Home Depot 2005 Annual Report Download - page 16

Italy. We also have product development merchants, as well as a sourcing office, in Monterrey, Mexico.
These initiatives enable us to improve product features and quality, to import products not currently
available to our customers and to offer products at a lower price than would otherwise be available if
purchased from third-party importers. We currently source products from more than 600 factories in
approximately 35 countries.
Services. The Home Depot and EXPO Design Center stores offer a variety of installation services.
These services target D-I-F-M customers who select and purchase products and installation of those
products from us. These installation programs include products such as carpeting, flooring, cabinets,
countertops and water heaters. In addition, we provide professional installation of a number of
products sold through our in-home sales programs, such as generators and furnace and central air
systems. Our wholly-owned subsidiaries, THD At-Home Services, Inc. and Home Depot Installation
Services, Inc., sell and install our roofing, siding and window programs. With the exception of Home
Depot Installation Services, Inc., which employs its own qualified installers, The Home Depot’s
installation services are provided by qualified independent contractors throughout the U.S. and Canada.
We also arrange for the provision of flooring, countertop, cabinet and window covering installation
services to production home builders through our Creative Touch Interiors brand. During the fourth
quarter of fiscal 2005, we extended our services business by acquiring Chem-Dry, the world’s largest
carpet and upholstery cleaning franchisor. Chem-Dry has nearly 4,000 franchises worldwide, including
2,500 in the U.S.
Store Growth
United States. At the end of fiscal 2005, we were operating 1,793 The Home Depot stores in the
U.S., including the territories of Puerto Rico and the Virgin Islands. During fiscal 2005, we opened 140
new The Home Depot stores, including four relocations, in the U.S. Although these new store openings
occurred primarily in existing markets, we continued our geographic expansion by opening stores in a
number of new markets.
To increase customer service levels, gain incremental sales and enhance long-term market penetration,
we often open new stores near the edge of market areas served by existing stores. While these openings
may initially have a negative impact on comparable store sales growth, we believe this ‘‘cannibalization’’
strategy increases customer satisfaction and our overall market share by reducing delays in shopping,
increasing utilization by existing customers and attracting new customers to more convenient locations.
During fiscal 2005, we believe that approximately 20% of our stores were cannibalized by certain of our
new stores.
Canada. At the end of fiscal 2005, we were operating 137 The Home Depot stores in ten Canadian
provinces. Of these stores, 21 were opened during fiscal 2005, including one relocation.
Mexico. At the end of fiscal 2005, we were operating 54 stores in Mexico. Of these stores, 10 were
opened during fiscal 2005.
China. At the end of fiscal 2004, we entered into an arrangement to lease commercial office space in
Shanghai to support a retail initiative in China. We are currently pursuing our strategy for entry into
the China home improvement marketplace.
EXPO Design Center Stores
EXPO Design Center stores are designed to be a complete home decorating and remodeling resource
for middle- to upper- income D-I-F-M customers by offering interior design products for kitchens,
baths, appliances and flooring, as well as products for lighting, decorating and storage and organization
projects, beyond those available in The Home Depot stores. In each of the 34 EXPO Design Center
stores, customers are also offered complete project management and installation services through
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