01—Abstract
Summary
Summary of the 10-K filed March 24, 2016. Cited figures are marked; the original filing is the authoritative source.
The Home Depot, Inc. reported strong performance in fiscal year 2015, with Net Sales increasing by 6.4% to $88.5 billiona, driven by a 5.6% increase in comparable store sales.
Diluted Earnings per Share rose to $5.46b from $4.71 in the prior year. The company successfully integrated the acquisition of Interline Brands, Inc. for $1.7 billion, strengthening its position in the MRO market for professional customers.
Significant investments were made in enhancing the customer experience through an interconnected retail strategy, including improvements to online platforms and in-store technology. The company also continued to focus on operational efficiency, particularly in its supply chain through initiatives like "Project Sync." Despite facing challenges, including expenses related to a 2014 data breach, Home Depot demonstrated resilience and continued to return value to shareholders through substantial share repurchases and dividend payments.
02—Key points
Key Highlights
- Net Sales grew 6.4% to $88.5 billion in fiscal year 2015, with comparable store sales increasing by 5.6%.
- Diluted Earnings Per Share (EPS) increased to $5.46 from $4.71 in the prior year.
- Completed the acquisition of Interline Brands, Inc. for $1.7 billion to expand reach in the MRO market for professional customers.
- Continued investment in interconnected retail strategy, enhancing both online and in-store customer experiences.
- Launched "Project Sync" to optimize the supply chain, aiming to reduce lead times and improve efficiency.
- Returned significant value to shareholders through $7.0 billion in share repurchases and $3.0 billion in dividends.
- Managed expenses effectively, with Selling, General, and Administrative expenses as a percentage of Net Sales decreasing to 19.0% from 19.6%.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Home Depot, Inc. kept $0.08.
- Revenue$88.52B100.0%
- Cost of revenue−$58.25B65.8%
- Gross profit$30.27B34.2%
- Operating costs−$18.49B20.9%
- Operating income$11.77B13.3%
- Interest, other & tax−$4.76B5.4%
- Net income$7.01B7.9%
Where FY2016 revenue went
$88.52B- Cost of revenue: $58.25B, 66% of revenue
- SG&A: $16.80B, 19% of revenue
- Net income: $7.01B, 7.9% of revenue
- Other operating costs: $1.69B, 1.9% of revenue
- Interest, other & tax: $4.76B, 5.4% of revenue
Kept 7.9% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed March 24, 2016Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $88.52B$83.18B | +6.4% |
| Cost of Revenue | $58.25B$54.79B | +6.3% |
| Gross Profit | $30.27B$28.39B | +6.6% |
| SG&A Expenses | $16.80B$16.28B | +3.2% |
| Operating Expenses | $18.49B$17.92B | +3.2% |
| Operating Income | $11.77B$10.47B | +12.5% |
| Interest Expense | $919.00M$830.00M | +10.7% |
| Net Income | $7.01B$6.34B | +10.5% |
| EPS (Basic) | $5.49$4.74 | +15.8% |
| EPS (Diluted) | $5.46$4.71 | +15.9% |
| Shares Outstanding (Basic) | 1.28B1.34B | −4.6% |
| Shares Outstanding (Diluted) | 1.28B1.35B | −4.7% |
05—Questions
Frequently Asked Questions
What was the impact of the Data Breach on the company's financial results?
The company incurred pretax net expenses of $128 million in fiscal year 2015 related to the data breach discovered in Q3 2014, which reduced diluted EPS by $0.06. Total pretax gross expenses since the breach, net of insurance recoveries, amounted to $261 million, with net expenses of $161 million.
How did the company's strategic initiatives contribute to its performance?
The company's strategic framework, focusing on Customer Experience, Product Authority, and Productivity and Efficiency Driven by Capital Allocation, underpinned its performance. Key initiatives like enhancing the interconnected retail experience, improving supply chain logistics through Project Sync, and focusing on product innovation contributed to sales growth and operational efficiencies.
What is the company's approach to returning capital to shareholders?
The Home Depot demonstrated a strong commitment to returning capital to shareholders. In fiscal 2015, the company repurchased $7.0 billion of its common stock and paid $3.0 billion in dividends. This reflects a disciplined capital allocation strategy aimed at driving shareholder value.
What were the key drivers of the increase in Net Sales and Net Earnings?
The increase in Net Sales was primarily driven by positive comparable store sales (up 5.6%), attributed to an increase in customer transactions and average ticket growth. Net Earnings benefited from this sales growth, improved gross profit margins, and effective expense management, partially offset by data breach expenses.
06—Continue