01—Abstract
Summary
Summary of the 10-K filed March 25, 2020. Cited figures are marked; the original filing is the authoritative source.
The Home Depot, Inc.'s 2020 10-K filing highlights a year of robust sales and earnings, demonstrating resilience in the home improvement sector.
The company continued its "One Home Depot" strategic initiative, investing significantly in interconnected customer experiences, supply chain enhancements, and associate development. This multi-year investment program aims to create a seamless blend of physical and digital retail channels, catering to both DIY and professional customers. The company also emphasized its commitment to shareholder returns through dividends and share repurchases, underscoring a focus on creating value for its investors.
Despite a dynamic retail landscape, The Home Depot maintained its market leadership. The filing also touches upon the early stages of the COVID-19 pandemic, noting its potential impact on supply chains and operations, though the full extent was yet to be determined at the time of filing. The company's strong financial position, operational efficiency, and strategic investments position it to navigate future challenges and capitalize on growth opportunities.
02—Key points
Key Highlights
- The company is executing an $11 billion multi-year investment program focused on creating a "One Home Depot" interconnected customer experience, blending digital and physical retail.
- Net sales reached $110.2 billion in fiscal 2019, with net earnings of $11.2 billion, or $10.25 per diluted share.
- Online sales represented 9.3% of net sales and grew by 19.4% in fiscal 2019, indicating strong e-commerce performance.
- The Home Depot continues to invest in its supply chain, with approximately $1.2 billion allocated to its "One Supply Chain" network for faster and more efficient delivery capabilities.
- The company returned significant value to shareholders, with $7.0 billion in share repurchases and $6.0 billion in cash dividends during fiscal 2019.
- The filing acknowledges the emerging impact of COVID-19, noting potential disruptions to supply chains and operations, and the company's initial mitigation efforts such as reduced store hours.
- Return on Invested Capital (ROIC) was a strong 45.4% for fiscal 2019, reflecting efficient capital deployment.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Home Depot, Inc. kept $0.10.
- Revenue$110.22B100.0%
- Cost of revenue−$72.65B65.9%
- Gross profit$37.57B34.1%
- Operating costs−$21.73B19.7%
- Operating income$15.84B14.4%
- Interest, other & tax−$4.60B4.2%
- Net income$11.24B10.2%
Where FY2020 revenue went
$110.22B- Cost of revenue: $72.65B, 66% of revenue
- SG&A: $19.74B, 18% of revenue
- Net income: $11.24B, 10% of revenue
- Other operating costs: $1.99B, 1.8% of revenue
- Interest, other & tax: $4.60B, 4.2% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed March 25, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $110.22B$108.20B | +1.9% |
| Cost of Revenue | $72.65B$71.04B | +2.3% |
| Gross Profit | $37.57B$37.16B | +1.1% |
| SG&A Expenses | $19.74B$19.51B | +1.2% |
| Operating Expenses | $21.73B$21.63B | +0.5% |
| Operating Income | $15.84B$15.53B | +2.0% |
| Interest Expense | $1.20B$1.05B | +14.3% |
| Net Income | $11.24B$11.12B | +1.1% |
| EPS (Basic) | $10.29$9.78 | +5.2% |
| EPS (Diluted) | $10.25$9.73 | +5.3% |
| Shares Outstanding (Basic) | 1.09B1.14B | −3.9% |
| Shares Outstanding (Diluted) | 1.10B1.14B | −4.0% |
05—Questions
Frequently Asked Questions
What is The Home Depot's primary strategy for growth and customer engagement?
The Home Depot's primary strategy is the "One Home Depot" initiative, a multi-year, approximately $11 billion investment program aimed at creating an interconnected, frictionless shopping experience. This involves seamlessly blending digital and physical channels, investing in stores, associates, supply chain, and product innovation to cater to evolving customer expectations for both DIY and professional customers.
How did The Home Depot perform financially in fiscal year 2019?
In fiscal year 2019, The Home Depot reported net sales of $110.2 billion and net earnings of $11.2 billion, or $10.25 per diluted share. The company also demonstrated strong operational efficiency with a Return on Invested Capital (ROIC) of 45.4%.
What is The Home Depot's approach to returning capital to shareholders?
The Home Depot is committed to returning capital to shareholders through both dividends and share repurchases. In fiscal year 2019, the company returned $7.0 billion through share repurchases and $6.0 billion in cash dividends. The company also announced a 10% increase in its quarterly cash dividend in February 2020.
How is The Home Depot addressing the potential impact of COVID-19?
At the time of filing, The Home Depot was actively monitoring the COVID-19 pandemic. Initial actions included reducing store operating hours, expanding paid time off for associates, and shifting support operations to remote or virtual setups. The company also increased its financial flexibility by expanding credit facilities and suspending share repurchases. The full impact was uncertain and being continuously assessed.
06—Continue