Home Depot 2009 Annual Report Download - page 12

extent, other retailers. Due to the variety of competition we face, we are unable to precisely measure the impact
on our sales by our competitors.
Item 1A. Risk Factors.
The risks and uncertainties described below could materially and adversely affect our business, financial
condition and results of operations and could cause actual results to differ materially from our expectations and
projections. The Risk Factors described below include the considerable risks associated with the current
economic environment and the related potential adverse effects on our financial condition and results of
operations. You should read these Risk Factors in conjunction with “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Item 7 and our Consolidated Financial Statements and
related notes in Item 8. There also may be other factors that we cannot anticipate or that are not described in
this report generally because we do not currently perceive them to be material. Those factors could cause results
to differ materially from our expectations.
Sustained uncertainty regarding current economic conditions and other factors beyond our control could
adversely affect demand for our products and services, our costs of doing business and our financial
performance.
Our financial performance depends significantly on the stability of the housing, residential construction and
home improvement markets. Adverse conditions in or sustained uncertainty about these markets could
adversely impact consumer confidence, causing our customers to delay purchasing or determine not to purchase
home improvement products and services. Other factors – including high levels of unemployment and
foreclosures, interest rate fluctuations, fuel and other energy costs, labor and healthcare costs, the availability of
financing, the state of the credit markets, including mortgages, home equity loans and consumer credit, weather,
natural disasters and other conditions beyond our control – could further adversely affect demand for our
products and services, our costs of doing business and our financial performance.
Strong competition could adversely affect prices and demand for our products and services and could
decrease our market share.
We operate in markets that are highly competitive. We compete principally based on customer services, price,
store location and assortment of merchandise. In each market we serve, there are a number of other home
improvement stores, electrical, plumbing and building materials supply houses and lumber yards. With respect
to some products, we also compete with specialty design stores, showrooms, discount stores, local, regional and
national hardware stores, mail order firms, warehouse clubs, independent building supply stores and other
retailers. Intense competitive pressures from one or more of our competitors could affect prices or demand for
our products and services. If we are unable to timely and appropriately respond to these competitive pressures,
including through maintenance of superior customer service and customer loyalty, our financial performance
and our market share could be adversely affected.
We may not timely identify or effectively respond to consumer needs, expectations or trends, which could
adversely affect our relationship with 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 promptly to evolving trends in demographics and
consumer preferences, expectations and needs. Failure to maintain attractive stores and to timely identify or
effectively respond to changing consumer tastes, preferences, expectations as to service levels, spending
patterns and home improvement needs could adversely affect our relationship with customers, the demand for
our products and services and our market share.
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