The Home Depot, Inc

The Home Depot, Inc

 

The Home Depot, Inc., incorporated in 1978, is home improvement retailer. As of January 28, 2007, it operated 2,147 stores, most of which are The Home Depot stores. The Company operates in two segments, Retail and HD Supply. The Home Depot stores sell an assortment of building materials, home improvement and lawn and garden products and provide a number of services. The Home Depot stores average approximately 105,000 square feet of enclosed space, with approximately 23,000 additional square feet of outside garden area. As of January 28, 2007, the Company had 2,100 The Home Depot stores located throughout the United States (including the territories of Puerto Rico and the Virgin Islands), Canada, China and Mexico. In addition, at January 28, 2007, the Company operated 34 EXPO Design Center stores, 11 The Home Depot Landscape Supply stores and two The Home Depot Floor stores. In addition to its retail stores, its business includes HD Supply, which distributes products and sells installation services primarily to business-to-business customers, including home builders, professional contractors, municipalities and maintenance professionals.

 

During the fiscal year ended January 28, 2007 (fiscal 2006), the Company acquired The Home Way, a Chinese home improvement retailer, including 12 stores in six cities. During fiscal 2006, the Company under its HD Supply segment acquired Burrus Contractors Supply, Heartland Waterworks Supply, Cox Lumber Company, Hughes Supply, CTF Supply, Rice Planter Carpets, Edson Electric Supply, Sioux Pipe, Forest Products Supply, Texas Contractors Supply, Grafton Utility Supply and Western Fasteners. In addition, during fiscal 2006, the Company acquired Home Decorators Collection and Jubilee Home Solutions under its Retail segment.

 

Retail Segment

 

The Home Depot stores serve three primary customer groups: do-it-yourself (D-I-Y) customers, do-it-for-me (D-I-F-M) customers and professional customers. D-I-Y customers, which are home owners who purchase products and complete their own projects and installations. The Home Depot stores offer how-to clinics taught by associates and merchandise vendors. D-I-F-M customers, which are home owners who purchase materials themselves and hire third parties to complete the project and/or installation. The Company arranges for the installation of a variety of The Home Depot products through qualified independent contractors. Professional customers, which are professional remodelers, general contractors, repairmen and tradesmen. In many stores, the Company offers a variety of programs to these customers, including additional delivery and will-call services, dedicated staff, extensive merchandise selections and expanded credit programs.

 

An average The Home Depot store stocks 35,000 to 45,000 products during the year, including both national brand name and other items. The Net Sales of each major product group (and related services), for fiscal 2006, was building materials, lumber and millwork 23.6 %, plumbing, electrical and kitchen 30.8%, hardware and seasonal 27%, and paint flooring and wall covering 18.6%. During fiscal 2006, the Company offered a number of brands across a range of departments including, but not limited to, Behr Premium Plus paint, Charmglow gas grills, Hampton Bay lighting, Mills Pride cabinets, Vigoro lawn care products, Husky hand tools, RIDGID and Ryobi power tools, Pegasus faucets, Traffic Master carpet, Glacier Bay bath fixtures and Veranda decking products. In fiscal 2006, the Company introduced a lineup of branded lawn tractors and mowers available nationwide, including Cub Cadet, Toro, John Deere and Honda; launched an outdoor living assortment, including Hampton Bay patio and Charmglow grills; launched a line-up of lithium-ion power tools from Milwaukee, RIDGID and Makita, and launched the LG SteamWasher and the Maytag Epic washer and dryer.

 

The Home Depot and EXPO Design Center stores offer a variety of installation services. These services target D-I-F-M customers who select and purchase products and installation of those products from the Company. These installation programs include products, such as carpeting, flooring, cabinets, countertops and water heaters. In addition, the Company provides professional installation of a number of products sold through its in-home sales programs, such as generators and furnace and central air systems.

 

At January 28, 2006, the Company operated 1,872 The Home Depot stores in the United States, including the territories of Puerto Rico and the Virgin Islands. During fiscal 2006, it opened 86 new The Home Depot stores, including eight relocations, in the United States. At January 28, 2006, the Company operated 155 The Home Depot stores in 10 Canadian provinces. Of these stores, 20 were opened during fiscal 2006, including two relocations. At January 28, 2006, it operated 61 The Home Depot stores in Mexico. Of these stores, seven were opened during fiscal 2006.

 

The Company offers credit purchase programs through third-party credit providers to professional, D-I-Y and D-I-F-M customers. In fiscal 2006, approximately 4.5 million new The Home Depot credit accounts were opened, bringing the total number of The Home Depot account holders to approximately 17 million. Credit card sales accounted for approximately 28% of store sales in fiscal 2006. It also offers an unsecured Home Improvement Loan program through third-party credit providers that gives its customers the opportunity to finance the purchase of products and services in its stores.

 

HD Supply Segment

 

The Company distributes products and offers services primarily to builders, contractors, government entities, industrial businesses and maintenance professionals. The Company also offers integrated supply, design assistance, kitting, assembly and fabrication services.

 

The Company's products and services are focused around four categories that are related to different phases of a building project: infrastructure, construction, maintenance, and repair and remodel. Infrastructure category covers the products and services to construct and support the public works systems for residential and commercial projects. Construction category covers the interior and exterior structural building components for residential and commercial projects. Maintenance category covers products and services for the routine maintenance, repair and operations needs of multifamily housing, hospitality, healthcare, government and industrial facilities. Repair and remodel category covers home improvement products and building materials, serving the consumer, professional handyman and light remodeler markets.

Over 90% of the Company's sales volume is facilitated through the extension of credit to its customers. Its businesses offer credit to customers, either through unsecured credit that is based upon the creditworthiness of the customer, or secured credit for materials sold for a specific job where the security lies in lien rights associated with the material going into the job.