Home Depot, 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.
Associate Engagement
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 Excitement
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 sourcing initiatives.
Product Availability
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.
Shopping Environment
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. -- www.cnxmarketlink.com
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