage rates eventually moderate and construction activity revives, demand for large-scale renovation and new builds should rebound.
Professional contractors will be first in line to take on that work – and Lowe’s expects to be on their preferred supplier list.
Industry analysts note that professional construction demand tends to be more resilient than retail DIY spending, and that the housing market still has pent-up projects (apartment complexes, office retrofits, etc.) in the pipeline.
Once rates come down, the spending could flow. Lowe’s now has the supply chain to capture that wave. If labor shortages ease and policy supports homebuilding, contractors may ramp up purchases of drywall, windows and siding – right where FBM excels.
Regulatory Implications
Lowe’s $8.8 billion acquisition is far from closed. The deal needs customary regulatory approvals before a likely Q4 2025 closing.
Given the size of the transaction and its impact on contractor distribution, antitrust authorities may take a close look.
Lowe’s has already arranged financing – securing about $9 billion in bridge loans from Bank of America and Goldman Sachs – so money is ready, but regulators will scrutinize whether this gives Lowe’s too much power in some markets.
Public scrutiny will focus on competition: will contractors face higher prices or less choice? Lowe’s assures it will finance the deal with mostly debt while keeping its credit ratings stable. The company is talking up the expected efficiencies and pro-market benefits, but investors will be watching the approval process carefully.
International Considerations
The FBM deal also has a cross-border angle. FBM operates not just in the U.S. but also in Canada. Its 370+ locations include many branches north of the border.
This gives Lowe’s an instant footprint in Canada’s professional building supply market – a market it had largely exited after selling RONA in 2023. In a sense,
Lowe’s is retracing its steps internationally by acquiring FBM’s Canadian business. Going forward, this cross-border strength could serve as a template for other growth. For instance, Lowe’s could use the FBM model to explore markets beyond North America or to deepen partnerships with global builders working on U.S. projects.
The Canadian operations may also help staff exchange best practices between Lowe’s and FBM. It’s a reminder that in a distribution-driven strategy, geography and scale go hand-in-hand.
Supply Chain Evolution
Strategically, the FBM deal fundamentally blends retail and wholesale supply chains. By bringing together Lowe’s store network and FBM’s branch network, the acquisition creates a new vertical integration. Industry observers note this can cut costs and speed deliveries.
FBM’s use of real-time order systems (like its MyFBM digital app) will now merge with Lowe’s Pro ordering platform.
These tools “enable real-time inventory tracking, pricing, and order management” that streamline operations.
A contractor can order bulk sheets of drywall on a single platform and have it fulfilled from whichever channel – direct-store delivery or branch pickup – is faster. This efficiency is critical for pros juggling multiple projects.
Cultural Integration
Behind the scenes, managers warn that merging two corporate cultures will be delicate. FBM grew by being entrepreneurial and local. Its branches operate almost like small businesses, building personal relationships with contractors.
Lowe’s is much more centralized and process-driven. Maintaining FBM’s culture will be key to keeping customers happy. FBM’s own CEO, Ruben Mendoza, said that under private equity, the company always “stayed true to our values and culture” even as it expanded rapidly.
Lowe’s will need to honor that ethos. Employees at newly converted Lowe’s branch locations will face new reporting lines and policies.
Experts note that if Lowe’s imposes one-size-fits-all procedures too quickly, it could alienate pro accounts used to FBM’s tailored service.
Market Transformation
This deal underscores a broad industry shift: the home improvement sector is moving from a retail mindset toward a distribution-driven future. With DIY demand cooling, leadership is going to firms that build deep contractor relationships.
As one analyst put it, Lowe’s move is about capturing a “less cyclical” pro market where margins hold up in downturns.
If Lowe’s and Home Depot continue on this path, we may see fewer flashy store remodels and more investment in warehouses, logistics and apps for builders.
The next decade of growth will likely belong to the company that becomes the go-to distribution partner for contractors. This acquisition signals that Lowe’s is betting heavily on that future – and reshaping the industry in the process.