Home Depot 2012 Annual Report Download - page 3

In Fiscal Year 2012, we grew sales for the third consecutive year, with positive sales in all three U.S.
Divisions, Canada and Mexico. For the year, our comparable store sales were up 4.6 percent, total
sales were up 6.2 percent, and diluted earnings per share were up 21.5 percent. These results reect the
benet of our strategic focus and what we believe to be the beginning of the healing process for the
U.S. housing market.
We are pleased that by the end of 2012 we met, ahead of schedule, our nancial targets of achieving a
10 percent operating prot and 15 percent return on invested capital. We have now set out new nancial
targets of achieving a 12 percent operating prot and a 24 percent return on invested capital by the end
of scal 2015.
The focus for our business over the past several years and going forward reects:
1. What we are passionate about: Customer Service;
2. What we intend to be best in the world at: Product Authority for Home Improvement; and
3. What drives our economic engine: Disciplined Capital Allocation.
For our strategic framework, we borrowed from Jim Collins and use the “three-legged stool” to refer
to these priorities, and we have added Interconnected Retail as the fourth element of our strategy,
recognizing that our customers want a seamless experience, online and in our stores.
CUSTOMER SERVICE
Each year we dedicate over 10 million hours in training for our associates. In 2012, we re-trained all of
our store associates on our customer service initiative we launched in 2009 called “Customers FIRST.”
We also enabled our store managers to customize their stores’ training to focus on the elements that
they felt needed the most improvement. We are pleased that we continue to see improvement in both
our internal and external customer surveys.
We are well on our way to our goal of having 60 percent of store hours assigned to customer service,
with the remaining 40 percent assigned to completing tasks. We began this effort several years ago,
when the percentages were reversed, and ended 2012 with approximately 57 percent of our hours
assigned to customer facing activities.
We are very proud that we set a company record this year for our highest ever Success Sharing
payout. Success Sharing is our bonus program for our hourly associates, and this year we paid out
approximately $195 million. The rst step in customer service is making sure that we take care of our
associates, and the Success Sharing program is one of the ways we do that.
PRODUCT AUTHORITY
Product authority begins with providing compelling values to our customers and ensuring that the
products our customers want are available at the right time and in the right quantities.
We have integrated our online and in-store data, pricing and assortment planning processes to enhance
our customers’ experience. We have also improved our inventory management systems and completed
the mechanization of our Rapid Deployment Centers.
Dear Shareholders: