By Sabrina Escobar

Lowe's is ramping up its professional contractor business in a bid to claw some market share away from competitor Home Depot.

The home improvement retailer is acquiring Artisan Design Group for $1.33 billion in cash, Lowe's said Monday.

ADG helps contractors design, deliver, and install interior finishes, such as flooring, cabinets and countertops. It is currently owned by private-equity firm Sterling Group. In fiscal 2024, the company made about $1.8 billion in revenue.

"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," said Lowe's CEO Marvin Ellison in a press release Monday. "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."

The transaction is expected to close in the second quarter of 2025.

While Lowe's has been catering to contractors for a few years now, its Pro business has lagged behind rival Home Depot's. About 30% of Lowe's sales came from Pro sales in its latest quarter and the remaining 70% were from do-it-yourself sales; Home Depot's sales skew more 50/50.

Home improvement companies have been itching to get into the Pro business because demand can be more reliable. Indeed, earlier this year, Ellison predicted that while growth in the home improvement market would be roughly flat this year, Pro would outpace DIY "driven by the repair and maintenance occasion."

Home Depot made its own splashy acquisition of a Pro-focused business last year. The company bought SRS Distribution -- a company that serves roofers, landscapers, and pool specialists -- for $18.25 billion.

Shares of Lowe's were unchanged in after-hour trading Monday. The stock is down 9.2% this year.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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April 14, 2025 16:58 ET (20:58 GMT)

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