Home Depot

II. Background Information

The Home Depot Inc. was founded in 1978 and is the world’s largest home improvement retailer and the second largest retailer in the United States. The sales for the fiscal year 2000 were $45.7 billion, compared to $38.4 billion in fiscal 1999. As of January 2001, the company was operating 1,134 retail stores in forty-seven states, six Canadian provinces, Puerto Rico, Chile and Argentina.

Home Depot stores sell a wide assortment of building materials, home improvement and garden products. Twenty-six EXPO Design Center stores sell products and services primarily for design and renovation projects. Additionally, the company operates four Villager’s Hardware test stores, which offer products for home enhancement and small projects. In mid-year, Home Depot also launched a Home Depot Floor Store, located in Plano, Texas.

Home Depot stores serve three primary customer groups: do-it-yourself (D-I-Y) customers, who are typically homeowners that purchase products and complete their own projects and installations; buy-it-yourself (B-I-Y) customers, who are typically homeowners that purchase materials themselves and hire third parties to complete the project and/or installation; and professional customers, who are professional repair re-modelers, general contractors and tradesmen.

The Company also offers products through two direct marketing subsidiaries: Maintenance Warehouse and National Blinds and Wallpaper. The Maintenance Warehouse subsidiary is one of the leading mail marketers of maintenance, repair and operations products serving primarily the multi-family housing and lodging facilities management market. The company’s National Blinds and Wallpaper subsidiary is a telephone mail order service for wallpaper and custom window treatments.

Home Depot stores average approximately 108,000 square feet of enclosed space, with an additional approximately 24,000 square feet in the outside garden area. The basic EXPO Design center is approximately 90,000 square feet. Newly acquired companies, Georgia Lighting Inc. and Apex Supply Company Inc., are each operated by Home Depot Inc. as a wholly owned subsidiary. Georgia Lighting, a leading specialty lighting designer, distributor and retailer, has six retail locations. Apex Supply Company is a wholesale supplier of plumbing, HVAC and other related professional products, with twenty-one locations in Georgia, Tennessee and South Carolina.

The co-founder of Home Depot Inc. retired as co-chairman on May 30, 2001. Arthur Blank, 58 years old, ran Home Depot since its inception in 1978 and was chief executive from May 1997 to December 2000. He will not seek re-election to the board. Co-founder Bernie Marcus, 71, the company’s other co-chairman, is expected to continue as chairman. Blank decided to retire sooner than he had planned, primarily because of what he called the successful transition of leadership to CEO Robert Nardelli, a former General Electric Co. executive and the first outsider at Home Depot’s helm. Nardelli, 52, replaced Blank as CEO on December 5, 2000.

When Blank was CEO, sales more than doubled to $45.7 billion last year from fiscal 1996, and the stock price almost quadrupled, helping to make Home Depot sixth on the Fortune magazine’s list of most Admired Companies in America. The magazine also ranked Home Depot as America’s Most Admired Specialty Retailer for eight consecutive years. Home Depot’s stock is traded on the New York Stock Exchange and is included in the Dow Jones Industrial Average and Standard & Poor’s 500 Index.

The executive officers direct the departmental, operational, merchandising, finance etc. functions, and they provide the support to all the members of staff to ensure that they follow the goals of the company and this will lead to profitability. The executive officers and directors are there to ensure that the company does not lose customers.

b. Finance

Its 2006 sales totaled US$90.8 billion (US$77.0 billion in retail sales). Despite the 10% increase in revenue, it dropped three spots to #17 on the 2007 FORTUNE magazine's FORTUNE 500 list (it was #13 in 2005 and #14 in 2006). The Home Depot also owns EXPO Design Center, a chain of higher-end home decorating and appliance stores. In 2006, the Home Depot acquired Hughes Supply which is to be assimilated into HD Supply serving contractors. In September 2005, Home Depot Direct launched its high-end online home-furnishings store, 10 Crescent Lane, shortly followed by the launch of Paces Trading Company, its high-end online lighting store. In mid 2006, the Home Depot acquired Home Decorators Collection which was placed as an additional brand under its Home Depot Direct Division.

On January 2, 2007, the Home Depot and Robert Nardelli mutually agreed on Nardelli's resignation as CEO after a six-year tenure. Nardelli resigned amid complaints over his heavy handed management and whether his pay package of $123.7 million, excluding stock option grants, over the past 5 years was excessive considering the stock's poor performance versus its competitor Lowe's. His golden parachute severance package of $210 million has also been criticized because when the stock went down his pay went up.[4] [5] His successor is Frank Blake, who previously served as the company's vice chairman of the board and executive vice president.

The Home Depot Pioneered the Concept of Warehouse Retailing in the Home Centre Industry. The Company’s Strategy Consists of:

1. Focusing on the Do-It-Yourself Segment of the Market;

2. Keeping Costs through Low Overhead, Purchase Discounts, and High Turnover;

3. Attracting Customers through Aggressive Advertising and Competitive Pricing;

4. Providing High Service to the Target Customer Group through Well-Trained Employees and Well-Stocked Stores;