A giant regains its momentum

By now, the story is quite well known. Frank Blake took over as CEO of Home Depot in January of 2007 to replace Bob Nardelli, the ex-GE executive who had been brought in to lead Depot into the future. Nardelli's tenure was a disaster for Depot, but Blake has returned the company to its glory days, and its just-completed year continues to show the amazing difference the right leader can make, even in determining the destiny of a giant retail firm. Here is a quick statistical look at more than two dozen facts about the world's largest home center chain as of its 2012 year: 1. Overall sales reached $74.8 billion, up 6.2 per cent This growth is better than that of most other retail chains which have reported their results for 2012. 2. Earnings, however, increased an impressive 21.5 per cent to $4.5 billion, more than many of the world's other home centers achieve in annual sales. 3. It has not been opening new stores during the last several years, but is operating 2,256 units in the U.S., Canada and Mexico. Depot is operating multiple units in most major U. S. cities. The recent recession and America's slow recovery has not been conducive to aggressive expansion for any retailer. 4. It finally gave up on China and closed its last 7 stores there, taking a $145 million write-off. Like the UK's B & Q, Depot found China a tough challenge, though B & Q continues with a modified approach. Depot closed more stores earlier, then finally realized its concept was not going to be successful there. 5. Depot's operational concept today differs greatly from that of its founders, which relied on direct-to-store shipments. Today's Depot is patterned more after that of Walmart, the world's largest retailer, by utilizing warehouses and distribution centers to feed its stores. Lowe's, its major competitor, has always operated distribution centers to feed its stores. Depot's warehouses and distribution centers are using the very latest in mechanization for maximum efficiency. 6. It is operating 153 distribution centers and warehouses of varying types and sizes in 35 states, including 18 highly mechanized distribution centers 7. Ot its current store count, 1,976 units are in the U. S., 180 are in Canada and 100 are now operating in Mexico. 232 U.S. stores are in California, with 178 in Texas, the second most important state. 8. It opened only 2 new stores in 2012, plus one relocation, which emphasizes just how slow America's recovery has been. 9. Its stores average just over $33 million in annual sales and achieved more than $318 in sales-per-square-foot. 10. It has continued to increase its gross margin during the last several years, and last year average 34.6 per cent while at the same time successfully reducing its SGA (selling, general and administrative expenses) to 22.1 per cent. Eliminating the China write-off, SGA would have been only 21.9 per cent. Gross margin has steadily been increasing during the last several years and now is at an all-time high. 11. Its inventory at yearend was $10.71 billion, giving it a Sales-to-Inventory Ratio of nearly 7 to 1. (This is an easy way to compare your performance to that of the world's largest home center chain). 12. Its average sale was $54.89, up 2.9 per cent from the previous year and nearly $3 up from several years ago. 13. Since 2010, sales have increased from $68 billion to $74.8 billion, earnings per share from $2.01 to $3.00 per share. 14. Comp-store sales were up 4.9 per cent, which is considerably better than many other retail chains have revealed for 2012. 15. Stores typically stock between 30 and 40,000 SKUs, a figure largely unchanged. 16. It offers 600,000 SKUs via the Internet and redesigned and improved its web site to make it easier to use. Internet Retailer lists both Depot and Lowe's among its Top 500 web retailers, both within the top 50. 17. Like a number of other major retailers, it now offers Buy On-line; Pick Up in Store and Buy On-Line, Return in Store. 18. It now is operating a special distribution center just to fill Internet sales and another one is planned. Such actions are necessary in order to compete with web retailers like Amazon, which has more than 70 distribution centers around the world to quickly get merchandise to buyers. 19. Sales-per-employee are well over $250,000 a year. Total employment is 340,000, but many of these are part-timers working less than 40 hours. 20. With few new stores opened, average store size continues to be 104,000 sq. ft., plus 24,000 sq. ft. for garden centers. 21. It is operating 3 sourcing offices in China, plus offices in India, Italy, Mexico and Canada. 22. It continues to place a lot of emphasis on environmentally friendly products, in sourcing, in-store signing and other marketing efforts. 23. Breaking out sales by 4 broad categories reveals plumbing, electrical and kitchen accounting for 30.8 per cent; hardware and seasonal, 29.4 per cent; building materials, lumber and millwork, 20.6% and paints and flooring, 19.2 per cent. Those are largely unchanged over the past several years. 24. While attaining 10 per cent operating profit and return on capital of 15 per cent, the company has set an ambitious goal of 12 per cent operating profit and 24 per cent return on capital for 2015. 25. It devoted 10 million hours to training its employees last year as Blake realized that service had deteriorated under Nardelli's focus on fewer full-time salespeople and the use of more poorly trained part-timers. 26. Nearly 60 per cent of employee hours were spent serving customers; 40 per cent for store-related tasks such as housekeeping, another measurement for readers. 27. $195 million in bonuses were paid to hourly workers in the stores, a process initiated by Blake to help insure good customer service.