The Store Is the Warehouse: 16.6% OnlineNarrow moat

Home Depot (HD) — moat facet

Home Depot's online sales grow 11% a year because they are fulfilled from stores it already owns, not from a separate network.

Home Depot's online business is not a separate company competing with its stores; it is the stores, reached through a phone. Online sales represented 16.6% of net sales in the second quarter of fiscal 2026 and grew 11.0%1, several times the growth of comparable sales. The online figure excludes HD Supply and SRS2.

Q2 fiscal 2026 growth rates (%)11.0%Online sales5.7%Net sales1.7%Comparable salesHome Depot Form 10-Q and results release, Q2 fiscal 2026
Online grows six times as fast as comparable sales.

The economics favour an incumbent with stores. An order picked from a shelf a few miles away, or collected by the customer, avoids much of the cost that a pure online seller bears for long-distance shipping of heavy, bulky goods. The company counts its store and branch locations, digital experience and supply chain network among its advantages3.

The company is also putting AI tools in front of customers. The 10-K describes Magic Apron, which supports customers and associates with online product and project inquiries, and AI-powered tools for Pros such as a Blueprint Takeoffs Tool and Material List Builder4.

The same technology works against it. The 10-K says online and other digital capabilities, as well as AI tools, facilitate competitive entry, price transparency, and comparison shopping5. A customer who can compare prices across every seller in seconds is harder to keep on convenience alone.

Customers use the stores in several ways at once. The 10-K describes buying online and picking up in store, curbside pickup, self-service lockers and car and van delivery from the majority of American stores6; approximately 50% of American online orders were fulfilled through a store in fiscal 20257. Each option uses a building Home Depot already has.

The online business is a widening advantage because it rides on owned stores. Its growth rate is what to follow: 11.0% in the second quarter of fiscal 20268; a fall toward the pace of comparable sales would mean the phone has stopped bringing new spending to the stores.

Moat trajectory: Widening

Online 16.6% of sales in Q2 fiscal 2026, growing 11.0%.

The number that tests this moat
Reported
Online sales growth, latest quarter
+11.0%, 16.6% of net sales (Q2 fiscal 2026)

The interconnected store; growth slowing to the pace of comparable sales would mean digital has stopped adding.

Source: Home Depot Form 10-Q, Q2 fiscal 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
Every Price Visible in Seconds
Home Depot itself warns that AI tools make comparison shopping easier, which erodes loyalty built on convenience.
References
  1. ReportedOnline sales represented 16.6% of net sales in the second quarter of fiscal 2026 and grew 11.0%, several times the growth of comparable sales.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  2. ReportedThe online figure excludes HD Supply and SRS.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
  3. ReportedThe company counts its store and branch locations, digital experience and supply chain network among its advantages.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business and Item 2 properties: stores, Pros, SRS, competition and supply chain. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  4. ReportedThe 10-K describes Magic Apron, which supports customers and associates with online product and project inquiries, and AI-powered tools for Pros such as a Blueprint Takeoffs Tool and Material List Builder.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business: competition, online and the interconnected experience. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  5. ReportedThe 10-K says online and other digital capabilities, as well as AI tools, facilitate competitive entry, price transparency, and comparison shopping.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business: competition, online and the interconnected experience. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  6. ReportedThe 10-K describes buying online and picking up in store, curbside pickup, self-service lockers and car and van delivery from the majority of American stores; approximately 50% of American online orders were fulfilled through a store in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business: competition, online and the interconnected experience. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  7. ReportedThe 10-K describes buying online and picking up in store, curbside pickup, self-service lockers and car and van delivery from the majority of American stores; approximately 50% of American online orders were fulfilled through a store in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1 business: competition, online and the interconnected experience. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  8. ReportedIts growth rate is what to follow: 11.0% in the second quarter of fiscal 2026; a fall toward the pace of comparable sales would mean the phone has stopped bringing new spending to the stores.
    The Home Depot Form 10-Q for the quarter ended 2 August 2026 - segment results, product lines, online sales, IEEPA tariff refunds, the Mingledorff's acquisition and trailing ROIC of 24.8%. — Q2 fiscal 2026 · publ. 25 August 2026 · source ↗
Sources
Generated September 26, 2026