Top 20 Retailers

Home Channel News, August 7, 2000

Through the first six months of 2000, the industry's leaders survived a soggy spring and report that business prospects through the remainder of the year look positive.

Home Depot

The company is on target to open 200 stores this year, including three specialty formats

ATLANTA -- Sales increases, expansion, new programs, a bigger international presence and a new retail concept store have kept Home Depot on track this year in its role as the world's largest home improvement retailer.

Home Depot reported a 29 percent increase in net earnings, to $629 million, in the first quarter of 2000, during which its sales rose 24 percent to $11.12 billion, and the average customer transaction increased 3 percent.

Home Depot opened 41 stores in the first quarter of 2000, bringing its total to 971 -- including stores in Canada, Puerto Rico and Chile -- and announced plans to open a half dozen stores in Argentina. The retailer plans to open 200 stores this year, and hit the 1,000-unit mark last month. (Home Depot reached the 500-store landmark in February 1997.)

Depot has steadily introduced specialty-store concepts to its stable of business, and last month added another when, on July 13, it opened the 45,500-square-foot Floor Store in Piano, Texas. That unit stocks 15,000 skus of flooring, wallcovering and window treatments.

The retailer's testing of its Villager's Hardware concept has progressed this year in New Jersey. The final Villager's test store and the fourth in the Garden State is set to open in Elizabeth in November. The third Villager's -- a 36,000-square-foot, 37,000-sku hardware store format -- is scheduled to open this month in Saddle Brook.

Earlier this year, the retailer rolled out its "pro initiative" to more than 100 stores, whose products and services are geared more to contractors and remodelers. Depot's acquisition last year of the distributor Apex Supply of Atlanta helped expand its sales to professional and commercial plumbing and HVAC customers. With Apex and in partnership with Trane Co., Home Depot is testing the sale and installation of whole-house heating and cooling systems in nine stores.

Home Depot's expansion of its Expo Design Center format proceeds apace. At least 200 of the home decor showrooms are scheduled to open in North America over the next five years -- 11 are set to open this year.

In addition to the stand-alone, specialty projects Home Depot has created, the retailer is taking steps to make changes and improvements inside its warehouse stores. On the product side, Home Depot has become the exclusive retailer of Thomasville's new cabinet line. By the end of this year, all of its warehouse home centers will carry a full line of major appliances, and offer another 2,000 skus on a special-order basis.

It will also rollout tool rental departments to 400 of its stores -- from 50 at the beginning of 1999 -- by the end of this year.

Other programs Home Depot tried this year include partnering with Toys "R" Us to market a line of Depot-branded tools for children, launching the Home Improvement Loan Account program and partnering with Allstate Insurance.

The loan program, which will be available in all of Depot's U.S. stores by the fall, allows homeowners to apply for loans between $3,000 and $30,000 with competitive fixed rates through GE Capital Financial. Under the Allstate agreement, the insurance company will refer its policyholders with property damage claims to Home Depot for products and services. The program currently applies to flooring replacement -- materials and installation -- and may expand.

One of Home Depot's biggest programs this year is the launch of its e-commerce site. The site -- which will cater to both pros and DIYers -- will be tested in the Las Vegas market this summer before being expanded in five or six other markets. Home Depot -- which was named a top employer for Information Technology workers by Computerworld magazine -- revamped its Web site last year and plans to roll out its e-commerce program, market by market, using store based fulfillment.

As it expands, Home Depot is expected to need another 200,000 employees by the end of 2003. So the chain continues to look for innovate ways to locate employees -- about 200 of whom are needed for a typical warehouse. Computerized kiosks in all Depot stores are being used to find a "better caliber of Home Depot associate," the retailer said.

Paradoxically, the company is also grappling with a number of lawsuits, filed by former employees, about its recruitment, hiring and promotion practices.

In May, the retailer settled a complaint from the Michigan Department of Civil Rights, which was investigating claims by former and current employees of racial discrimination in Depot's recruitment, hiring and promotion policies. The details of the settlement were confidential, but the state will continue to monitor Home Depot practices around Detroit for two years. Three racial discrimination suits by former or current employees were field against Home Depot in Austral, Ga; in Southfield, Mich.; and southeast Florida.