Company Analysis - Home Depot

Financial Accounting - 7-26-11

Section 1:

The Home Depot is the world’s largest home improvement store and the fourth largest retail store in the United States behind, Wal-mart, Kroger and Costco based on net sales. With 1,976 stores located in the U.S. including the Commonwealth of Puerto Rico and territories of the U.S. Virgin Islands and Guam, it has locations in all 50 states as well as 179 locations in Canada, 85 locations in Mexico and 8 locations in China. Home Depot employs approximately 321,000 associates, of whom roughly 19,000 are salaried with the rest compensated hourly. Approximately 59% are employed on a full time basis. A typical Home Depot store has 105,000 enclosed square feet with an additional 24,000 outside square feet for the garden area. Each store stocks approximately 30,000 to 40,000 products during the year, stocking both national brand name and proprietary items. Some of the better known proprietary brands include but are 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. Each store has 4 major product groups which include 10 departments; Home Depot (2011)

-Plumbing, electrical and kitchen

-Hardware and seasonal

-Building materials, lumber and millwork

-Paint and flooring

The Home Depot stores focus to serve 3 primary customer groups:

• Do-It-Yourself (“D-I-Y”) Customers: These customers are the weekend warriors who are homeowners that purchase products and do their own installations.

• Do-It-For-Me (“D-I-F-M”) Customers: These customers are still homeowners but may not have the skill set or time to do the projects themselves so they rely on 3rd party contractors to complete the task but buy the products from Home Depot.

• Professional Customers: These customers are typically professional repairmen, general contractors, small business owners and tradesmen. Most Home Depot stores have a...