DIY Giant Lowe’s Turns To Pro Market With $1.3 Billion ADG Acquisition

Mooresville, N.C. headquartered home improvement giant Lowe’s Companies Inc. has agreed to acquire Artisan Design Group in a $1.325 billion deal.

ADG, owned by private equity firm The Sterling Group, is a nationwide provider of design, distribution and installation services for interior surface finishes, including flooring, cabinets and countertops, to national, regional and local homebuilders and property managers.

With fiscal 2024 revenue of approximately $1.8 billion, a national network of over 3,200 specialized installers, ADG will expand Lowe’s Pro offering into a new distribution channel within a highly fragmented, approximately $50 billion market, Lowe’s said in announcing the deal.

ADG was formed in 2016 by the merging of two industry leading businesses and under Sterling’s ownership since 2018 ADG has completed 15 acquisitions, each of which was founder or entrepreneur owned. It currently operates 132 distribution, design, and service facilities in 18 states, and is headquartered in Dallas, Texas.

“With more than 18 million homes needed in the United States by 2033, we expect new home construction will be a major driver of Pro planned spend for the next decade. The acquisition of ADG allows us to build on our momentum with Pro planned spend and is expected to expand our total addressable market by approximately $50 billion,” said Marvin R. Ellison, Lowe’s chairman, president and CEO.

“With its strong, customer-centric operating model, ADG has become an industry leader with best-in-class customer satisfaction scores from the top builders in the U.S.”

Lowe’s will finance the acquisition with cash on hand. The transaction is expected to close in the second quarter of 2025.

Lowe’s Looks To Pro Market

The deal comes as after Lowe’s doubled down on enhancing its Pro business, including rolling out an updated version of its Pro Loyalty Program, which offers new features and functions that Lowe’s said are often used by industry professionals.

Lowe’s serves approximately 16 million customer transactions a week in the United States. With total fiscal year 2024 sales of more than $83 billion, Lowe’s operates over 1,700 home improvement stores and employs approximately 300,000 associates.

In February, the home improvement retailer beat Wall Street’s estimates for the fourth quarter as it reported Q4 revenues of $18.6 billion, above the $18.3 billion the Street expected, and adjusted earnings per share of $1.93, above analyst estimates of $1.84.

Same-store sales increased 0.2%, turning positive for the first time in around two years. However, sales gains were partially offset by lower foot traffic, down 1.3%, as pressure in DIY discretionary spending continued and consumers put off big hime improvement projects while mortgage rates have stayed comparatively high.

During an earnings call, Ellison said that sales were largely driven by high-single-digit sales growth in its Pro business and online sales, leading some analysts to predict that Lowe’s may be better placed than arch rival Home Depot to gain momentum once customers return to the DIY market.

For its part, Home Depot’s fourth quarter results slightly topped Wall Street’s expectations as it posted a 14.1% increase in revenue year over year to $39.7 billion, although both Home Depot and Lowe’s have both cautioned about prospects for the year ahead amid declinging consumer sentiment.