The Home Depot: A Timeline of Key Events

Transcription

1 The Home Depot: A Timeline of Key Events This report is part of our Retailers Timelines series. In this report, we examine key events in Home Depot s recent history. 1) Home Depot undertook meaningful steps to strengthen its online business and supply chain in the years between 2015 and ) In December 2017, Home Depot acquired The Company Store, an online home decor retailer from Hannover Direct. 3) In January 2017, Home Depot invested in a wind-powered renewable energy project operated by EDP Renewables. 4) In January 2015, Craig Menear became the Chairman of Home Depot, effective from February Deborah Weinswig CEO and Founder Coresight Research deborahweinswig@coresight.com US: HK: CN:

2 Home Depot Company Description Home Depot is the largest American retailer of home improvement products with 2,284 megastores, as of March It also owns US company Interline Brands, which is a maintenance, repair and operations contractor for institutional and commercial facilities. Figure 1. Home Depot: Company Profile Key Data Points Company Name Ticker Symbol Founder(s) Description The Home Depot Inc. NYSE: HD Founded Year 1978 Locations 2,284 stores as of March 2018 Revenue (FY 2017) CEO Company Headquarters Corporate Website Countries of Operation Key Competitors Source: Press releases/company reports Bernard Marcus, Arthur Blank, Kenneth Langone, Ronald M. Brill and Pat Farrah $100.9 billion Craig Menear Atlanta, Georgia, US corporate.homedepot.com US, Canada, Mexico Lowe s, Big Lots, Orchard Supply Hardware, True Value, Tractor Supply Co., Walmart, Amazon Key Events Overview, ) : In the last three years, the company has strengthened its online business and supply chain by increasing investments across these segments. In November 2015, Home Depot announced the opening of an online customercare operations center in Tempe, Arizona, and acquired The Company Store, an online home decor retailer in December It also opened a fulfillment center in Ohio to support its online business and IT initiatives in September ) : In 2014, Home Depot scaled its initiatives to support its online business. The company announced the opening of a direct fulfillment center in Atlanta to strengthen same-day delivery and also support its online business through new warehouse management and material handling systems. This step followed the company s acquisition of Blinds.com, an online window covering retailer, in January In order to improve logistics and distribution across Mexico, Home Depot announced an investment of $197 million in January 2013 and the opening of six new stores in the country. In September 2012, Home Depot partnered with JD.com to sell its products online in China. 3) : In January 2011, Home Depot announced various store openings including the CW Home Depot store in the Philippines. The company announced its plans to open seven new stores in Mexico in 2011 which followed its announcements of six store openings in the US in fiscal year 2010, and 12 new global stores in the year This period also saw the company form many important partnerships, including one with Martha Stewart in

3 Figure 2. Home Depot: Events Timeline, Date Event Category Event to sell her brand s cleaning products and paints. The partnership with Stewart had followed Home Depot s partnership with Citigroup to reduce the fixed costs associated with its private-label credit cards in Aug 2018 Product Offering Home Depot announces its partnership with Bosch, a premium home appliances brand, and starts selling Bosch products both online and offline across the US. Jan 2018 Expansion Home Depot Mexico announces its plans to invest $90 million to open new business units and enhance its e-commerce platform. The company plans to refurbish around 122 stores and open two business units before the end of the year. Dec 2017 Speculation Home Depot considers buying XPO Logistics a logistics and transportation company specializing in transportation of large goods to stop Amazon.com from buying it, according to Recode.net. Dec 2017 M&A Home Depot acquires The Company Store, an online home decor retailer from Hannover Direct. The deal does not include five stores of The Company Store which are shut down later. Sales from lighting, flooring and window treatment account for $25 billion or 25% of the total sales at Home Depot, while the sales from home decor account for 3% of the total sales, according to Credit Suisse analyst Seth Sigman. Dec 2017 Strategy Home Depot announces the repurchase of common stock worth $15 billion under a share repurchase program. Jan 2017 Expansion Home Depot invests in a wind-powered renewable energy project operated by EDP Renewables, a wind farm operator across North America. The energy derived from the project is enough to power 100 Home Depot stores for as long as a year. Oct 2016 Management Change Home Depot announces the appointment of Jeff Boyd to its board of directors. Boyd was involved in a strategic role and had a prominent role to play in resurrecting Priceline Group, an online travel-related services provider. Nov 2015 Expansion Home Depot announces the opening of an online customer-care operation in Tempe, Arizona. This is the third customer-care facility exclusively for the company s online business. Oct 2015 Management Change Home Depot announces the appointment of Linda Gooden to the company s board of directors. Gooden retired from Lockheed Martin Corporation in 2013 as EVP and comes with extensive experience in cybersecurity, information technology and finance. Sep 2015 Expansion Home Depot announces the opening of a direct fulfillment center in Troy Township, Ohio. This center supports the company s online business, information technology and the overall interconnected retail strategy. Sep 2015 Expansion Home Depot announces the official opening of the 200,000-square-foot Marietta Technology Center, which is expected to create 500 IT jobs. Sep 2015 Expansion Home Depot raises $1.5 billion from senior unsecured notes. The company uses the proceeds from these notes for corporate purposes and for the funding of the Interline Brands acquisition. Aug 2015 Strategy Home Depot announces the expansion of its partnership with Honda Power Equipment, after which it starts selling select models of Honda generators at 300 of its Pro Desk locations and on its website in the US. Aug 2015 Management Change Home Depot appoints Gerard J. Arpey to the company s board of directors. Arpey was formerly the CEO and Chairman of AMR corporation and American Airlines. Currently, Arpey is a partner in the Emerald Creek Group. Jul 2015 Management Change Home Depot appoints Bill Lennie as EVP, Outside Sales and Service. Lennie is presently responsible for leading the company s Pro, Maintenance Repair Operations and installation businesses, after having previously served as president of Home Depot Canada. 3

4 Jul 2015 M&A Home Depot acquires Interline Brands from P2 Capital Partners, Goldman Sachs Group s Merchant Banking Division and Interline Brands for an enterprise value of $1.6 billion. Apr 2015 M&A Home Depot sells two of its buildings to Sigo Partners for $3.4 million. Feb 2015 Strategy Home Depot announces the purchase of shares worth $18 billion from its common stock. The company expects to finish the buyback by the end of fiscal year Jan 2015 Management Change CEO and President Craig Menear is appointed Chairman of Home Depot, effective from February He succeeds Frank Blake who retires from the position of Chairman. Jan 2015 M&A Home Depot signs an agreement with HD Supply for the acquisition of all assets of HD Supply Distribution Services from HD Supply. The deal is valued at approximately $200 million. Oct 2014 Management Change Marc Powers is appointed Home Depot s EVP, US Stores. Powers replaces Marvin Ellison who resigned from the position on October 10, Jul 2014 Strategy Home Depot announces its partnership with MakerBot, a desktop 3D printer manufacturing company. Under the agreement, Home Depot starts selling Makerbot printers in a pilot program that runs across 12 stores in California. Aug 2014 Management Change Home Depot announces that Craig Menear will be CEO and President of the company effective from November Feb 2014 Management Change Home Depot announces that Craig Menear will be the President of the company s US retail business and manage the operations of all its stores in the US. Prior to this appointment, Menear was EVP of the company s merchandising division. Feb 2014 Expansion Home Depot announces the opening of its direct fulfillment center in Locust Grove, Atlanta. This fulfillment center is the first of its kind, and it strengthens the company s same-day delivery services and also supports its online business. Jan 2014 M&A Home Depot acquires Blinds.com, an online window covering retailer and retains its staff and management at Blinds.com s Houston location. Sep 2013 Management Change Helena Foulkes is elected to Home Depot s board of directors and she is also made a member of the company s Finance and Leadership Development & Compensation Committees. Sep 2013 Expansion Home Depot announces the opening of its 1.6-million-square-foot distribution center in Joliet, Illinois. May 2013 Management Change Home Depot announces the election of Francis Blake as its Director. Mar 2013 Expansion Home Depot announces the construction of a 200,000-square-foot warehouse to bring high-demand construction supplies, destined for its stores on Long Island, Queens and Brooklyn, by rail to the Brookhaven Rail Terminal in Yaphank. Jan 2013 Expansion Home Depot Mexico plans to open six new stores in 2013 with a planned investment of $197 million. The company expects these stores to improve logistics and distribution across the country. Dec 2012 M&A Home Depot acquires BlackLocus a tech startup that develops technology to help retailers in making data-driven pricing decisions from Mercury Fund, Silverton Partners and other shareholders. Dec 2012 Product Offering Home Depot announces the expansion of its product offerings by partnering with Samsung Electronics. The company launches Samsung products both offline and online on December 9. Nov 2012 Management Change Ronald Sargent announces his retirement from Home Depot s board of directors. Sep 2012 Strategy Home Depot announces its partnership with JD.com. This partnership gives it access to JD.com s online marketplace for selling its goods in China. Sep 2012 Strategy Home Depot announces the closure of seven of its big-box stores in China in order to focus on specialty stores and online offerings. 4

5 Jul 2012 Product Offering Home Depot announces that it will sell Electrolux appliances including dishwashers, laundry machines, freezers, ovens and refrigerators in the US. Feb 2012 Strategy Home Depot extends its partnership with Martha Stewart till March Jan 2012 M&A Home Depot acquires Red Beacon, an online services provider company, from Mayfield Fund and Venrock. Dec 2011 Strategy Home Depot announces the closure of its distribution centers in West Phoenix and shifts their operations to Riverside, California. The move is expected to increase efficiency and reduce costs. Jan 2011 Expansion Home Depot announces that it will open a new CW Home Depot store in Makati, the Philippines. The store opens in May 2011 to cater to the rising demands in the Philippines for building, finishing and furnishing needs of homeowners and builders. Jan 2011 Executive Change Home Depot announces the promotion of Aaron Carmack to the position of President of Home Depot, Canada. Dec 2010 Expansion Home Depot announces plans to open 11 new stores, including seven in Mexico, in Aug 2010 Product Offering Home Depot starts selling 40W Ecosmart LED bulbs at homedepot.com. The bulbs are priced at $19.97 and have an expected lifetime of 50,000 hours. Feb 2010 Expansion Home Depot announces its plans to open six new stores in the US by end of fiscal year Dec 2009 Expansion Home Depot announces its plans to open a distribution center at Mill Creek Corporate Center in Salem, Oregon. The center improves the company s supply chain and employs 250 people over the next four years. Dec 2009 Partnership Home Depot announces its plans to sell paint and cleaning products from Martha Stewart by The Martha Stewart line replaces Home Depot s previous line of Ralph Lauren paint. Feb 2009 Expansion Home Depot announces its plans to open a regional distribution center in Topeka, Kansas. The center is housed in a 465,000-square-foot building which cost around $25 million. Jan 2009 Expansion Home Depot announces plans to open 12 new stores in Sep 2008 Expansion Home Depot announces plans to open its store in Huntington Beach, California. This 126,000-square-foot store employs 180 workers. Aug 2008 Strategy Home Depot signs a deal with Citigroup to reduce and stabilize the fixed costs associated with its private-label credit card and Mastercard. Aug 2008 Management Change Home Depot announces the promotion of Marvin Ellison to EVP, US Stores. Ellison replaces Paul Raines, who was serving in the same position since April Mar 2008 Expansion Home Depot announces its plans to open a regional distribution center in Alabama. The cost of this center s construction is around $40 million. Source: Company reports/s&p Capital IQ/Coresight Research 5

6 Home Depot in Charts Figure 3. Home Depot s Yearly Revenues (Left Axis, USD Bil.) and Revenue Growth (Right Axis, %), FY13 FY17 $120 $100 $80 $60 $40 $20 $0 $94.60 $ $83.20 $ % $ % 6.7% 5.5% 5.4% FY13 FY14 FY15 FY16 FY17 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Revenue Revenue growth Source: Company reports/coresight Research Figure 4. Home Depot s Yearly Online Sales as a Percentage of Total Sales, FY13 FY17 3.5% 4.5% 5.3% 5.9% 6.7% FY13 FY14 FY15 FY16 FY17 Source: Company reports/coresight Research Figure 5. Home Depot Global Store Count, FY13 FY17 2,284 2,269 2,274 2,278 2,263 FY13 FY14 FY15 FY16 FY17 Source: Company reports/coresight Research 6

7 Figure 6. Key Objectives Under the One Home Depot Experience Company Strategy Home Depot is transforming the shopping experiences for both professional and DIY customers. The primary strategy of the company is to invest in its supply chain and boost its same-day and next-day delivery capabilities to cater to growing online demand. The company announced in its 2017 annual report that it plans to invest a total of $11 billion on store remodelling, bettering its supply chain and digital experience, and on its employees. Strategies outlined by Home Depot in its annual report are given below. 1) Investing in Supply Chain to Make It Faster and More Efficient: Home Depot plans to invest around $1.2 billion of the $11 billion on its supply chain over the next five years owing to growing consumer confidence and expectations in product fulfillment and delivery. The company expects to increase same-day and next-day delivery services to cover approximately 90% of the US population by the end of fiscal year ) Increased Focus on Pro Customers: Home Depot will continue to leverage its service providers. Bill Lennie, Home Depot EVP said, With over 40% sales penetration, serving the Pro customer is important to our success. The company s Pro segment s sales have outpaced its DIY sales consistently for several years, and it expects to become the primary source for all needs of Pro customers. The average ticket size for a Pro customer is $6,000 annually and Home Depot has taken meaningful steps such as its co-branded credit card to connect better with them. The card has an approval rate of 72% and the average credit offering is $6,700. 3) Investing in Business to Create the One Home Depot Experience: The company plans to provide its customers with a seamless shopping experience. In the past, the company s customers have complained that they find its stores hard to navigate and that it takes too long to check out. Home Depot is investing in navigation as well as in the customer-facing touchpoints at its stores to enable a faster and easier checkout experience. It is also adding automated checkout lockers in stores to enable faster pickup of online orders. Focus Area Stores Associates Interconnected Experience Products and Innovation Professional Customers Supply Chain and Delivery Key Objectives The company aims to invest in systems and physical capabilities to enable a faster checkout experience for its customers. It also plans to expand its pilot initiatives such as self-service lockers that enable customers to collect their online orders without visiting the service desk. Home Depot plans to simplify the systems its associates use to help them provide improved customer support. It is working to combine around 10 such systems into a single system called Order Up. Home Depot has a long-term objective of offering the best shopping experience and it will continue to harmonize experiences across all sales channels in addition to improving personalization tools on its website. Home Depot will optimize the assortment of its products and advance the localization approach for its products. The company plans to build a new personalized B2B web experience and will leverage Interline Brands to increase its product assortment. Home Depot will expand the options for same-day and two-day delivery. It will focus on bulky product delivery options and open more fulfillment centers. Source: Company website 7

8 Company Outlook Home Depot is commited to investing in its business to enhance the customer experience and improving its logistics to strengthen the online business as sales through this channel continues to grow. The company has lately raised investments in store lighting, signages and a better checkout experience along with investments in an omnichannel experience. The consumer-centric approach and continued investments in technical advancements will play a pivotal role in growing Home Depot s sales. 8

9 Deborah Weinswig, CPA CEO and Founder Coresight Research New York: Hong Kong: China: Manik Bhatia Senior Research Executive Hong Kong: 6/F, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong London: Marylebone Road London, NW1 6JQ United Kingdom New York: 1359 Broadway, 18th Floor New York, NY Coresight.com 9