Home Depot 2009 Annual Report Download - page 3

Dear Shareholders:
In 2009, our comp sales declined by 6.6 percent, with total sales down 7.2 percent. Earnings per share from
continuing operations were up 13.1 percent from last year, but on an adjusted basis declined 6.7 percent. At the
end of 2008, the U.S. economy was in the most severe recession it has experienced since the great depression.
We planned for this tough economic environment, and we executed well against our plan, exceeding the sales
and earnings targets we set forth at the beginning of the year. We gained over 100 basis points of U.S. market
share in 2009, a notable accomplishment on a base of fewer stores.
We saw sequential improvement in our performance during the year and exited the year with a positive comp in
the fourth quarter. We also saw signs of stabilization in some key macroeconomic indicators, such as Private
Fixed Residential Investment as a percent of GDP. In Canada, the demand for home improvement products is
showing improvement. And our Mexican team delivered positive comps for the year in a very tough economic
environment. As we look to 2010, we believe we will see modest economic recovery in the markets we serve
and expect our performance to continue to improve as the economy undergoes a steady, though slow, recovery.
As a company, we made significant progress against our strategic imperatives in 2009. We enhanced customer
service in our stores, introduced new and innovative products with compelling values, and drove productivity
and efficiency.
Our customer service levels, as measured by our Voice of the Customer surveys and other external sources,
continue to improve. A key factor in this improvement was the launch of a new customer service program
called “Customers FIRST.” All associates in the company, from our stores to our store support center, were
trained in Customers FIRST in 2009. We view FIRST as a sustaining long-term program and a commitment to
continued improvement in the service levels in our stores.
We also continued our supply chain transformation. At the end of January 2010, we opened our twelfth Rapid
Deployment Center or “RDC.” RDCs now serve approximately 1,250, or 65 percent, of our U.S. stores. We will
reach our goal of serving 100 percent of our U.S. stores by the end of fiscal year 2010. While our supply chain
team is proceeding with the rollout of these new RDC facilities, we are also restructuring and improving other
parts of our supply chain. We have closed legacy distribution centers, optimized distribution center operations
and enhanced our transportation management systems, driving further supply chain efficiency in addition to the
RDC rollout.
During the year we continued to implement new merchandising tools that provide better forecasting capabilities
and assortment management. Over 70 percent of our products are now on centralized automated replenishment.
Through the combined efforts of our supply chain, merchandising, operations and finance teams, we reduced
inventory by almost half a billion dollars in 2009, while at the same time improving our in-stock position.
We continued to drive our “New Lower Price” campaign and are very pleased with the customer response to the
program. We have saved our customers over $600 million so far. More than ever, our customers expect great
value. They also expect new products that will simplify their home improvement projects, like our new line of