Home Depot Working Distribution System

New York, NY, June 27, 2007–Home Depot sees improvements to its centralized distribution system as one of several ways to focus on improving shareholder value, an executive said at a conference.

Mark Holifield, Home Depot’s senior vice president for the supply chain, said at the Wachovia Securities 2007 Nantucket Equity Conference on Tuesday that Home Depot is working to improve customer service, product innovation and availability and stores’ shopping environment.

The company also wants to improve its business with professional builders. Currently 30 percent of customers are professionals.

Home Depot is attempting to bolster its business five months after former chief executive Bob Nardelli’s six-year tenure ended with his resignation, amid shareholder protest over his high salary as the company’s stock slumped.

Last week, Home Depot said it would sell its wholesale distribution business and buy back $22.5 billion in stock.

Next up is improving inventory management and product distribution, Holifield said. The company plans to update its retail inventory management system, putting basic measurement tools in place in 2007 and updating the system between 2008 and 2010.

Home Depot will also put a central distribution system in place. Currently, 40 percent of products flow through a central network, but the rest is direct to stores. The company hopes 80 percent of products will be distributed centrally eventually.

“We have got to radically increase the amount of central distribution at The Home Depot,” Holifield said. “All this is about improving the velocity through the supply chain. All of it is intended to improve our in-stock at stores, our inventory turnover and our distribution costs.”