Atlanta, GA, Aug. 19--Home Depot Inc. chief executive officer Robert Nardelli rewarded store managers who met sales goals last quarter with a four-wheel prize: pickup trucks painted orange to match the logo color of the world's largest home-improvement chain.
"It is really like a race car," said Monty Marsh of his 2003 Chevrolet Silverado, customized with leather seats and racing stripes. "I have to keep my kids out of it. They want to take it on dates."
The incentives are part of Nardelli's push to revive revenue and fend off competitor Lowe's Cos. Inc. after the former General Electric Co. executive spent most of his first year lowering expenses. Atlanta-based Home Depot is expected to report today that sales at older stores increased for the first time in a year and that profit rose to 54 cents a share, the average forecast of analysts surveyed by Thomson First Call.
"Bob Nardelli is turning things around," said Wayne Bopp, an analyst with Fifth Third Bank, which owns 4.2 million Home Depot shares. "The problems at Home Depot were deeper than people appreciated."
Nardelli, who had no retail experience before joining Home Depot, also is boosting spending to remodel stores, increasing inventory to make sure shelves are full, adding products such as John Deere tractors and advertising more.
While his hiring in December 2000 jolted some longtime employees who worked for company cofounders Bernard Marcus and Arthur Blank, Nardelli said they now were embracing changes intended to produce extended growth.
"It's exciting to me to see the morale and the confidence in our associates," he said in an interview last month.
Signs of a turnaround had helped Home Depot shares rise 41 percent this year, more than three times the increase of the Dow Jones industrial average. They closed up 36 cents at $33.90 in New York Stock Exchange composite trading. No. 2 Lowe's had increased 39 percent this year.
Lowe's said yesterday that second-quarter profit rose a more-than-expected 28 percent, while sales at stores open at least a year climbed 6.9 percent. Home Depot's older stores are expected to post a gain of 1 percent to 2 percent, though Lowe's sales suggest Home Depot may top forecasts, analysts said.
Nardelli, 55, is making adjustments after some missteps last year, investors said, including hiring more full-time workers. He had increased the number of part-time employees to about half its workforce of 315,000 to have more people on weekends.
That led to higher turnover and hurt service.
Home Depot is installing self-checkout lanes in 800 stores this year to try to cut waiting time, and employees who had worked checkout are being moved onto the sales floor to assist customers. New, larger signs in almost 600 Home Depots will make it easier for people to find merchandise in the approximately 120,000-square-foot warehouse-style stores, the company said.
Store manager Marsh said his 210 employees in Germantown, MD, had boosted sales of carpets, kitchens and gardening products by providing advice and keeping shelves stocked.
The recovering stock price also has bolstered employee morale, which sank with last year's stock plunge, investors said. Home Depot store managers and assistant store managers are paid in part with stock options.
