10-KPeriod: FY2016

HOME DEPOT, INC. Annual Report, Year Ended Jan 31, 2016

Filed March 24, 2016For Securities:HD

Summary

The Home Depot, Inc. reported strong performance in fiscal year 2015, with Net Sales increasing by 6.4% to $88.5 billion, driven by a 5.6% increase in comparable store sales. Diluted Earnings per Share rose to $5.46 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.

Financial Highlights

28 data points
Beta

Revenue

$88.52B

34.2% Gross Margin

Net Income

$7.01B

7.9% Net Margin

EPS (Diluted)

$5.46

Free Cash Flow

$9.37B

Financial Statements
Beta
Revenue$88.52B
Cost of Revenue$58.25B
Gross Profit$30.27B
SG&A Expenses$16.80B
Operating Expenses$18.49B
Operating Income$11.77B
Interest Expense$919.00M
Net Income$7.01B
EPS (Basic)$5.49
EPS (Diluted)$5.46
Shares Outstanding (Basic)1.28B
Shares Outstanding (Diluted)1.28B

Key Highlights

  • 1Net Sales grew 6.4% to $88.5 billion in fiscal year 2015, with comparable store sales increasing by 5.6%.
  • 2Diluted Earnings Per Share (EPS) increased to $5.46 from $4.71 in the prior year.
  • 3Completed the acquisition of Interline Brands, Inc. for $1.7 billion to expand reach in the MRO market for professional customers.
  • 4Continued investment in interconnected retail strategy, enhancing both online and in-store customer experiences.
  • 5Launched "Project Sync" to optimize the supply chain, aiming to reduce lead times and improve efficiency.
  • 6Returned significant value to shareholders through $7.0 billion in share repurchases and $3.0 billion in dividends.
  • 7Managed expenses effectively, with Selling, General, and Administrative expenses as a percentage of Net Sales decreasing to 19.0% from 19.6%.

Frequently Asked Questions

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.

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.

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.

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.