Home Depot 2006 Annual Report Download - page 16

Seasonality. Our business is seasonal to a certain extent. Generally, our highest volume of sales occurs
in our second fiscal quarter and the lowest volume occurs during our fourth fiscal quarter.
Competition. We are one of the largest wholesale distributors of our range of products in the United
States, and we believe that no other company competes against us across all of our product lines.
However, there is significant competition in each of our individual product lines. Our competition
includes other wholesalers, manufacturers that sell products directly to their respective customer base
and some of our customers that resell our products. To a limited extent, retailers of plumbing, electrical
fixtures and supplies, building materials, maintenance repair and operations supplies and contractors’
tools also compete with us. Competition varies depending on product line, customer classification and
geographic area. The principal competitive factors in our business include, but are not limited to,
availability of materials and supplies; technical product knowledge and expertise as to application and
usage; advisory or other service capabilities; ability to build and maintain customer relationships;
same-day delivery capabilities in certain product lines; pricing of products and provision of credit.
Support Services
Information Technologies. During fiscal 2006, we continued to make significant information technology
investments to support better customer service and provide an improved shopping environment in our
stores. We completed the deployment of self-checkout registers to all our U.S. stores and the majority
of our stores in Canada and enhanced our coupon processing at all check-outs. We also began
implementing in-store call boxes and installed voice over internet phone systems in order to provide
customers faster assistance from our associates. To support the continued growth of our appliance
business, we upgraded our proprietary Depot Direct appliance fulfillment system.
In addition to significant investments in store technology, we upgraded our order management system,
which improves the speed and accuracy of online order processing and provides customers the ability to
check special order status on the internet. We also defined a set of common enterprise system
platforms for our HD Supply wholesale businesses and began migrating the HD Supply businesses to
these platforms, beginning with the payroll and financial functions.
We also began work on the strategic effort to implement a new Retail Systems platform to further
improve the performance of our merchandising functions and store operations. We also commenced the
effort to add new automation into our supply chain functions focusing on new systems for warehouse
distribution, transportation management and enhancements to support greater order penetration
through our centralized replenishment systems.
Associates. At the end of fiscal 2006, we employed approximately 364,000 associates, of whom
approximately 26,000 were salaried, with the remainder compensated on an hourly or temporary basis.
Approximately 68% of our associates are employed on a full-time basis. We believe that our employee
relations are very good. To attract and retain qualified personnel, we seek to maintain competitive
salary and wage levels in each market we serve.
Intellectual Property. Through our wholly-owned subsidiary, Homer TLC, Inc., we have registered or
applied for registration, in a number of countries, for a variety of internet domain names, service marks
and trademarks for use in our businesses, including The Home Depot; HD Supply; Hampton Bay
fans, lighting and accessories; Glacier Bay toilets, sinks and faucets; Pegasus faucets and bath
accessories; Commercial Electric lighting fixtures; Workforce tools, tool boxes and shelving;
www.hdsupply.com and www.doitherself.com. Furthermore, we have also obtained and now maintain
patent portfolios relating to certain products and services provided by The Home Depot, and
continually seek to patent or otherwise protect selected innovations we incorporate into our products
and business operations. We regard our intellectual property as having significant value to each
business segment and as being an important factor in the marketing of our brand, e-commerce, stores
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