Home Depot 2009 Annual Report Download - page 13

Our success depends upon our ability to attract, train and retain highly qualified associates while also
controlling our labor costs.
Our customers expect a high level of customer service and product knowledge from our associates. To be
successful, we must attract, train and retain a large number of highly qualified associates to meet the needs and
expectations of our customers while at the same time controlling labor costs. Our ability to control labor costs is
subject to numerous external factors, including prevailing wage rates, the impact of legislation or regulations
governing healthcare benefits or labor relations, such as the proposed Employee Free Choice Act, and health
and other insurance costs. In addition, we compete with other retail businesses for many of our associates in
hourly positions, and we invest significant resources in training and motivating them. These positions have
historically had high turnover rates, which can lead to increased training and retention costs. There is no
assurance that we will be able to attract or retain highly qualified associates in the future. In addition, our
centralization of certain human resources functions might not be readily adapted by our associates and therefore
might not provide the anticipated benefits.
The inflation or deflation of commodity prices could affect our prices, demand for our products, our sales
and our profit margins.
Prices of certain commodity products, including lumber and other raw materials, are historically volatile and
are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs,
competition, market speculation, government regulations and periodic delays in delivery. Rapid and significant
changes in commodity prices may affect the demand for our products, our sales and our profit margins.
We rely on third party suppliers. If we fail to identify and develop relationships with a sufficient number of
qualified suppliers, or if our current suppliers experience financial difficulties, our ability to timely and
efficiently access products that meet our high standards for quality could be adversely affected.
We buy our products from suppliers located throughout the world. Our ability to continue to identify and
develop relationships with qualified suppliers who can satisfy our high standards for quality and our need to
access products in a timely and efficient manner is a significant challenge. Our ability to access products also
can be adversely affected by political instability, the financial instability of suppliers (particularly in light of
recent economic conditions), suppliers’ noncompliance with applicable laws, trade restrictions, tariffs, currency
exchange rates, transport capacity and cost and other factors beyond our control.
If we are unable to effectively manage and expand our alliances and relationships with selected suppliers of
brand name products, we may be unable to effectively execute our strategy to differentiate ourselves from
our competitors.
As part of our focus on product differentiation, we have formed strategic alliances and exclusive relationships
with selected suppliers to market products under a variety of well-recognized brand names. If we are unable to
manage and expand these alliances and relationships or identify alternative sources for comparable products, we
may not be able to effectively execute product differentiation.
If we do not maintain the security of customer, associate or company information, we could damage our
reputation, incur substantial additional costs and become subject to litigation.
Any significant compromise or breach of customer, associate or company data security could significantly
damage our reputation and result in additional costs, lost sales, fines and lawsuits. The regulatory environment
related to information security and privacy is increasingly rigorous, with new and constantly changing
requirements applicable to our business, and compliance with those requirements could result in additional
costs. There is no guarantee that the procedures that we have implemented to protect against unauthorized
access to secured data are adequate to safeguard against all data security breaches.
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