Atlanta, GA, January 13--Home Depot said at its annual meeting with the investment community that it expects fiscal year 2005 sales will grow between 9-12 percent and that earnings per share will grow between 10-14 percent.
The company plans to add 175 new stores and continue its investment in store modernization and technology through a capital spending plan of $3.7 billion. Comparable store sales for fiscal 2005 are expected to increase 4-7 percent.
"We are clearly on track with the transformation of the company and our strategy of building multiple business platforms for solid, sustainable growth well into the future," said Bob Nardelli, chairman, president & CEO. "Our strong financial performance is enabling us to build upon our leading position across a number of professional businesses and other adjacent markets. We are staying on our strategy of enhancing the core, extending the business and expanding the market."
"Throughout 2004, we saw strength across the company as we executed our strategy," said Carol Tome, executive vice president and CFO. "For fiscal year 2004, we surpassed key growth targets for sales, earnings and year-end cash position. The Home Depot's financial condition remains unparalleled in retailing."
At the meeting, the company made the following forecasts of financial performance for fiscal year 2004, ending January 31, 2005:
- Sales growth of 12.5% to $72.9 billion
- Same store sales of approximately 5%, the company's best annual performance since 1999
- Earnings per share of $2.26, an increase of 20%
- Gross margin expansion of approximately 160-180 basis points
John Costello, executive vice president, Merchandising and Marketing, announced that the company will continue its aggressive pace of introducing distinctive and innovative new products in 2005, supported by continued investment in store modernization, including major "game-changing" merchandising resets that reflect emerging consumer trends.
Major new product introductions in 2005 include
- Expanded assortment of storage and organization products
- Dozens of new Hampton Bay lighting and fan products
- Fashion rugs from brands such as Kathy Ireland
- Ralph Lauren metallic paint
Planned 2005 resets include
- Expanded countertop displays
- High-end kitchen cabinet and appliance vignettes
- Expanded lighting showroom
Costello also announced that The Home Depot has formed a new partnership with LG Electronics to bring a third line of home appliances to the company's product offering in the second quarter of 2005.
"This exciting addition to our product line includes laundry systems, refrigerators, dishwashers, air conditioners, and microwave ovens, among others," Costello said. "Our expanded assortment of distinctive and innovative new products will meet customer needs, build differentiation, and drive revenue and average ticket."
Carl Liebert, senior vice president, Operations, described the actions the company is taking to leverage technology in stores through initiatives such as enhancements to front-end technology and back-end automation.
Frank Blake, executive vice president, Business Development, described the steps the company is taking to continue the already strong growth of its services and installations business.
Blake announced the roll-out of its Special Order Services Initiative (SOSI), a new technology platform that will provide a seamless link among customer, associate and installer to streamline project management for installations. SOSI is scheduled to be rolled out in late 2005. "With over 11,000 installations per day, The Home Depot is emerging as a major force through Installation Services, and we expect to continue our double-digit growth into 2005," Blake said.
