Home Depot 2008 Annual Report Download - page 2

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Dear Shareholders:
In 2008, our retail sales declined by 7.8 percent, with comp sales down 8.7 percent.
Our adjusted earnings per share from continuing operations declined 22 percent. In
ordinary times, these would be very disappointing results. But 2008 was not an
ordinary year.
Despite the difficult economic environment, we continued to improve our retail
business, through investing in our associates and our stores, rebuilding our supply
chain and improving customer service. We also made several strategic decisions to
optimize our capital allocation, concentrating our efforts on our core business.
In the first quarter, we closed 15 underperforming stores and reduced our pipeline of
new stores by 50. In the third quarter, we renegotiated our private label credit card
agreement, capping our cost of private label credit. In the fourth quarter, we
announced our decision to exit EXPO and related businesses. These actions will
make the Company stronger.
On the financial side, we ended the year with a solid operating profit and $41 billion
in assets. We generated cash from the business of approximately $5.5 billion, which
allowed us to invest in the business where necessary and reduce our debt obligations
while maintaining a healthy dividend.
On the operational side, we implemented an “Aprons on the Floor” initiative, which
deployed over $200 million in annualized savings onto the floor of the stores for
customer service. Our customer service levels, as measured by our Voice of
Customer surveys and other external sources, continue to improve.
We launched our “New Lower Price” campaign in the fall and have been very
pleased with the customer response to this program. More than ever, our customers
expect great value and exciting products in our stores, and we are committed to
providing for these expectations.
We started the roll-out of our enhanced supply chain. At the end of January, we
opened our fifth Rapid Deployment Center (RDC), and RDCs now serve
approximately 500 of our U.S. stores. Our goal is to have approximately 20 RDCs
in place by the end of 2010, serving all of our U.S. stores.