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Analysis of Home Depot

Analysis of Home Depot

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Analysis of Home Depot

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  1. Analysis of Home Depot Topics Covered Company History Current Management Team Current Market Financial Position Present Corporate Strategy Future Prospects

  2. The History of Home Depot

  3. 1970s 1978 The Home Depot concept develops and the corporation is founded by Bernie Marcus and Arthur Blank. The original partnership is called "MB Associates" and was officially incorporated June 29, 1978.

  4. 1980s The Home Depot breaks the 30 store mark. The 100th The Home Depot store opens. 1981 1986 1984 1989 The Home Depot stock goes public on NASDAQ on September 22, and raises more than $4 million. The Home Depot breaks the $1 Billion mark in sales.

  5. 1990s The Home Depot announces its 1994 and 1996 Olympic Games and U.S. Olympic Team sponsorship. The Home Depot finishes the year with more than 200,000 associates. 1999 1990 1996 1992 1998 The Home Depot surpasses Lowe's to become the top seller in the home improvement industry. The Home Depot is added to the Dow Jones Industrial Average. The Home Depot hires its 100,000th associate and opens its 500th store.

  6. 2000s Robert Nardelli Resigns as Chairman and CEO of The Home Depot and Is Succeeded by Frank Blake The Home Depot hires Robert L. Nardelli as president, CEO and board of directors member. 2002 2006 The Home Depot opens its 1,500 store. 2000 The company launches the online store www.homedepot.com. 2007 The Home Depot is named the 2006 Energy Star® Partner of the Year by the Environmental Protection Agency.

  7. The Home Depot's Current Management Team

  8. Frank Blake Frank BlakeChairman and CEO Frank Blake was appointed chairman and CEO of The Home Depot in January 2007. Prior to this position, he served as vice chairman of the board of directors and executive vice president of the company. He joined The Home Depot in 2002 as executive vice president, Business Development and Corporate Operations, and was responsible for real estate, store construction, credit services, strategic business development, growth initiatives, call centers and the Home Services business.

  9. Tim Crow Tim Crow Executive Vice President - Human Resources Tim Crow is executive vice president, Human Resources, at The Home Depot. He is the Company’s top human resources executive and oversees all aspects of HR management for its more than 355,000 associates.

  10. Joe DeAngelo Joe DeAngeloChief Operating Officer and Executive Vice President Joe DeAngelo has served as the chief operating officer and executive vice president of The Home Depot since January 2007. He has oversight of the strategic responsibilities of the company’s retail platform, including store operations, asset protection and customer service.

  11. Robert DeRodes Robert DeRodesExecutive Vice President & Chief Information Officer Robert P. DeRodes is executive vice president and chief information officer at The Home Depot. He joined the Company in 2002 and is responsible for all aspects of the Company’s Information Technology and Communication Systems. 

  12. James C. Snyder Jr. James C. Snyder Jr. Vice President – Secretary and Acting General Counsel James Snyder joined The Home Depot in August 2001 and is currently vice president of Legal and Risk Management, secretary and acting general counsel. Jim is responsible for all legal functions worldwide

  13. Carol B. Tomé Carol B. ToméChief Financial Officer and Executive Vice President Carol B. Tomé has served as chief financial officer since May 2001 and was named executive vice president of Corporate Services at The Home Depot in January 2007. Her corporate finance duties include financial reporting, financial planning and analysis, financial operations, divisional finance, internal audit, investor relations, treasury and tax.

  14. Senior Leadership Team Roger Adams Roger Adams is senior vice president & chief marketing officer and is responsible for the Company’s marketing, advertising, brand management and event marketing. • Diane Dayhoff • Diane Dayhoff, Senior Vice President of Investor Relations is The Home Depot's primary point of contact with the investment community and is responsible for the Company's relationships with institutional and retail investors. • Marvin R. Ellison • Marvin R. Ellison is president of the Northern Division has over 110,000 employees in his division and is responsible for over one-third of the total sales volume of The Home Depot U.S. stores.

  15. Senior Leadership Team cont’d Craig Menear Craig Menear, senior vice president, Merchandising, responsibilities include global sourcing, vendor management, merchandising services, and all merchandising departments and strategy for The Home Depot. • Bruce Merino • Bruce Merino is the president, Expo Design Center and Western Division of The Home Depot. He is involved with the everyday business strategies of Operations, Human Resources, Safety, Asset Protection, New Store Growth and Merchandising for the division. • Paul Raines • As president of The Home Depot Southern Division, Paul is responsible for 759 stores in 18 southern states

  16. Senior Leadership Team cont’d Ricardo Saldivar Ricardo has served as president of The Home Depot Mexico Division since 2001.  Ricardo has led the accelerated expansion of the division resulting in a leading position in the Mexican home improvement market. • Brad Shaw • Brad Shaw joined The Home Depot as senior vice president of Corporate Communications & External Affairs. He is responsible for global corporate communications, as well as associate communications. • Annette Verschuren Annette Verschuren is division president of The Home Depot’s Canadian operations, and also oversees The Home Depot’s operations in China.

  17. Current Market

  18. Current Market Home Depot Operates as a home improvement retailer primarily in the US, Canada and Mexico. Items they sell include: Building materials Home improvement supplies Lawn and Garden products The Home Depot and EXPO design center store Carpeting Flooring Cabinets, Countertops Water Heaters

  19. Market Share Nations No.2 retailer behind Wal-Mart Stores Number 1 in home building/improvement market They expect to have 4 to 9 percent loss current fiscal year Lowe’s, which is currently number 2 in home building/improvement market after home depot, is better in shape than home depot

  20. Current Plans for Keeping/Improving Current Market Share SPEC Construction Loan program 5 percent rebate on all materials Up to $2 million with terms up to 18 months

  21. Announced Plans for Keeping/Improving Current Market Share Increase capital expenditures %29 to $4.5 billion Open 115 new stores during the fiscal year $865 million investment on programs to keep stores clean and uncluttered $275 million on logistics improvements to improve product availability

  22. Direct Competitor Comparison

  23. Top 10 Home Improvements Retailers

  24. Financial Position of Home Depot

  25. According to Frank Blake 2007 will be a difficult year for Home Depot Stock not performing well Short term not looking good Long term is a terrific market HD will invest $2.2 billion this fiscal year in key priorities. The investment includes $1.6 m in capital spending and $600 million in expenses.

  26. Growth Home Depots revenue has grown at an average annual rate of 11% over the past five years. Because of new store expansion and wholesale acquisitions Some store sale fell by 3% in 2006 First decline since 2002

  27. Profitability Home Depot consistently earns returns on investment capital well in excess of its cost of capital Operating margin fell in 2006 for the first time in five years Because of same store sales decline and expansion of the lower-margin HD supply business

  28. Financial Health Shares of HD have fallen about three percentage points since January For the year ahead HD expects share net to fall between 3% and 8% Long term outlook is positive.

  29. Home Depot's Last Five Year Stock Analysis

  30. Lowe's vs Home DepotStock Analysis

  31. Dividend Payments For the Last Five Years

  32. Home Depot – Present Corporate Strategy Home Depot’s corporate strategy continues to present a diversity of events that is facilitating plans to maintain various business initiatives for its continued growth. As they strive to continue as the leader in the home improvement retailer industry, Home Depot is constantly looking for ways to stay ahead of the home improvement game.

  33. Home Depot – Present Corporate Strategy Their most recent initiative includes construction of superstores and mini-stores. A super-sized store / Union, NJ / 225,000 sq. ft. A combination of Expo Design and Home Depot stores Expanded merchandise line - specialty store items like home electronics Expanded sections of current departments (i.e. such as Appliance showrooms). Mini-stores in small neighborhoods / 35,000 to 50,000 sq. ft. Item specific to the purchasing area. Revive the old “Ma & Pop” hardware stores

  34. Home Depot – Present Corporate Strategy Launch of its ECO Options program. 2,500 Easily identified environmentally safe products all-natural insect repellent, organic plant food, cellulose insulation, compact fluorescent light (CFL) bulbs

  35. Home Depot – Present Corporate Strategy Ongoing initiatives “Kid-tailing” program Workshops for children ages 4 – 12 years old Increases sales 30 percent Expo Design Stores Focuses on the home improvement customer Offers specialized services and upscale products. Store Improvements Tool Rentals, Improvement loans, Contractor Services

  36. Future Prospects

  37. Problems They are Facing Decline in home sales which slows down the constructions Product availability Customer satisfaction Competitors are catching up with them

  38. Solutions to their problems Opening 115 new stores $865 million investment in maintenance and merchandising reset programs to keep the stores clean and uncluttered $275 million logistics improvements to improve product availability SPEC Construction Loan Program Selling wholesale distribution arm to concentrate on reviving its ailing which have been losing ground to rival Lowe’s Opening mini super-stores to bring back neighborhood stores back to life

  39. The Solution Opening mini super-stores to bring back neighborhood stores back to life to tap into $25 to $35 billion untapped market potential in the home improvement retail market to improve customer relations to have customizable stores depending on the neighborhood

  40. Q&A We will be glad to answer your questions

  41. Thank You