The Home Depot, Inc. (ticker: HD, exchange: New York Stock Exchange (.N))
News Release -
The Home Depot Presents 2006 Initiatives and Long-Term Growth Vision to Investor Community
Jan 19, 2006 /PRNewswire-FirstCall via COMTEX News Network/ -- The Home Depot(R), the world's largest home improvement retailer, today announced a range of new initiatives for 2006 at its annual meeting with the investment community. Chairman, President & CEO Bob Nardelli and members of the company's leadership team described in detail their 2005 accomplishments, the company's plans for the coming fiscal year and the company's growth vision for 2010.
"Over the next five years, The Home Depot expects to maintain and grow its leadership position in home improvement retail worldwide," said Nardelli. "At the same time, we expect to become the nation's largest diversified wholesale distributor, become number one in services and will dramatically increase our direct-to-consumer channels. Our 2006 initiatives demonstrate that we are well on our way to accomplishing our 2010 goals."
"We will continue to drive productivity throughout our business in 2006," said Carol Tome, executive vice president and CFO. "By generating more than $8 billion annually in operating cash flow, we will continue to invest in the business and return cash to our shareholders."
The company's 2010 targets include: annual sales growth of 9-12 percent, earnings per share growth of 10-14 percent, 400-500 new store openings and an aggressive growth trajectory for Home Depot Supply. A full list of 2010 financial targets is available at the Investor Relations section on www.homedepot.com.
Enhancing the Core
Tom Taylor, executive vice president, Merchandising and Marketing, announced that the company will introduce distinctive and innovative new products in 2006, supported by continued investment in store modernization and merchandising resets reflecting emerging consumer trends.
"Our number one priority is to create a unique, one-of-a-kind shopping experience for customers," said Taylor. "Store modernization, product innovation and a compelling value proposition will differentiate our stores in the marketplace."
New initiatives in 2006 include:
- The launch of the broadest, most commanding tractor selection under one
- Continued proprietary and exclusive brand leadership
- New product resets, including a new Countertop Solutions Center and new
tool and millwork corrals
- Expansion of the home organization and storage category
- Increased lighting assortment in stores
- Four convenience store openings in the first half of 2006, with the
possibility of 300 by 2010
Carl Liebert, executive vice president, Home Depot Stores, described how the company is leveraging technology to increase efficiency and create a fun, productive shopping environment for customers. New operational initiatives will free associates to spend more time serving customers. By 2010, the company expects that 70 percent of operational hours will be dedicated to the selling floor, an industry-leading average.
New technology is driving productivity and customer service initiatives. The company has redeployed approximately 100 hours onto the selling floor as a result of technology enhancements, including self-checkout and new POS systems.
"These initiatives not only drive operational efficiencies, but they also allow our associates to spend more time on the sales floor helping customers," said Liebert. "Our associates know and love their products and their customers better than anyone. We help people get what they need and get out fast."
Extending the Business
Frank Blake, executive vice president, Business Development and Corporate Operations, described the steps the company is taking to continue the already strong growth of its services and installations business, including the launch of a new customer Web site, www.myhomedepotproject.com. The company has also introduced a field organization of more than 300 associates that fully aligns its resources around enhancing the customer experience. This new field services organization was specifically designed to proactively engage with customers during and after the installation process to drive sustainable improvements in customer service, installer performance and speed of issue resolution.
"With more than 11,000 installations per day, The Home Depot is emerging as a major force in the services arena, and we expect to continue our double- digit growth through 2010, becoming number one in that market," Blake said. "Our goal is to provide customers with one-stop shopping, affordable pricing and guaranteed results."
Expanding into New Markets
Blake also explained how The Home Depot will continue to expand its market opportunities by growing internationally, as well as through new store formats.
"We will continue our market penetration in both Mexico and Canada, two markets which represent a $36 billion combined opportunity," said Blake. "As of the end of fiscal 2005, 9 percent of our store base will be located outside of the United States."
In addition, the company is testing new store formats to allow it to reach traditionally hard-to-serve markets for retailers. The new formats include a 60,000 square foot store as well as infill stores for urban areas. If both prove successful, the combination could provide the opportunity for up to 300- 500 additional store openings by 2010, comprising a $4-8 billion opportunity.
Joe DeAngelo, executive vice president, Home Depot Supply, gave a detailed view of the company's plans to expand in the professional market, an opportunity estimated at more than $410 billion.
"The strategy of Home Depot Supply is to repeat in the professional space the same type of market transformation The Home Depot pioneered and executed in the do-it-yourself retail space," said DeAngelo. "We have established platforms that cover the continuum, from heavy infrastructure through construction to lifetime maintenance."
The company's planned acquisition of Hughes Supply significantly adds to its ability to accelerate its strategy and achieve sales of $23-27 billion by 2010. The combination of the two companies adds to Home Depot Supply's strong positions in waterworks, non-industrial facility maintenance, professional supply and plumbing, while also adding new growth platforms like utilities, industrial pipes, valves and fittings, and electrical distribution.
For complete copies of each presentation, visit the Investor Relations section at www.homedepot.com.
Founded in 1978, The Home Depot(R) is the world's largest home improvement specialty retailer and the second largest retailer in the United States, with fiscal 2004 sales of $73.1 billion. The company employs approximately 345,000 associates and has 2,028 stores in all 50 states, the District of Columbia, Puerto Rico, 10 Canadian provinces and Mexico. The company has announced plans for retail expansion into China. The Home Depot has been recognized by FORTUNE magazine as the No. 1 Most Admired Specialty Retailer for 2005. Its stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index. HDE
Certain statements contained herein, including any statements related to Net Sales growth, increases in comparable store sales, impact of cannibalization, commodity price inflation and deflation, implementation of store initiatives, Net Earnings performance, including Depreciation expense, earnings per share, stock-based compensation expense, store openings and closures, capital allocation and expenditures, the effect of adopting certain accounting standards, future financial reporting, financing, margins, return on invested capital, operations after the closing of the merger with Hughes Supply, Inc. ("Hughes"), the timing and certainty of closing of the merger with Hughes, the accounting and financial impact of the merger with Hughes, strategic direction and the demand for our products and services, constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on currently available information and are based on our current expectations and projections about future events. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our historical experience and expectations. These risks and uncertainties include, but are not limited to: economic conditions in North America; changes in our cost structure; the availability of sourcing channels consistent with our strategy of differentiation; conditions affecting new store development, such as our ability to find suitable store locations and obtain all required permits; conditions affecting customer transactions and average ticket, including, but not limited to, weather conditions; the success of our technology initiatives in improving and streamlining operations and customers' in-store experience; our ability to identify and respond to evolving trends in demographics and consumer preferences; our ability to design stores that appeal to customers; the costs of redesigning stores in light of evolving customer expectations; the success of new store formats; the relative success of our expansion strategy, including our ability to identify acquisition opportunities, particularly in markets outside the United States, and our ability to complete acquisitions on financially attractive terms and integrate them with our other businesses (including the merger with Hughes); our ability to create appropriate distribution channels for key sales platforms; our ability to successfully execute our on-line strategy; our ability to attract, train and retain highly qualified associates; the impact of new accounting standards; the impact of competition; and decisions by management related to possible asset impairments, regulation and litigation matters. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. Additional information regarding these and other risks and uncertainties is contained in our periodic filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended January 30, 2005.
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