What We Learned This Week

Home Depot Appealing to the Pros: Home Depot is making another push into the professional contractor market. This week, the company announced its intent to acquire building products distributor GMS for $4.3 billion ($5.5 billion including debt), a move that will fall under its SRS Distribution subsidiary, acquired just last year for $18 billion. Based in Georgia, GMS operates over 320 distribution centers across the country and offers a range of construction materials including wallboard, ceilings, and steel framing. It also runs more than 100 tool rental and service centers.

Capturing more of the pro contractor segment has been a core part of Home Depot’s long-term growth strategy, but it’s a tricky space. The market is highly fragmented and typically serviced by local suppliers who cater to specific needs like jobsite delivery, custom lot sizes, and speed, areas where big-box retail models often fall short. To compete, Home Depot has been investing heavily in its distribution network and logistics infrastructure to deliver on what pros actually care about: reliability and efficiency. Pro sales now make up roughly half of Home Depot’s total business, and while the path to consolidation isn’t easy, it’s a compelling area of focus. Pros tend to be steady, high-frequency customers, and if the housing and construction markets regain momentum, Home Depot’s expanding capacity could pay long-term dividends. As always, this is a company that knows how to run a tight, forward-thinking operation.

Signs of a Bottom: It’s been a while since we’ve had good news out of Nike, but last week finally delivered a glimmer of optimism. The company reported fiscal Q4 results that were rough on the surface - sales down 12%, profits down over 80%, and the stock initially dropped. But sentiment quickly shifted after the earnings call, where management struck a much more confident tone about what’s ahead (stock ended up gaining 20%+ for the week). They emphasized that the worst may be behind them and reaffirmed that the financial impact of their turnaround efforts wouldn't worsen due to the current tariff environment.

Details were light on near-term sales traction, but Nike did outline some progress under new CEO Elliott Hill. His strategy focuses on rebuilding wholesale relationships and expanding the brand's reach with women. As part of that push, Nike will begin selling on Amazon again for the first time since 2019 and is gaining momentum through over 200 women-led retail shops launched during the quarter. Inventory levels are also stabilizing, which is encouraging. Still, it’s probably too early to call this a full-blown turnaround. Wall Street tends to get ahead of itself when it smells a bottom, but fashion is fickle. And while fixing distribution and inventory is critical, getting the product back on trend is the other half of the equation. That part will take time.

Trade Boost: Adding to the recent wave of Nike optimism, reports surfaced that the Trump administration has reached a preliminary trade deal with Vietnam. That’s significant for Nike, as a large portion of its manufacturing footprint is based there, and uncertainty around potential tariffs has been an overhang on the stock. According to early details, the U.S. would implement a flat 20% tariff on all imported goods from Vietnam, while Vietnam would drop tariffs to 0% on U.S. imports. Additionally, Vietnam reportedly agreed to impose a 40% tariff on goods routed through the country from elsewhere, aiming to prevent tariff circumvention by third-party nations.

If finalized, this would mark an improvement from the originally proposed 46% tariff on Vietnamese imports and would provide some much-needed clarity for Nike, Columbia, On Holdings, and other U.S. brands reliant on Vietnamese manufacturing. Vietnam has every incentive to get something done - exports to the U.S. make up over 30% of its GDP. With the administration’s 90-day negotiation window nearing its end, this marks another development following earlier reports of progress with the U.K. and China. Plenty still in motion, but this would be a positive step forward for U.S. businesses with global supply chains.