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2008 Annual Meeting
  of Shareholders
     May 22, 2008




    Frank Blake
    Chairman & CEO
Cautionary Statement Pursuant to the Private
Securities Litigation Reform Act of 1995
Certain statements contained herein,...
2007 Financial Performance
Continuing Operations


                                                              EPS
     ...
Ja
     n-
        0




                $20
                      $25
                            $30
                   ...
Private Residential Investment
                           Private Residential Investment as a % of GDP
    8%



    7%


...
2007 Accomplishments
Invested in Five Priorities

Divested HD Supply in August 2007

Returned excess cash to our sharehold...
Five Priorities
Associate Engagement
Objective
Deliver excellent customer service
Key ’07 Actions
• Focused on Taking Care of our Associat...
Shopping Environment
Objective
Provide clean and enjoyable shopping environment to our customers

Key ‘07 Actions
• Comple...
Product Availability
Objective
Improve in-stock rates and reduce lead times and costs
Key ’07 Actions
• RDC (Rapid Deploym...
Product Excitement
Objective
Focus on providing great value and product innovation
Key Actions
• Launched Merchandising Tr...
Own the Pro
Objective
Be the number one destination for the Pro customer

Key Actions
• Focused on job lot quantities in k...
International




                                                                  CHINA
                                ...
2008 Outlook

2008 will be another difficult year
 – Sales guidance down 4%-5%
 – Earnings per share guidance down 19%-24%...
Inventory of Homes for Sale
                                                                                              ...
Long-term Fundamentals
                      2002           2008F          2012F

  U.S. Households                       ...
2008 Focus
Associate Engagement
 – Re-deploy $180 million from non-selling expense to Aprons on the
   Floor
Store Environ...
The Home Depot’s Values
1st Lt. Michael
Sgt. 1st Class    Cpl. Victor     Capt. Sean E.
                                                       W. ...
Sgt. Shakere     Sgt. Clarence Sgt. Regina C.        Sgt.
 Taffari Guy       “Lavon”          Reali       Christopher B.
 ...
The Home Depot’s Values
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home depot 2008 Annual Meeting of Stockholders

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Transcript of "home depot 2008 Annual Meeting of Stockholders"

  1. 1. 2008 Annual Meeting of Shareholders May 22, 2008 Frank Blake Chairman & CEO
  2. 2. Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995 Certain statements contained herein, including any statements related to the state of the home improvement market, the state of the housing market, continuation of reinvestment plans and other factors affecting earnings and sales, earnings and earnings per share guidance for Fiscal 2008 constitute quot;forward-looking statementsquot; as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on currently available information and on our current expectations and projections about future events. Risks and uncertainties include, but are not limited to: economic conditions in North America; fluctuating commodity prices; our ability to successfully operate in countries outside the United States; conditions affecting customer transactions and average ticket, including, but not limited to, weather conditions; improving and streamlining operations and customers' in-store experience; and the impact of competition. 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 statements to reflect subsequent events or circumstances except as may be required by law. 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 February 3, 2008.
  3. 3. 2007 Financial Performance Continuing Operations EPS Net Earnings Sales $ Billions $ Billions $79.0 $77.3 $2.55 $2.27 $4.2 $5.3 -2% -11% -20% FY 2007 FY 2006 FY 2007 FY 2006 FY 2006 FY 2007
  4. 4. Ja n- 0 $20 $25 $30 $35 $40 $45 7 M ar -0 7 M ay -0 7 HD Stock Price Ju l-0 7 Se p- 07 N ov - 07 Ja n- 0 8 M ar -0 8 M ay -0 8
  5. 5. Private Residential Investment Private Residential Investment as a % of GDP 8% 7% 6% 60 yr average: 4.8% 5% 4% Q108: 3.8% 3% 2% 1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 Residential Investment Declined $270+ Billion in Past 2 Years Source: Bureau of Economic Analysis (BEA)
  6. 6. 2007 Accomplishments Invested in Five Priorities Divested HD Supply in August 2007 Returned excess cash to our shareholders ― Bought back $10.7 billion through a tender offer Achieved almost half of our $22.5 billion recap plan ― Dividend payout ratio was 38% in 2007 Investing in the Core
  7. 7. Five Priorities
  8. 8. Associate Engagement Objective Deliver excellent customer service Key ’07 Actions • Focused on Taking Care of our Associates • De-leveraged payroll • Invested in know-how - Master Trade Specialists • Launched Aprons on the Floor campaign • Improved training Availability of Associates Mean (1 to 10 Scale) 7.61 7.33 Voluntary Hourly Attrition down 14% FY 2006 FY 2007
  9. 9. Shopping Environment Objective Provide clean and enjoyable shopping environment to our customers Key ‘07 Actions • Completed an aggressive list of maintenance projects, including new lighting and basic clean-up in over half of our stores • Implemented programmatic maintenance schedule • Established store standards nationwide Clean & Uncluttered Aisles Mean (1 to 10 Scale) 7.93 7.69 FY 2006 FY 2007
  10. 10. Product Availability Objective Improve in-stock rates and reduce lead times and costs Key ’07 Actions • RDC (Rapid Deployment Center) pilot successful • 3 RDCs live, 5 more planned for 2008 • Launched a new warehouse management system • Implemented enhancements to our replenishment systems Products in Stock Mean (1 to 10 Scale) 8.23 8.09 FY 2007 FY 2006
  11. 11. Product Excitement Objective Focus on providing great value and product innovation Key Actions • Launched Merchandising Transformation • Accelerated product line reviews • Expanded Eco Options Likely to Recommend Mean (1 to 10 Scale) 8.53 8.48 FY 2006 FY 2007
  12. 12. Own the Pro Objective Be the number one destination for the Pro customer Key Actions • Focused on job lot quantities in key Pro categories • Expanded Pro Bid Room, including direct ship programs • Tapped local vendors to provide local product Pro, Likely to Recommend Mean (1 to 10 Scale) 8.51 8.43 FY 2006 FY 2007
  13. 13. International CHINA MEXICO CANADA #1 Home Improvement #1 Home Improvement 12 Stores in 6 cities Retailer in Canada Retailer in Mexico 3,000 Associates 165 Stores 66 Stores Positive ’07 Comps 28,000 Associates 7,000 Associates Market Opportunity: Nearly $6 Billion in Sales Nearly $1.5 Billion in Sales $50 Billion Positive ’07 Comps Double Digit Positive ’07 Market Opportunity: Comps $32 Billion Market Opportunity: $17 Billion
  14. 14. 2008 Outlook 2008 will be another difficult year – Sales guidance down 4%-5% – Earnings per share guidance down 19%-24% Will continue to invest in our key priorities Will continue to allocate capital in the most efficient manner
  15. 15. Inventory of Homes for Sale New Months Supply of Homes for Sale 11 Homes 10 Existing Homes 9 8 7 6 5 4 3 Q199 Q399 Q100 Q300 Q101 Q301 Q102 Q302 Q103 Q303 Q104 Q304 Q105 Q305 Q106 Q306 Q107 Q307 Q108 Source: NAR, Moody’s Economy.com, Bureau of Census Housing inventory continues to grow
  16. 16. Long-term Fundamentals 2002 2008F 2012F U.S. Households 119.2 108.0 113.1 4.8% 5.4% (Millions) U.S. Owner Households 5.1% 3.8% 80.0 77.1 73.4 (Millions) Strong Household Growth Source: Moody’s
  17. 17. 2008 Focus Associate Engagement – Re-deploy $180 million from non-selling expense to Aprons on the Floor Store Environment – Maintain spend to provide enjoyable shopping environment Product Excitement – Complete SCORE implementation in Canada and key elements of our US merchandising transformation Product Availability – Build and operate Rapid Deployment Centers sufficient to supply 40% of US stores, with 30% of COGS flowing through those stores Own the Pro – Invest to Serve Pro Needs
  18. 18. The Home Depot’s Values
  19. 19. 1st Lt. Michael Sgt. 1st Class Cpl. Victor Capt. Sean E. W. Vega Travis S. Manuel Lyerly Bachman Langarica Pro Account D28 Dept Supervisor, 6653 Sales Associate, Receiving D28 Sales 662 Supervisor, 2219 Associate, 443
  20. 20. Sgt. Shakere Sgt. Clarence Sgt. Regina C. Sgt. Taffari Guy “Lavon” Reali Christopher B. Floyd, Jr. Williams Lot Associate, Special Services 1084 Associate, 644 D21 Sales Electrical Dept Associate, 4106 Associate, HD Supply
  21. 21. The Home Depot’s Values
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