Home Depot 2006 Annual Report Download - page 4

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From the beginning, outstanding customer service
has been the cornerstone of our company. Our
customers have high expectations of us because our
associates set them. This expectation of outstanding
customer service is what sets us apart as a retailer.
The most critical job for those of us leading this
company is to sustain a culture that never falls short
of those customer expectations. Our “values wheel”
summarizes that culture:
As you’ll read in the attached financial report, 2006
was a challenging year for us. We experienced a tough
housing market, particularly in the second half of the
year. We addressed this challenge by accelerating
investment in our retail business and intensifying our
focus on customer service and satisfaction.
Going forward, we expect 2007 to be a challenging
year as the housing environment remains soft. We will
continue to make the necessary investments in our
retail business so that we will emerge even stronger
when the industry recovers. We are focused on five
priorities around which our leadership team, our
associates and our investments are aligned.
Associate engagement: Deliver differentiated
customer service and the know-how our customers
have come to expect from The Home Depot.
Product excitement: Drive value, price leadership
and innovation through merchandising.
Product availability: Improve in-stock positions so
customers can find and buy exactly what they need.
Shopping environment: Ensure that our stores are
safe, clean and uncluttered.
Own the Pro: Be the number one destination for
professional contractors, whose business today makes
up roughly 30 percent of our retail sales.
2006 was a milestone year for our Supply segment.
We completed the acquisition of Hughes Supply and
successfully integrated it into our HD Supply business.
We are now the second largest commercial distribution
business in the United States. As we announced in
February 2007, we are exploring strategic alternatives
for HD Supply, including a possible sale of the
business.
In 2006, we made a significant acquisition in China,
a country with one of the largest and fastest growing
home improvement markets in the world. The company
we acquired, The Home Way, has stores that look
very similar to ours in North America for a very good
reason: We trained its founding management team in
the mid 1990s.
Our goal is to provide the best customer experience
in home improvement retail, the best place to work
for our associates and the best place to invest. The
five priorities described above are clearly aligned with
the first two goals, and we will use a disciplined capital
allocation approach to drive toward the third goal.
The most important barometer of the health of our
company is the health of our culture. I hope that you
shop our stores and experience our customer-focused
culture firsthand.
Francis S. Blake
Chairman & Chief Executive Officer
March 29, 2007
DEAR SHAREHOLDERS, ASSOCIATES, CUSTOMERS, SUPPLIERS AND COMMUNITIES:
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