Forty Thousand Items and Its Own BrandsNarrow moat

Home Depot (HD) — moat facet

Home Depot stocks up to 40,000 items a store and keeps any single foreign country below a tenth of its purchases.

Home Depot's buying power shows up in the assortment. Each store stocks approximately 30,000 to 40,000 items1, and the company regularly assesses its departments for opportunities to expand its portfolio of proprietary and exclusive brands2. A proprietary brand earns the retailer the margin a supplier would otherwise keep and gives a customer a reason to shop nowhere else.

IEEPA tariff refunds, Q2 fiscal 2026 ($M)about 730Receivedabout 685In cost of goods soldabout 45In inventory costHome Depot Q2 fiscal 2026 Form 10-Q; inventory portion calculated as the remainder
Most of the refund went straight to cost of sales.

Scale also buys flexibility in where goods come from. The chief financial officer said Home Depot is diversifying imports so that no single country outside of the U.S. represents more than 10% of its purchases3. That limited the damage from the IEEPA tariffs and left the company with about $730 million of refunds once the Supreme Court invalidated them4.

Inventory is the cost of the assortment. Merchandise inventories were $26,847 million at 2 August 20265, and inventory turnover slowed to 4.4 times in fiscal 20256.

The buying advantage is real but not unique; any retailer of comparable size can negotiate similar terms, and the 10-K itself says the market is highly competitive, highly fragmented, and evolving7.

The reorganisation of July 2026 put private brands under the merchandising chief8, a sign that proprietary products are meant to carry more of the margin. Every sale of an own brand is a sale on which no supplier can undercut Home Depot directly.

This is a narrow advantage. The tariff line is the practical test: the refunds and the 15% replacement tariff show how exposed the assortment is to trade policy, and gross margin excluding refunds tells how much of the cost Home Depot can pass through.

Moat trajectory: Holding steady

No foreign country above 10% of purchases; tariff refunds of about $730M.

The number that tests this moat
Reported
Merchandise inventories at year end
$25,817M (1 February 2026) against $23,451M

Stock carried for the assortment; growth faster than sales means the breadth is costing capital.

Source: Home Depot Form 10-K, fiscal 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
A New Tariff With No Refund
Home Depot has spent a one-time tariff refund while a new across-the-board tariff replaces the old one.
References
  1. ReportedEach store stocks approximately 30,000 to 40,000 items, and the company regularly assesses its departments for opportunities to expand its portfolio of proprietary and exclusive brands.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 7 MD&A: segments, comparable sales, transactions, product lines, margins and ROIC. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  2. ReportedEach store stocks approximately 30,000 to 40,000 items, and the company regularly assesses its departments for opportunities to expand its portfolio of proprietary and exclusive brands.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 7 MD&A: segments, comparable sales, transactions, product lines, margins and ROIC. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  3. ReportedThe chief financial officer said Home Depot is diversifying imports so that no single country outside of the U.S. represents more than 10% of its purchases.
    CNBC on Home Depot's fourth quarter of fiscal 2025: shingle shipments down 28%, repair rather than replace, tariffs, and no single foreign country above 10% of purchases. — Q4 fiscal 2025 · publ. 24 February 2026 · source ↗
  4. ReportedThat limited the damage from the IEEPA tariffs and left the company with about $730 million of refunds once the Supreme Court invalidated them.
    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 ↗
  5. ReportedMerchandise inventories were $26,847 million at 2 August 2026, and inventory turnover slowed to 4.4 times in fiscal 2025.
    The Home Depot second-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - sales, comparable sales, transactions, ticket, earnings, reaffirmed guidance and the balance sheet. — Q2 fiscal 2026 · publ. 18 August 2026 · source ↗
  6. ReportedMerchandise inventories were $26,847 million at 2 August 2026, and inventory turnover slowed to 4.4 times in fiscal 2025.
    The Home Depot Form 10-K for fiscal 2025 (the 52 weeks ended 1 February 2026) - Item 1A risk factors and Item 7A market risk: housing, interest rates, commodities and shrink. — Fiscal 2025 · publ. 18 March 2026 · source ↗
  7. ReportedThe buying advantage is real but not unique; any retailer of comparable size can negotiate similar terms, and the 10-K itself says the market is highly competitive, highly fragmented, and evolving.
    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. ReportedThe reorganisation of July 2026 put private brands under the merchandising chief, a sign that proprietary products are meant to carry more of the margin.
    The Home Depot Form 8-K, item 5.02 - the 30 July 2026 reorganisation and the Office of Pro Acceleration across Home Depot Pro, HD Supply, SRS Distribution and Construction Resources. — August 2026 · publ. 21 August 2026 · source ↗
Sources
Generated September 26, 2026