Home Depot 2005 Annual Report Download - page 4

modifying its homes. The growth of our Services revenue – by
21.4 percent in 2005 – is proof positive that we are meeting that
demand, especially in categories such as special order counter-
tops, roofing/gutters, kitchens, windows and HVAC.
Our acquisition of Chem-Dry last year illustrates how we have
pursued strategic and operational adjacencies to build our
services infrastructure. As the world’s largest seller and installer
of carpeting, we joined forces with the world’s largest carpet and
upholstery cleaning franchisor. And whether we decide to own,
subcontract or franchise going forward, we are continually
looking for unique opportunities to deliver turnkey service and
value to our customers.
Expand the Market: Building Platforms for Growth
Expanding our market has presented us with the two largest
opportunities: the professional contractor market, and the interna-
tional market. The professional contractor market is twice the size
of the Do-It-Yourself (DIY) business, while the international market
is just as large as the U.S. market.
We can repeat in the pro market what we did in retail in the ‘80s
and ‘90s, with both speed and sustainability. Back then, we trans-
formed a fragmented, inefficient, local and stagnant market into
a consolidated, efficient, international and innovative market.
Given our scale and vision today, we have the same opportunity in
the professional arena, but our position is much more formidable.
We’re off to a fast and strong start.
Indeed, 2005 was a turning point. We completed 21 acquisitions
to better service professional contractors and announced several
others, adding to our distinctive portfolio of category leaders,
such as National Waterworks, Contractors’ Warehouse, Williams
Bros. Lumber Company and Chem-Dry. In 2005 we announced
Hughes Supply, the largest acquisition in our history. Through
close coordination between our stores and our branches, we will
provide unmatched services to our existing base of professional
customers as well as to new customers.
Internationally, we are the #1 home improvement retailer in
Canada and in Mexico, using a portable business model that
respects the cultures in which we are privileged to operate.
By fiscal year-end, we had 137 stores in Canada, a country that
delivered more than US$4 billion in revenues. In Mexico, we
ended the year with 54 stores and expect our business in that
market to top $1 billion in 2006 for the first time. We will con-
tinue to explore the most prudent way to enter other vast markets.
Community Engagement
When we enter a community, we arrive fully appreciating that
our bottom line is really shaped by those on the front line – in
the communities where we live and work. We arrive with our asso-
ciates’ passion for engaging communities, along with our pledge
to improve everything we touch.
I am proud of the associates who embodied that spirit in 2005
when we faced the challenge of responding to the most
devastating hurricane season in history. I am moved by those
who volunteered more than 320,000 hours in 1,300 community
projects during our Corporate Month of Service. I am honored
by acknowledgements of our efforts, including The King Center’s
2005 Salute to Greatness Award and the ENERGY STAR®2006
Partner of the Year Award. And I salute our 1,800 deployed
military associates, who lead personal missions of service and
sacrifice and contribute to the strength of our nation every day.
2010 Vision: Continuing to Lead, Change and Grow
Leading, changing and growing are considered challenges
at some companies, but at The Home Depot, it’s what we do.
Over the next five years, I am confident that we will continue to
lead, change and grow in ways that will benefit our shareholders,
customers, associates, communities and suppliers for years
to come.
Over the next five years, we will invest between $12 billion and
$14 billion to remodel and refresh our existing stores, open
400 – 500 new stores and launch new retail formats to better
meet the needs of our evolving customer base. We will never lose
sight of the fact that our core retail stores are the foundation of
our great company and the enabler of our future growth.
At the same time, Home Depot Supply will continue growing,
with projected sales between $23 billion and $27 billion by
2010. Between our retail business and Home Depot Supply, we
expect to be the most formidable competitor in our defined
marketplace, with total revenues between $125 billion and
$143 billion by 2010. In short, no one will have the breadth of
product offering, as many convenient locations, or as diverse a
customer base as The Home Depot.
Again, I want to thank our 345,000 associates for making the last
five years the best in our company’s history. Not only have we
delivered stellar financial results, we have laid the groundwork for
a future that promises to be even brighter than our past. I come to
work every single day thankful for being part of such a wonderful,
dedicated team, and excited about what we are all going to
achieve together.
Bob Nardelli
Chairman, President & Chief Executive Officer
March 29, 2006
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