Inflation Concerns Weigh on Retailers, Despite Consumer Resilience

US retail inflation remains a concern for retailers despite consumer spending picking up. Retailers are implementing mitigation strategies such as cost concessions, resourcing, supply chain efficiencies, cost controls, expanding US-made products, and price increases. Consumer resilience is evident in mixed corporate earnings, with retailers such as Best Buy and Dollar General reporting growth across all income levels. However, larger discretionary purchases have slowed at Home Depot and Lowe's due to consumer behavior shifts.

Home Depot (NYSE: HD) has received clearance from the Canadian Competition Bureau to proceed with its acquisition of GMS (NYSE: GMS). The deal, announced in late June, involves Home Depot acquiring GMS for $110 per share. The approval from the Canadian Competition Bureau, in the form of a no-action letter, satisfies the remaining antitrust law-related conditions necessary for the acquisition. The tender offer by Home Depot to acquire all outstanding shares of GMS is set to expire at one minute after 11:59 PM ET on Wednesday, September 3.

This approval comes at a time when the retail sector is grappling with inflationary pressures and shifting consumer behavior. Despite these challenges, Home Depot and other retailers are implementing various mitigation strategies, such as cost concessions, resourcing, supply chain efficiencies, cost controls, expanding US-made products, and price increases. These efforts aim to manage rising costs and maintain profitability.

Consumer resilience is evident in mixed corporate earnings, with retailers like Best Buy and Dollar General reporting growth across all income levels. However, larger discretionary purchases have slowed at Home Depot and Lowe's due to consumer behavior shifts. The U.S. durable goods sector, which includes many of these retailers, has shown resilience despite inflationary pressures and tariffs. The sector's long-term upward trend is highlighted by record durable goods orders in July 2025, with a 10.2% increase from six months prior [1].

The approval of Home Depot's acquisition of GMS is a significant development in the retail sector. It highlights the company's strategic move to expand its market reach and potentially enhance its competitive position. As the sector navigates ongoing challenges, this acquisition could provide a strategic advantage for Home Depot.

References:
[1] https://seekingalpha.com/news/4490520-home-depot-gms-deal-gets-clearance-from-canadian-competition-bureau