Home Depot – 2010 Financial Report
For fiscal year ended January 30, 2011 ("fiscal 2010"), Home Depot reported Net Earnings of $3.3 billion and Diluted Earnings per Share of $2.01 compared to Net Earnings of $2.7 billion and Diluted Earnings per Share of $1.57 for fiscal year ended January 31, 2010 ("fiscal 2009"). The results for fiscal 2010 included a $51 million pretax charge related to the extension of our guarantee of a senior secured loan of HD Supply, Inc. (the "HD Supply Guarantee Extension"). The results for fiscal 2009 reflected the impact of several strategic actions initiated in fiscal 2008. These strategic actions resulted in store rationalization charges related to the closing of 15 underperforming U.S. stores and the removal of approximately 50 stores from their new store pipeline, business rationalization charges related to the exit of our EXPO, THD Design Center, Yard birds and HD Bath businesses (the "Exited Businesses") and charges related to the restructuring of support functions (collectively, the "Rationalization Charges"). These actions resulted in pretax Rationalization Charges of $146 million for fiscal 2009. The results for fiscal 2009 also included a pretax charge of $163 million to write-down our investment in HD Supply, Inc. Additionally, fiscal 2009 included earnings of $41 million from discontinued operations, net of tax, for the settlement of working capital matters arising from the sale of HD Supply.
Home Depot reported Earnings from Continuing Operations of $3.3 billion and Diluted Earnings per Share from Continuing Operations of $2.01 for fiscal 2010 compared to Earnings from Continuing Operations of $2.6 billion and Diluted Earnings per Share from Continuing Operations of $1.55 for fiscal 2009. Excluding the HD Supply Guarantee Extension charge from their fiscal 2010 results, and the Rationalization Charges and the write-down of their investment in HD Supply from their fiscal 2009 results, Earnings from Continuing Operations were $3.4 billion and Diluted Earnings per Share from Continuing Operations were $2.03 for fiscal 2010 compared to Earnings from Continuing Operations of $2.8 billion and Diluted Earnings per Share from Continuing Operations of $1.66 for fiscal 2009.
Net Sales increased 2.8% to $68.0 billion for fiscal 2010 from $66.2 billion for fiscal 2009. Home Depot’s comparable store sales increased 2.9% in fiscal 2010, driven by a 2.4% increase in their comparable store customer transactions and a 0.5% increase in their comparable store average ticket to $51.93. Comparable store sales for their U.S. stores increased 2.5% in fiscal 2010. In fiscal 2010, Home Depot focused on the following four key initiatives:
Customer Service: Home Depot’s focus on customer service is anchored on the principles of taking care of their associates, putting customers first and simplifying the business. The roll out of their Customers FIRST training to all store associates and support staff in fiscal 2009 has brought simplification and focus across the business, and they repeated and refreshed the Customers FIRST training during fiscal 2010. The Customers FIRST program is part of their ongoing commitment to improve customer service levels in their stores, and they continued to see the benefit of this training in improved customer service ratings for fiscal 2010 compared to fiscal 2009. Also in fiscal 2010, Home Depot completed the deployment of their FIRST Phone, a new hand held device that provides multiple functions such as inventory management, product location and mobile checkout. The core purpose of this new device is to reduce tasking time for their store associates to allow them more time to focus on customer service. Home Depot ended fiscal 2010 with more than half of their store payroll allocated to customer facing activities rather than tasking activities. They have a customer facing store payroll target of 60%, and they believe they will achieve that by 2013.
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