Lowe’s Companies Inc. yesterday completed its $512 million purchase of Maintenance Supply Headquarters, a distributor of maintenance, repair and operations products used to maintain facilities in the multifamily housing industry. The acquisition furthers the company’s announced plan to beef up product and service offerings targeting professional builders and contractors.
Houston-based Maintenance Supply Headquarters sells online at SupplyHQ.com and operates 13 distribution centers serving customers in 29 geographic areas, primarily in the western, southeastern and south central United States. It offers more than 5,300 products and services for maintaining and renovating multifamily properties, Lowe’s says.
The purchase follows the November acquisition by Lowe’s of Laurel, Md.-based Central Wholesalers, an MRO products distributor serving the Mid-Atlantic and Northeast. The two acquisitions push the Lowe’s MRO business to 16 distribution centers and more than $400 million in annual sales, Lowe’s says. Central Wholesalers sells online at Cwip.com,
Lowe’s is following an MRO trail blazed by The Home Depot Inc.’s 2015 acquisition of Interline. Home Depot bought the national distributor of MRO products for $1.63 billion. Interline operates eight specialized B2B websites including SupplyWorks.com, a supplier of facility maintenance products; Wilmar.com and e-Musa.com, serving multifamily housing facilities; and e-Barnett.com and e-HardwareExpress.com, for contractors serving residential customers.
The move paid off as contractors and builders helped Home Depot lift online and overall sales growth in the first quarter, CEO and president Craig Menear said on the company’s earnings call with analysts in May.
“Pro sales once again outpaced DIY (do-it-yourself) sales in the quarter,” Menear said. “We recognize that Pro customers have needs that go beyond our traditional in-store offerings, and we believe that the work we are doing to strengthen our sales support, assortment and fulfillment for this customer base continues to resonate.”
Home Depot didn’t break out Q1 online sales from professional, what it calls Pro, customers, but executives noted on its year-end earnings call in February that Pro customers account for about 45% of total sales. Based on that rate, sales to professionals accounted for $10.75 billion in Q1.
Likewise, Lowe’s relied on strong sales online and in stores to professional contractors last year to grow total sales 19.2% for the fiscal fourth quarter and 10.1% for the fiscal year ended Feb. 3. And it’s taking steps to make its Pro sales even stronger, CEO Robert Niblock says.
“Pro-customer sales were robust with another quarter of comp growth well above the company average,” Niblock said on a conference call with stock analysts in March. “We’re proud of our success with Pro customers and continue to make investments to expand our capabilities to better serve this important customer.”
Lowe’s doesn’t break out total or business-to-business e-commerce sales, but executives said on the conference call that Q4 online sales increased 25% year over year, according to a transcript of the call from Seeking Alpha. And when they discussed Q3 results last fall, they noted that B2B sales account for 30% of total sales.
The two MRO company acquisitions by Lowe’s expand the company’s “ability to serve the highly attractive and growing multifamily housing industry while strengthening our foundation for future growth with enhanced product and service offerings,” says Mike Tummillo, senior vice president of Lowe’s pro sales. “With this latest transaction, we look forward to delivering even more value for our pro customers.”
Tummillo will oversee Maintenance Supply Headquarters and Central Wholesalers, along with Lowe’s Pro Services business and Alacrity Services, a Lowe’s subsidiary that provides home restoration and repair services.
Founded in 2006, Maintenance Supply Headquarters’ offerings include appliances, plumbing, HVAC, lighting, hardware, electrical and other products for maintaining and renovating multifamily properties, as well as services such as renovation project support, custom fabrication and educational classes.
Goldman Sachs & Co. LLC served as financial advisor to Lowe’s and Hunton & Williams LLP was legal advisor for the latest transaction. Crutchfield Capital Corporation was financial advisor to Maintenance Supply Headquarters and Porter Hedges LLP served as legal advisor.
Lowe’s is No. 119 and Home Depot is No. 87 in the B2B E-Commerce 300.
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