The Home Depot Outlines Strategic Progress and Future Initiatives; Updates Fiscal Year 2010 Guidance and Provides Fiscal Year 2011 Outlook

Dec 08, 2010, 07:00 ET from The Home Depot

ATLANTA, Dec. 8, 2010 /PRNewswire-FirstCall/ -- The Home Depot®, the world's largest home improvement retailer, will today outline progress on its key strategic priorities and discuss its long-term financial targets at its 2010 Investor and Analyst Conference.  In addition, the Company lifted its fiscal year 2010 sales and earnings per share from continuing operations guidance and provided fiscal year 2011 financial targets.

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Today's conference will begin at 9 a.m. ET and will be available in its entirety through a live webcast and replay at in the Events & Presentations section.

Strategic Priorities

The Company will discuss its four areas of strategic focus and its progress and plans for each:  (1) customer service, (2) product authority, (3) productivity and efficiency driven by disciplined capital allocation, and (4) interconnected retail.  

  • The Company's focus on customer service is anchored on the principles of taking care of associates, putting customers first and simplifying the business.  
  • The Company's focus on product authority is facilitated by its merchandising transformation and portfolio strategy, including innovation, assortment and value.
  • The Company's approach to driving productivity and efficiency starts with  disciplined capital allocation focused on building best-in-class competitive advantages in information technology and supply chain, as well as building shareholder value through higher returns on invested capital and total value returned to shareholders in the form of dividends and share repurchases.
  • The Company's focus on interconnected retail is based on the view that providing a seamless shopping experience across multiple channels will be a critical enabler for future success.

"The Home Depot has a strong foundation of customer service, product authority and value creation.  As we look to 2011 and beyond, we will continue to build on that foundation and deliver superior returns," said Frank Blake, chairman & CEO.    

Updated Fiscal Year 2010 Sales and Earnings Per Share from Continuing Operations Guidance

Based on its year-to-date performance and expectations for the remainder of the fiscal year, the Company updated its fiscal year 2010 guidance and now expects sales to be up approximately 2.3 percent for the year.  The Company expects diluted earnings per share from continuing operations as reported to increase by approximately 27 percent to $1.97 for the year.  This earnings per share guidance includes the benefit of the Company's year-to-date repurchases through the third quarter of fiscal 2010, but excludes the impact of future share repurchases.

Fiscal Year 2011 Financial Outlook (based on GAAP)

The Company set forth the following financial targets for fiscal year 2011:  

  • Sales growth: approximately 2.0 to 2.5 percent
  • Comparable store sales growth: low single digit
  • New store openings: 10
  • Gross margin expansion: moderate
  • Expense leverage: modest
  • Operating margin expansion: approximately 30 to 40 bps
  • Tax rate: approximately 36.9 percent
  • Earnings per share from continuing operations growth, before share repurchases: approximately 7 to 9 percent
  • Earnings per share from continuing operations growth, after share repurchases: approximately 11 to 13 percent
  • Capital expenditures: approximately $1.3 billion
  • Depreciation and amortization expense: approximately $1.7 billion
  • Cash flow from the business: approximately $5.4 billion
  • Share repurchases: intend to use excess cash to repurchase shares; targeting $2.5 billion

The Home Depot is the world's largest home improvement specialty retailer, with 2,246 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, Mexico and China. In fiscal 2009, The Home Depot had sales of $66.2 billion and earnings from continuing operations of $2.6 billion. The Company employs more than 300,000 associates. The Home Depot's stock is traded on the New York Stock Exchange (NYSE: HD) and is included in the Dow Jones industrial average and Standard & Poor's 500 index

Certain statements contained herein constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements may relate to, among other things, the demand for our products and services, net sales growth, comparable store sales, state of the economy, state of residential construction, housing and home improvement markets, state of the credit markets, including mortgages, home equity loans and consumer credit, in-stock positions, commodity price inflation and deflation, merchandising, implementation of store initiatives, implementation of supply chain initiatives, continuation of reinvestment plans, net earnings performance, earnings per share, capital allocation and expenditures, liquidity, return on invested capital, management of our purchasing or customer credit policies, the effect of accounting charges, the ability to issue debt on terms and at rates acceptable to us, store openings and closures, expense leverage and other operating strategies, other factors affecting earnings and sales, Fiscal 2010 and Fiscal 2011 financial guidance and financial outlook.  These forward-looking statements are based on currently available information and current assumptions, expectations and projections about future events.  

You are cautioned not to place undue reliance on our forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. These statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control or are currently unknown to us – as well as potentially inaccurate assumptions that could cause actual results to differ materially from our expectations and projections.  Additional information regarding risks and uncertainties is described in Item 1A, "Risk Factors," and elsewhere in our Annual Report on Form 10-K for our fiscal year ended January 31, 2010 and our subsequent Quarterly Reports on Form 10-Q.

SOURCE The Home Depot