The Home Depot Presents 2007 Key Priorities and Financial Outlook
The Home Depot Presents 2007 Key Priorities and Financial Outlook
ATLANTA, Feb 28, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- The Home Depot(R), the world's largest home
improvement retailer, today reported its financial outlook and key priorities for driving retail growth in 2007 and beyond at its
Annual Investor and Analyst Conference.
Chairman and CEO Frank Blake stated that the Company does not expect residential construction and the housing market to
improve until late in the second half of 2007 or early 2008. The Company's outlook for 2007 reflects this broader economic
dynamic, as well as the Company's customer priorities and strategic investments.
"We are first and foremost a retail business, and our 2007 plans reflect that commitment," said Frank Blake, chairman & CEO.
"While the current home improvement market remains challenging, the long-term fundamentals of our company are strong, and
we believe we can improve our performance and grow at, or faster than, the market beyond 2007. That's why we are making
significant investments in our associates and our stores."
The Company's five key priorities and the anticipated investment that will be applied to each are outlined below. Total
investment in these priorities in fiscal 2007 is projected to be approximately $2.2 billion, comprised of $1.6 billion in capital
spending and $600 million in expense.
The Home Depot's goal is to provide a unique warehouse shopping experience characterized by available, helpful and
knowledgeable associates. Customers know that the orange apron means something special, and the Company intends to
focus on know-how and service as a competitive edge. During 2007, the Company plans investments in associate engagement
to total $360 million, including recruitment of master trade specialists, a simplified staffing model, technology-enabled customer
assistance, and redesigned compensation and reward plans.
Product innovation, more focused promotions and everyday low pricing will drive The Home Depot's merchandising initiatives in
2007. The Company expects to invest $260 million in 2007 on merchandising resets, product innovation, pricing strategies and
Keeping the right quantities of merchandise on the store shelves is a key priority for 2007 and beyond. The Home Depot will
focus on improving its in- stock position by investing in its logistics capabilities, including demand forecasting and distribution.
The Company plans to invest $275 million in these efforts.
The Home Depot consistently hears through surveys that customers want to shop in safe, clean and uncluttered stores. In
2007, the Company plans investments to total $865 million to support the shopping experience, including sustained
maintenance and merchandising reset programs.
Own the Pro
The Home Depot's goal is to be the number one destination for pro customers, primarily repair and remodel professionals.
During 2007, the Company expects to spend $415 million on programs such as loyalty programs, a pro bid room to handle
large customer orders with volume discounts, direct ship programs, credit programs and other specialty sales initiatives.
"Our 2007 sales and earnings per share targets reflect the reality of the home improvement market and our commitment to
invest for the long-term health of our business," said Carol Tome, CFO & executive vice president -- Corporate Services.
2007 Financial Targets
* Total sales growth of 0 percent to 2 percent, with HD Supply growing
from 13 percent of total sales to approximately 15 percent of total
sales by the end of the year
* Retail comps in the negative mid-single-digit area
* Approximately 115 new store openings; 4.6 percent square footage growth
* Diluted earnings per share decline of 4 percent to 9 percent
* Capital expenditures to increase 29 percent to $4.5 billion, focused on
new stores and retail reinvestment
2007 financial targets reflect 52 weeks and do not include the impact of the 53rd week. The Company will have 53 weeks of
operating results in its fiscal 2007 financial results. Including the impact of the 53rd week, consolidated sales are expected to
increase by 1 percent to 2 percent, and diluted earnings per share are expected to decline by 3 percent to 8 percent.
Beyond 2007, the Company believes that investments made in its retail business will allow sales in the retail business to return
to above market growth rates. Additionally, the Company expects that these investments will drive productivity, which will cause
earnings to grow faster than sales. Coupled with its commitment to share repurchases, the Company anticipates diluted
earnings per share growth of more than 10 percent annually. The overall retail outlook beyond 2007 is as follows:
* Annual sales growth of approximately 5 percent
* Annual earnings growth greater than 5 percent
* Annual diluted earnings per share growth of 10 percent or more
Capital Allocation Outlook
The Company outlined its intent to use available cash after investing to deliver a predictable dividend payout targeting
approximately 30 percent, to generate value-creating share repurchases and to maintain a high return on invested capital.
"Speed, flexibility and entrepreneurial spirit are hallmarks of The Home Depot and will guide our decision making in 2007," said
Blake. "We have aligned our leaders and resources around our five key priorities, and we believe this strategy will deliver the
most value for our customers, associates and shareholders."
The Home Depot(R) is the world's largest home improvement specialty retailer, with more than 2,163 retail stores in all 50
states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, 10 Canadian provinces, Mexico and China. Through its HD
Supply(SM) businesses, The Home Depot is also one of the largest diversified wholesale distributors in the United States, with
nearly 1,000 locations in the United States and Canada offering products and services for building, improving and maintaining
homes, businesses and municipal infrastructures. In fiscal 2006, The Home Depot had sales of $90.8 billion and earnings of
$5.8 billion. The Company employs approximately 355,000 associates and has been recognized by FORTUNE magazine as the
No. 1 Most Admired Specialty Retailer and the No. 13 Most Admired Corporation in America for 2006. The Home Depot's 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. HDG
Certain statements contained herein, including any statements related to Net Sales growth, comparable store sales, state of
the housing market, implementation of store initiatives, Net Earnings performance, earnings per share, store openings and
closures, capital allocation and expenditures, margins, return on invested capital, declaration of dividends and share
repurchases, 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. Risks and uncertainties include but are not
limited to: economic conditions in North America; our ability to develop relationships with a sufficient number of qualified
suppliers; changes in our cost structure, including fluctuating commodity prices; the availability of sourcing channels consistent
with our strategy of differentiation; the effect of changes in our leadership on our operations and strategic direction; the
strategic evaluation of HD Supply, including whether or not any transaction will occur and the terms, timing and conditions
associated with any such transaction; conditions affecting new store development, such as our ability to find suitable store
locations, obtain required permits and open stores on schedule; 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 and businesses; 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; our ability to create
appropriate distribution channels for key sales platforms; our ability to successfully execute our online strategy; our ability to
attract, train and retain highly qualified associates; the impact of new accounting standards; subjective assumptions, estimates
and judgments by management related to complex accounting matters; decisions by management related to possible asset
impairments; the impact of competition; regulation, government inquiries or investigations and litigation matters; and possible
restatement or adjustment of financial statements. 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 January 29, 2006.
SOURCE The Home Depot
Financial Community, Diane Dayhoff, Sr. Vice President of Investor Relations,
+1-770-384-2666, or firstname.lastname@example.org, or News Media, Paula Drake, PR
Manager, +1-770-384-3439, or email@example.com, both of The Home Depot
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