Over the past few years, Home Depot has been battling weak consumer demand, as concerns over inflation and housing affordability have led shoppers to shift their spending habits.
In Home Depot’s second-quarter earnings report for 2025, it revealed that its U.S. comparable sales increased by 1.4% year-over-year. However, data from Placer.ai revealed that customer visits at the retailer’s same-store locations dropped by 2.6% year-over-year during the quarter.
During an earnings call in August, Home Depot executives warned investors that customers continue to delay funding larger discretionary home improvement projects, such as bathroom or kitchen remodels, due to concerns about high mortgage rates and general economic uncertainty.
“Our customers still tell us that the rate environment is giving them pause on larger remodeling projects that would typically require debt financing,” said Home Depot Chief Financial Officer Richard McPhail during the call.
Even though the average 30-year mortgage rate in the U.S. has decreased slightly over the past few months, it remains above 6%, which has led many consumers to put off purchasing new homes as affordability shrinks. However, the housing market recently saw a glimmer of hope.
Existing-home sales spiked by 1.5% month over month in September.
Unsold housing inventory increased 1.3% month over month.
The median existing-home sales price rose by 2.1% year over year, reaching $415,200. Source: National Association of Realtors
“Inventory is matching a five-year high, though it remains below pre-COVID levels,” said NAR Chief Economist Lawrence Yun in a press release. “Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth.”
As Home Depot battles weak demand, it has decided to gradually scale back its supply chain. Currently, Home Depot operates over 325 distribution centers across the U.S. These locations are responsible for receiving, storing, packing and shipping products to customers.
However, Home Depot subsidiary HD Supply has unveiled plans to shut down its distribution facility in La Vergne, Tennessee, before Jan. 9, 2026, according to a recent WARN notice.
Home Depot has noticed major changes in customer behavior.Jeff Greenberg/Getty Images
The closure will result in 108 HD Supply employees being laid off. In a statement to TripRanks, an HD Supply representative said it is combining this facility with another in the area.
“HD Supply continues to improve its leading maintenance, repair and operations distribution business,” said the HD Supply representative. “As part of that journey, we’ve made several strategic decisions around our network strategy and have made the decision to consolidate our La Vergne Distribution Center into another facility in La Vergne.”
Shortly after the announcement, Home Depot’s stock price dropped by about 2% on Oct. 29.
The move from Home Depot follows its closure of a distribution facility in Mexico, Missouri, on Oct. 26, resulting in 61 layoffs. J.B. Hunt Transport also closed its facility at the Home Depot Distribution Center in Lithonia, Georgia, on Oct. 27, which caused 74 employees to be laid off.
The closures follow a temporary surge in demand for home improvement projects during the COVID-19 pandemic. During that time, many consumers had more time to tackle kitchen and bathroom renovations, paint jobs, etc., as they worked remotely from home.
As demand increased, Home Depot expanded its distribution center network as part of a $1.2 billion supply-chain investment announced in 2018. The goal was to open 150 new facilities by 2023 to reach 90% of customers with same- or next-day delivery.
Related: Home Depot over the years: A complete history of America’s biggest hardware store
While Home Depot continues to make drastic changes to its supply chain network, it is also making bold billion-dollar acquisitions to attract more Pro customers (residential and commercial professional contractors) and encourage them to tackle large home improvement projects.
In September, Home Depot acquired GMS, a major distributor of building products such as drywall, ceilings, steel framing and other complementary products, for $5.5 billion.
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In June last year, Home Depot also acquired building material supplier SRS Distribution, which specializes in landscaping, roofing and pool construction products, for $18.25 billion.
“The addition of GMS further enhances SRS’s position as a leading multi-category building materials distributor, bringing differentiated capabilities, product categories and customer relationships that are highly complementary to SRS’s business today,” said Home Depot CEO Ted Decker in a September press release. “We want to serve the Pro across their entire project, and the combination of SRS and GMS will enable cross-selling synergies, strengthen our capabilities, and bring even more opportunities to grow with this important customer.”
