Home Depot inc   (HD)
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    Sector  Retail    Industry Home Improvement
   Industry Home Improvement
   Sector  Retail

Home Depot inc

Business Description

The Home Depot, Inc.,?is the worlds largest home improvement retailer and the second largest retailer in the United States.?Most of our stores are either Home Depot? stores or EXPO Design Center? stores. A description of each of these types of stores is as follows:

Home Depot Stores: Home Depot stores sell a wide assortment of building materials, home improvement and lawn and garden products and provide a number of services. Home Depot stores average approximately 107,000 square feet of enclosed space, with an additional approximately 22,000 square feet in the outside garden area.

? EXPO Design Center Stores: EXPO Design Center stores sell products and services primarily for home decorating and remodeling projects. Unlike Home Depot stores, EXPO Design Center stores do not sell building materials and lumber. EXPO Design Center stores offer interior design products, such as kitchen and bathroom cabinetry, soft and hard flooring, appliances, window treatments, lighting fixtures and arrange installation services through qualified independent contractors. EXPO Design Center stores average approximately 100,000 square feet of enclosed space.

In addition to Home Depot and EXPO Design Center stores, we also have two store formats focused on the professional customer called The Home Depot SupplySM store and Home Depot Landscape SupplySM. We are operating five Home Depot Supply stores and 11 Home Depot Landscape Supply stores. We also have two stores located in Texas and Florida called The Home Depot Floor StoreSM that sell primarily flooring products.

The Companys other businesses included The Home Depot Supply. The Home Depot Supply distributes products and sells installation services primarily to businesses and governments. During fiscal 2003, The Home Depot Supply operated primarily through four subsidiaries, Apex Supply Company, Inc. ("Apex Supply Company"), Home Depot Your "other" Warehouse, LLC ("Your "other" Warehouse"), Maintenance Warehouse/America Corp. ("Maintenance Warehouse") and HD Builder Solutions Group, Inc. ("HD Builder Solutions Group"). Apex Supply Company is a wholesale supplier of plumbing, HVAC, appliances and other related professional products with 26 locations in Florida, Georgia, Indiana, South Carolina and Tennessee. Your "other" Warehouse? is a plumbing, lighting and hardware distributor that focuses on special order fulfillment through its six distribution centers in Georgia, Louisiana, Maryland and Nevada and one call center located in Louisiana. Maintenance Warehouse? supplies maintenance, repair and operations products serving primarily the multi-family housing, hospitality and lodging facilities management market. Maintenance Warehouse? fills orders through its 20 distribution centers, which are located in Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, Missouri, Ohio, Texas, Virginia, and Washington. HD Builder Solutions Group, Inc. provides products and arranges installation services for professional homebuilders through 22 locations in Arizona, California, Colorado, Delaware, Florida, Indiana, Kentucky, Maryland, Nevada, New Jersey, Ohio, Pennsylvania, and Virginia. Apex Supply Company, Maintenance Warehouse and HD Builder Solutions Group began doing business under the brand The Home Depot Supply.

Customers.?Home Depot stores serve three primary customer groups:

? Do-It-Yourself ("D-I-Y") Customers: These customers are typically homeowners who purchase products and complete their own projects and installations. To complement the expertise of our associates, Home Depot stores offer many D-I-Y "how-to" clinics taught by associates and merchandise vendors.

? Do-It-For-Me ("D-I-F-M") Customers: These customers are typically homeowners who purchase materials themselves and hire third parties to complete the project and/or installation. We arrange for the installation of a variety of Home Depot products through qualified independent contractors.

? Professional Customers: These customers are professional remodelers, general contractors, repairmen and tradesmen. In many stores we offer a variety of programs to these professional customers, including additional delivery and will-call services, dedicated staff, extensive merchandise selections and expanded credit programs, all of which we believe increase sales to this group.

Products.?A typical Home Depot store stocks approximately 40,000 to 50,000 products during the year, including both national brand name and proprietary items. The following table shows the percentage of revenues of each major product group (and related services) for each of the last three fiscal years:

We buy our store merchandise from vendors located throughout the world. We are not dependent on any single vendor. Most of our merchandise is purchased directly from manufacturers, which eliminates "middleman" costs. We believe that competitive sources of supply are readily available for substantially all of the products we sell in Home Depot stores.

To complement and enhance our product selection, we have formed strategic alliances and exclusive relationships with certain suppliers to market products under a variety of well-recognized brand names. At the end of fiscal year 2003, we offered a number of proprietary and exclusive brands across a wide range of departments including, but not limited to, John Deere? lawn and garden tractors; Thomasville? kitchen and bathroom cabinets; Silestone? countertops; RIDGID? power tools; Behr Premium Plus? paint; Mills Pride? cabinets; Husky? hand tools; GE SmartWater? water heaters; Philips? light bulbs; Toro? lawn mowers; Vigoro? lawn care products; GAF? roofing products; Honda? lawn mowers and Lithonia Lighting? fluorescent lighting products.

Services.?Home Depot stores offer a variety of installation services. These services target the D-I-F-M customer who selects and purchases materials for a project and prefers the Company to arrange for professional installation. We implement our installed sales programs through qualified independent contractors in the U.S. and Canada. These programs include the installation of products that are sold in our stores, such as carpeting, hard flooring, cabinets, water heaters and solid surface countertops, as well as the installation by third-party service providers of products such as generators and furnace and central air systems. In fiscal 2003, we acquired Installed Products U.S.A., a roofing and fencing installed services business, and RMA Home Services, a replacement windows and siding installed services business.

Competition.?Our business is highly competitive, based in part on price, store location, customer service and depth 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 discount stores, local, regional and national hardware stores, mail order firms, warehouse clubs, independent building supply stores and, to a lesser extent, other retailers. In addition to these entities, our EXPO Design Center stores also compete with specialty design stores or showrooms, some of which are only open to interior design professionals. Due to the variety of competition we face, we are unable to precisely measure the impact on our sales by our competitors. We estimate that our share of the U.S. home improvement industry is approximately 11% and we believe that we are an effective and significant competitor in our markets.

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