Home Depot 2009 Annual Report Download - page 8

Our Business
Operating Strategy. In fiscal 2009, despite prolonged difficulties in the economy, we continued to focus on
our core retail business, investing in our associates and stores and improving our customer service. This focus
reflected a continuation of strategies implemented in the fiscal year ended February 1, 2009 (“fiscal 2008”),
including the decision, announced in late January 2009, to close our EXPO Design Center, THD Design Center,
Yardbirds and HD Bath businesses (the “Exited Businesses”). In fiscal 2009, we maintained our focus on
maximizing the productivity of our existing store base. During the year, we continued to implement significant
changes in our store operations to make them simpler, more consistent and more customer-focused. We shifted
associate hours to be more customer facing, provided additional customer service and product knowledge
training to our associates and refocused our efforts on offering every day values in the stores. Additionally, we
continued to make strategic decisions intended to optimize our capital allocation, control expenses and create
long-term value for our shareholders.
Customers. The Home Depot stores serve three primary customer groups:
•Do-It-Yourself (“D-I-Y”) Customers: These customers are typically home owners who
purchase products and complete their own projects and installations.
•Do-It-For-Me (“D-I-F-M”) Customers: These customers are typically home owners who
purchase materials themselves and hire third parties to complete the project or installation. We
arrange for the installation of a variety of The Home Depot products through qualified
independent contractors.
•Professional Customers: These customers are professional remodelers, general contractors,
repairmen, small business owners and tradesmen. In many stores, we offer a variety of programs
to these customers, including delivery and will-call services, dedicated staff and expanded credit
programs, all of which we believe increase sales to these customers.
Products. A typical Home Depot store stocks approximately 30,000 to 40,000 products during the year,
including both national brand name and proprietary items. The following table shows the percentage of Net
Sales of each major product group (and related services) for each of the last three fiscal years:
Percentage of Net Sales for
Fiscal Year Ended
Product Group January 31, 2010 February 1, 2009 February 3, 2008
Plumbing, electrical and kitchen 29.8% 30.6% 31.0%
Hardware and seasonal 29.1 28.7 28.0
Building materials, lumber and millwork 21.9 22.1 22.3
Paint and flooring 19.2 18.6 18.7
Total 100.0% 100.0% 100.0%
In fiscal 2009, we reduced our inventory while improving our in-stock rate. We also reduced a number of
one-time discount promotions and refocused our efforts on offering every day values. We continued to
introduce innovative and distinctive products to our customers, including Thomasville®deep seating patio
furniture, Behr Premium Plus Ultra®paint and primer in one, Charbroil®infrared grills, RIDGID®pressure
washers and Homelite®trimmers.
To complement and enhance our product selection, we have formed strategic alliances and exclusive
relationships with selected suppliers to market products under a variety of well-recognized brand names. During
fiscal 2009, we offered a number of proprietary and exclusive brands across a wide range of departments
including, but not limited to, Behr Premium Plus®paint, Hampton Bay®lighting, Vigoro®lawn care products,
Husky®hand tools, RIDGID®and Ryobi®power tools and Glacier Bay®bath fixtures. We also announced our
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