Home Depot 2005 Annual Report Download - page 23

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Our ability to open new stores also will be affected by environmental regulations, local zoning issues
and other laws related to land use. Failure to effectively manage these and other similar factors will
affect our ability to open stores on schedule, which will delay the impact of these new stores on our
financial performance.
The implementation of our technology initiatives could disrupt our operations in the near term, and our
technology initiatives might not provide the anticipated benefits or might fail.
We have made and will continue to make significant technology investments both in our stores and in
our administrative functions. Our technology initiatives are designed to streamline our operations to
allow our associates to continue to provide high quality service to our customers and to provide our
customers a better in-store experience. The cost and potential problems and interruptions associated
with the implementation of our technology initiatives could disrupt or reduce the efficiency of our
operations in the near term. In addition, our new or upgraded technology might not provide the
anticipated benefits, it might take longer than expected to realize the anticipated benefits or the
technology might fail altogether.
We may not timely identify or effectively respond to consumer trends, which could adversely affect our
relationship with our customers, the demand for our products and services and our market share.
It is difficult to successfully predict the products and services our customers will demand. The success
of our business depends in part on our ability to identify and respond to evolving trends in
demographics and consumer preferences. Failure to timely identify or effectively respond to changing
consumer tastes, preferences, spending patterns and home improvement needs could adversely affect
our relationship with our customers, the demand for our products and services and our market share.
The inflation or deflation of commodity prices could affect our prices, demand for our products, sales and
profit margins.
Prices of certain commodity products, including lumber and other raw materials, are historically volatile
and are subject to fluctuations arising from changes in domestic and international supply and demand,
labor costs, competition, market speculation, government regulations and periodic delays in delivery.
Rapid and significant changes in commodity prices may affect our sales and profit margins.
If we cannot successfully identify and complete acquisition opportunities and integrate the acquired businesses,
we may be unable to successfully execute our expansion strategy.
The success of our expansion strategy depends, in part, on our ability to identify attractive acquisition
opportunities, complete acquisitions on financially attractive terms and integrate them with our other
businesses. Integration of our acquisitions presents significant challenges and risks to our business,
including:
• distraction of management from regular business concerns,
• assimilation and retention of employees and customers of the acquired business,
• integration of technologies, services and products, and
• achievement of appropriate internal control over financial reporting.
There is no assurance that we will be able to successfully manage the risks associated with acquiring
and integrating other businesses.
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