Home Depot 2010
By George Anderson
Home Depot is looking to slow things down a little. The “things” being the rate at which the company opens new stores.
Since Bob Nardelli took over the reigns at the DIY retailer back in December of 2000, the company has opened nearly 950 stores. Over the next five years, the company announced it was looking to open between 400 and 500 new locations.
Does the slowdown indicate trouble at Home Depot?
Far from it, says the company. Between now and 2010, Home Depot is looking to grow sales by an annually compounded rate of between nine and 12 percent while increasing operating margins by 50 to 100 basis points. If all goes according to the company’s five-year plan, compounded earnings per share will grow up to 14 percent.
“In 2000, we established our strategic platform from which to grow The Home Depot, and we’ve been successful in growing the business by 76 percent to over $81 billion since then,” said Mr. Nardelli in a released statement. “We expect to achieve our 2010 goals by staying on strategy to enhance our core with innovative merchandise and new categories; to extend the business through new stores, new formats, services and channels; and to expand the market into new areas and geographies.”
Although do-it-yourselfers have been a large part of its success, Home Depot says its Services division continues to grow as more consumers are opting to have someone else do the work instead.
According a company release, “The increasing do-it-for-me trend continues to drive double-digit growth in The Home Depot’s services business. By 2010, the company expects that 5-6 percent of its sales will come from services, a $110 billion market opportunity. Today, the company offers 25 national service programs through its At-Home Services division, including flooring, fencing, roofing, cabinetry and a host of other interior and exterior services.”
Home Depot is also looking to boost the business it does in the $410 billion professional market. By 2010, Mr. Nardelli and company are looking for Home Depot Supply to account for 18 or 19 percent of company sales. If it attains its goals, Home Depot Supply will become the largest diversified wholesale distribution business in America.
“We are poised for dramatic growth over the next five years across our business,” said Mr. Nardelli. “Our planned acquisition of Hughes Supply is a great example of how we are rapidly replicating in the professional market the same type of transformation that we brought to the home improvement retail market.”
While still a small part of its overall business, Home Depot is looking for its consumer direct businesses, including homedepot.com and catalogs such as 10 Crescent Lane and Paces Trading Company, to generate additional income. Home Depot believes its consumer direct business could achieve a billion dollars in sales by 2010.
Moderator’s Comment: What is your reaction to Home Depot’s five-year plan? What current areas of strength and/or weakness will it need to address to
achieve its goals? –
George Anderson – Moderator
- The Home Depot Unveils 2010 Growth Targets – The Home Depot/PRNewswire-FirstCall
via COMTEX News Network