While Home Depot plans to throttle back its expansion plans, the company still expects to grow at a double-digit pace for the next few years.
Robert Nardelli, company president and chief executive officer, said Home Depot will still wow investors with eye-popping 15 percent annual increases in sales over the next two years and earnings increases of over 18 percent to 20 percent through 2005. The company's sales will be about $53 billion this fiscal year, and will break $100 billion per year by 2005, he said.
According to an Associated Press (AP) report, Nardelli, a former GE exec nearing his first anniversary as Home Depot's leader, said the company plans to slow the number of new stores it opens each year, with fewer than 200 opening in 2002 and a nearly 50 percent cut in the number of its EXPO Design Center stores. Instead, Home Depot plans to focus those stores in the top-100 U.S. metro areas.
“The economic boom, the ‘build-it-they-will-come’ — the world has changed,” Nardelli said. “And we're changing. Those 200 stores will have a different shape, size and fit.”
This year, Home Depot will open 184 traditional stores, 10 EXPO Design Centers, four Home Depot Pro stores, and a test of Home Depot Urban, a smaller store that will open in Boston and suburban Chicago.
The company's growth strategy relies on diversifying revenue through better performance of existing stores, new residential services and increased sales to professional contractors.
Home Depot plans to lure contractors and other building professionals by adding “pro” services to 966 stores by the end of 2002. The company also will begin a supply operation for large industrial customers and expand a tool-rental program to more than 1,300 stores by the end of 2004.
The company also announced a venture with Illinois-based Service-Master Inc. to market services such as lawn care, carpet cleaning and pest control through kiosks in Home Depot stores.
Home Depot's optimistic assessment of its prospects comes even as its own computerized models show the home-improvement industry seeing flat growth next year, and only modest growth in the following two years, according to the AP report.