When embarking on household projects, many start their journey at The Home Depot. As the world's largest home improvement chain and one of the largest US retailers, the company operates about 2,265 stores in the US, Canada, and Mexico, as well as an online business. It targets the do-it-yourself (DIY) and professional markets with its selection of some 40,000 items, including lumber, flooring, plumbing supplies, garden products, tools, paint, and appliances. Home Depot also offers installation services for carpeting, cabinetry, and other products. Stung by the deep recession and housing crisis in the US, the firm is regaining its footing by focusing on its core Home Depot stores and exiting China.
Home Depot operates 280 stores outside the US, accounting for 12% of its store base and approximately $8.4 billion of its more than $74 billion in fiscal 2013 (ended January) sales. The chain has stores in all 50 US states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands. After closing the last of its big-box stores in China, the company operates a single specialty paint and flooring location in Tianjin.
In addition to its big-box retail stores in the US, Canada, and Mexico, Home Depot operates half a dozen Home Decorators Collection stores in six US states. (The company sold its professional HD Supply business in 2007 to better focus on its ailing retail store operation.) The company's Home Depot International subsidiary houses the company's retail operations in Canada (Home Depot of Canada) and Mexico. The DIY chain also operates a growing online business, homedepot.com.
Sales at Home Depot's stores are making a comeback following the Great Recession and implosion of the housing and construction markets in the US. Indeed, in fiscal 2013 (ended January) sales increased 6% versus the prior year to $74.8 billion. Same-store sales increased nearly 5% and net income grew 17% over the same period. While fiscal 2013 marked the third year of increasing sales and fourth year of profit growth for the company, the nearly $75 billion Home Depot rang up in fiscal 2013 is still well below its record high of more than $90 billion in fiscal 2007. (While the divestiture of HD Supply and other ancillary businesses accounts for some of the decline, the DIY retailer struggled for three consecutive years with declining sales at its core big-box stores before its business began to revive.)
Customers spent more on visits to Home Depot stores in fiscal 2013 and the company also credited economic growth and favorable weather conditions for the improvement. All but one of Home Depot's 14 product categories logged gains, with lumber, flooring, paint, tools, lighting, and decor among the relatively strong performers.
Home Depot is tempering its retail store expansion efforts in favor of expanding its e-commerce operation.
The home improvement giant appears to have regained its footing by focusing on its core Home Depot stores. Responding to complaints that it's hard for shoppers to find help inside its vast stores, the company has set a goal of having 60% of its store employees in customer-facing rolls by fiscal 2014. (Indeed, Home Depot suffers in comparison to archrival Lowe's in perceptions of customer service.) Other customer-friendly initiatives include offering in-store repair services for power tools and equipment. Home Depot is also upping its merchandising game, stocking more and better products, including items exclusive to its stores. Key to that effort it building its online business, which allows Home Depot to offer a broader variety of products. In early 2012 the chain launched its Buy On-Line, Pick-up In Store service, which connects its e-commerce and retail store operations. As Home Depot works to boost sales at home, it's also aiming to leverage itself in international markets. While the company has met with considerable success in Canada, and Mexico, it struggled in China since it entered the market in late 2006. Indeed, in 2012 Home Depot closed the last of its seven big-box stores there, saying instead that it will focus on specialty stores and e-commerce in China.
Mergers and Acquisitions
While the company has shed non-core businesses in recent years, it is still making targeted acquisitions. To foster its home services business, Home Depot acquired Texas-based manufacturer U.S. Home Systems, which makes kitchen and bathroom cabinet products, for roughly $94.9 million in October 2012. In May 2012 the company acquired MeasureComp, a flooring measurement and quote building company, whose business was largely dedicated to Home Depot. It brought the operation in-house under its Home Depot Measurement Services. Earlier in the year, the retailer purchased RedBeacon, a home services website that specializes in pairing up consumers with contractors. RedBeacon operates in big markets, such as Atlanta, New York, Chicago, and Washington, DC.