Home Depot 2010 Annual Report Download - page 12

Competition. Our business is highly competitive, based primarily on customer service, price, store location and
assortment of merchandise. In each of the markets 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, to a lesser 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, as well as general economic conditions, including changes in gross domestic
product. Adverse conditions in or sustained uncertainty about these markets or the economy 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 service, price,
store location and appearance, and quality, availability 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 and services, 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, as well as with installers of home improvement products.
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
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