Basic Company and Industry Information
Bernie Marcus and Author Blank founded Home Depot in Georgia in 1978. The first few stores were attached to Treasure Island stores and stocked around 25,000 products. What started out as a small neighborhood hardware store soon sprouted as the largest home improvement store in the nation. It wasn’t before long that Home Depot (HD) shares were being traded publicly on the New York Stock Exchange. Today, Home Depot is a member of the Dow Jones Industrial Average and is one of the “Top Ten Most Admired Companies” by Fortune magazine, which also ranked The Home Depot as “America’s Most Admired Specialty Retailer” for the seventh consecutive year. This ...view middle of the document...
Even though Home Depot is the world’s largest home improvement retailer, they are still less than 10 % of the total home improvement and other housing and building related product markets in North America. This has led Home Depot to expand rapidly not only in the United States, but overseas as well. There are Home Depot’s in Canada, Chile, and Puerto Rico. One of their primary goals at the moment is to penetrate into the Latin American market. During fiscal 1999, the Home Depot opened 169 new stores; one every 52 hours. Their goal is to have 1,900 stores by the end of fiscal year 2003.
Home Depot also has increased their market by starting EXPO Design Centers and Villager’s Hardware. EXPO is a showroom environment focused on remodeling and decorating projects. Villager’s Hardware is designed to attract customers who simply want the convenience of shopping at a small store when undertaking a small repair. Home Depot plans on expanding both of these stores. Another market Home Depot has just started to get into and is expanding is the Internet. They are planning to have an online superstore.
As you can see, Home Depot is a very large successful company. In fact, they more than double their closest competitor Lowe’s in net sales and well surpass them in net profits.
The overall industry looks good going into the future. With the population increasing, more and more homes will be built. In conclusion, with housing prices increasing while supply and demand both increases only means positive benefits to the home stores.
Home Depot appears to be doing great by expanding their market and product line. Their net sales and profits continue to increase substantially at an annual basis while continuing to hold a firm lead on the market from their closest competitor, Lowe’s. Home Depot shareholders are content with the companies prosper with dividends increasing every year while the market value of Home Depot’s stock only continues to increase.
Home Depot is financially stable with positive cash inflow from operating and financing activities with negative cash flows from investing activities, which shows that they’re borrowing money and reinvesting it into the company for expansion.
Home Depot achieved all of their goals; exceeding most of them, regarding net sales, earnings, and stock price. As a result, they strengthened their competitive position in the home improvement industry and solidly positioned the company for long-term success. Net earnings increased 44% in 1999, 169 new stores and a 10% increase in sales at existing stores assisted in 27% total sales gain for the year. The strength in sales was due mainly to new products and services. Home Depot stores are planning to open at a steady rate of 21-22%. With the new Home Depot University, where 50,000 customers improve their do-it-yourself skills over a 4-week program, premiered in all stores. Home Depot is exploring e-commerce and at the same time launching new...