10-KPeriod: FY2010

HOME DEPOT, INC. Annual Report, Year Ended Jan 31, 2010

Filed March 25, 2010For Securities:HD

Summary

In fiscal year 2009, The Home Depot, Inc. faced a challenging economic environment, reporting a 7.2% decrease in Net Sales to $66.2 billion. 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 billion, 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.

Financial Highlights

27 data points
Beta

Revenue

$66.18B

33.9% Gross Margin

Net Income

$2.66B

4.0% Net Margin

EPS (Diluted)

$1.57

Free Cash Flow

$5.13B

Financial Statements
Beta
Revenue$66.18B
Cost of Revenue$43.76B
Gross Profit$22.41B
SG&A Expenses$15.90B
Operating Expenses$17.61B
Operating Income$4.80B
Interest Expense$676.00M
Net Income$2.66B
EPS (Basic)$1.58
EPS (Diluted)$1.57
Shares Outstanding (Basic)1.68B
Shares Outstanding (Diluted)1.69B

Key Highlights

  • 1Net Sales decreased by 7.2% to $66.2 billion in fiscal year 2009, reflecting a challenging economic environment.
  • 2Operating Income increased by 10.2% to $4.8 billion, with an improved Operating Income margin of 7.3%.
  • 3The company continued its supply chain transformation, expanding its network of Rapid Deployment Centers (RDCs).
  • 4Inventory levels were reduced by $485 million (4.5%) while maintaining in-stock rates.
  • 5A strategic focus on core retail operations and customer service was maintained through initiatives like the Customers FIRST training program.
  • 6Generated $5.1 billion in cash flow from operations, used for debt repayment, dividends, and capital expenditures.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.