01—Abstract
Summary
Summary of the 10-K filed March 25, 2010. Cited figures are marked; the original filing is the authoritative source.
In fiscal year 2009, The Home Depot, Inc. faced a challenging economic environment, reporting a 7.2% decrease in Net Sales to $66.2 billiona.
Despite this, the company demonstrated resilience by improving its Operating Income margin and focusing on core retail operations. Strategic initiatives included optimizing store productivity, enhancing customer service through training, and managing inventory effectively, leading to a decrease in inventory levels. The company also continued its supply chain transformation with the expansion of Rapid Deployment Centers.
Financially, Home Depot generated strong operating cash flow of $5.1 billionb, which was used to repay debt, pay dividends, and fund capital expenditures. While earnings per share saw a decline compared to the prior year when excluding certain charges, the company's financial position remained solid, with a manageable debt-to-equity ratio. The focus on efficiency and cost control, alongside strategic exits from non-core businesses, positioned Home Depot to navigate the economic downturn and prepare for future recovery.
02—Key points
Key Highlights
- Net Sales decreased by 7.2% to $66.2 billion in fiscal year 2009, reflecting a challenging economic environment.
- Operating Income increased by 10.2% to $4.8 billion, with an improved Operating Income margin of 7.3%.
- The company continued its supply chain transformation, expanding its network of Rapid Deployment Centers (RDCs).
- Inventory levels were reduced by $485 million (4.5%) while maintaining in-stock rates.
- A strategic focus on core retail operations and customer service was maintained through initiatives like the Customers FIRST training program.
- Generated $5.1 billion in cash flow from operations, used for debt repayment, dividends, and capital expenditures.
- The company exited non-core businesses (EXPO Design Center, THD Design Center, Yardbirds, and HD Bath) as part of a strategy to focus on its main retail operations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Home Depot, Inc. kept $0.04.
- Revenue$66.18B100.0%
- Cost of revenue−$43.76B66.1%
- Gross profit$22.41B33.9%
- Operating costs−$17.61B26.6%
- Operating income$4.80B7.3%
- Interest, other & tax−$2.14B3.2%
- Net income$2.66B4.0%
Where FY2010 revenue went
$66.18B- Cost of revenue: $43.76B, 66% of revenue
- SG&A: $15.90B, 24% of revenue
- Net income: $2.66B, 4.0% of revenue
- Other operating costs: $1.71B, 2.6% of revenue
- Interest, other & tax: $2.14B, 3.2% of revenue
Kept 4.0% as net incomeNet income $2.66B · 4.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed March 25, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $66.18B$71.29B | −7.2% |
| Cost of Revenue | $43.76B$47.30B | −7.5% |
| Gross Profit | $22.41B$23.99B | −6.6% |
| SG&A Expenses | $15.90B$17.85B | −10.9% |
| Operating Expenses | $17.61B$19.63B | −10.3% |
| Operating Income | $4.80B$4.36B | +10.2% |
| Interest Expense | $676.00M$624.00M | +8.3% |
| Net Income | $2.66B$2.26B | +17.7% |
| EPS (Basic) | $1.58$1.34 | +17.9% |
| EPS (Diluted) | $1.57$1.34 | +17.2% |
| Shares Outstanding (Basic) | 1.68B1.68B | +0.1% |
| Shares Outstanding (Diluted) | 1.69B1.69B | +0.4% |
05—Questions
Frequently Asked Questions
What was the overall financial performance of Home Depot in fiscal year 2009?
In fiscal year 2009, Home Depot experienced a decline in Net Sales by 7.2% to $66.2 billion, largely due to a weak economy impacting the housing and home improvement markets. However, the company managed to increase its Operating Income by 10.2% to $4.8 billion, improving its operating margin. Earnings per diluted share from continuing operations were $1.55.
What significant strategic changes did Home Depot implement during fiscal year 2009?
The company continued its focus on core retail operations, investing in associates and stores, and improving customer service through initiatives like the 'Customers FIRST' training. A major strategic move was the closure of non-core businesses such as EXPO Design Centers, THD Design Centers, Yardbirds, and HD Bath. They also continued to optimize their supply chain by expanding Rapid Deployment Centers (RDCs) and rationalizing distribution networks.
How did Home Depot manage its inventory and supply chain?
Home Depot successfully reduced its merchandise inventory by $485 million (4.5%) compared to the previous year while improving its in-stock rate. The supply chain transformation included the expansion of Rapid Deployment Centers (RDCs) to serve approximately 65% of U.S. stores, aiming to improve product availability and reduce total supply chain costs.
What was the company's approach to capital allocation and financial health?
Home Depot generated $5.1 billion in cash flow from operations. This cash was used to repay $1.8 billion in long-term debt, pay $1.5 billion in dividends, and fund $966 million in capital expenditures. The company also maintained a commitment to share repurchases. Its long-term debt-to-equity ratio improved to 44.7% from 54.4% in the prior year, indicating a strengthening financial position.
06—Continue