Atlanta, GA, Jan. 6--Home Depot hammered out a stellar 2003, with its stock price soaring, earnings showing healthy growth and new store openings continuing apace, according to the Atlanta Journal-Constitution.
In 2004, the home improvement retailer must build on that momentum. In its 25th year in business, it must prove to analysts and investors that it can sustain its strong performance.
Even a 48% gain in its stock price last year didn't offset a 53% decline the year before, when Home Depot had the ignominious distinction of being the Dow's worst performer.
To ensure another good year, analysts say, Home Depot must convince investors that growth opportunities exist, even in a home improvement sector some fear has little use for new big box stores. That could lead Home Depot to look overseas for expansion, Deutsche Bank analyst Michael Baker said.
In particular, Baker said, a combination of Home Depot and Kingfisher, a large European home improvement retailer, might make sense in the future. On Monday, Kingfisher stock rose about 3% after a London newspaper reported that Home Depot might offer more than $14 billion for the London-based company.
This year will tell whether Chairman and Chief Executive Bob Nardelli's strategy can maintain its momentum and continue to gain traction after finally showing positive results in 2003.
Nardelli, a former top executive at General Electric, joined Home Depot in December 2000 and quickly replaced the company's freewheeling approach with a top-down management style and centralized merchandising.
The company's stock performance in 2002 made some analysts question Nardelli's techniques and processes.
The changes also upset some longtime executives and employees, who had become used to the ways of the company's original management.
On another front, Home Depot may settle by the end of the month a legal dispute with Sunshine Ace Hardware over the use of the slogan "You Can Do It. We Can Help."
Sunshine Ace, a chain of four hardware stores in southwest Florida, sued Home Depot in June in U.S. District Court in Fort Myers, FL, saying the company's new ad slogan violates a trademark Sunshine Ace has held for several years.
Since then, the chains have said they were trying to schedule mediation and could settle the dispute within 90 days, or by the end of January.
In February, Home Depot will announce its fourth-quarter and fiscal year 2003 earnings. The earnings will be significant because for the first time, Home Depot will top $60 billion in revenue. Nardelli has been touting recently that the company will be the youngest retailer to reach that milestone.
In late winter or early spring, Home Depot is expected to release its nominees to replace outgoing directors Richard Grasso and William Davila.
As former chairman of the New York Stock Exchange, Grasso's membership on Home Depot's board came under fire last year. But the conflict of interest for serving as a director of a company that trades stock on the NYSE disappeared when Grasso was forced to resign as head of the Big Board in September.
Home Depot officials had hoped Grasso would seek re-election when his term expires in May, but he decided against doing so. Davila will retire from the board.
This spring, Home Depot releases its proxy statement. The document will reveal what Nardelli and other top executives were paid in 2003. In 2002, the board cut Nardelli's salary 17%, to $11.5 million, because the company failed to meet financial objectives.
But look for a pay increase this time around, because Home Depot likely reached the financial goals for 2003.
In late May the company will hold its annual meeting in a city other than Atlanta. Last year, the company held the meeting outside Atlanta for the first time, choosing Chicago. Home Depot is keeping this year's meeting site a secret, but likely candidates include New York and Los Angeles.
August will be the big month of celebration for Home Depot. The company will hold a 25th anniversary bash in Orlando. Some big-time entertainment is being pursued, with possibilities including Cher, a favorite of the motorcycle-riding Nardelli, and Florida native Tom Petty. The venue is expected to be Disney World.
The fall will bring a new challenge for Home Depot, in its own back yard, as Lowe's opens its first intown Atlanta location. The battle is emblematic of the fight between Home Depot and Lowe's that now is playing itself out in large metro areas across the country as Lowe's concentrates its growth in and around major cities such as Chicago, New York and Atlanta.
