New York, NY, March 23--Home Depot Inc. doesn't expect its growth to be hurt when interest rates rise or home building slows, chief financial officer Carol Tome said Tuesday.
Where larger economic factors are concerned, the Atlanta home-improvement retailer's growth is more closely tied to housing turnover, consumer confidence and lumber prices, and signs are positive on those fronts, Tome said. Despite persistently high energy prices, the company expects the industry to grow at an annual pace of 3% to 5% over the next several years.
"We have never experienced prices where oil is $57 a barrel," Tome told investors at a New York conference hosted by Merrill Lynch & Co. "But putting that aside, our industry is very healthy."
For its part, Home Depot aims to boost its own growth with the addition of 175 stores this year, and by continuing to increase its sales at stores open at least a year - or same-store sales, a key measure of retail performance. This year, Home Depot expects its same-store sales to increase 4% to 7%.
Total sales are expected to increase 9% to 12%, with equal-sized boosts from customer traffic and average transaction size, while store conversions are expected to contribute 1% to 2% of that increase.
But new products and businesses are becoming an increasingly important part of the Home Depot growth story, said Frank Blake, executive vice president of business development. The company sees perhaps the biggest opportunity in services, which it estimates to be a $110 billion market. Other growth opportunities include increased wholesaling to professional customers.
Home Depot also is focused on ventures into new markets. In the U.S. that means the traditionally suburban chain will continue to build more stores in urban areas, drawing on its experience and past successes in locations such as Manhattan. Urban markets have the potential to be a $2 billion to $4 billion market. In rural areas, Home Depot sees the potential for $2 billion to $3 billion in sales, Blake said.
Home Depot has learned plenty about the rural market through its experience with rural stores in Canada and Mexico. This year, the company aims to raise its store count in Canada to 136 from 117. In Mexico, where Home Depot had only four stores in 2001, the company aims to boost its store count to 54 from 44 this year, and sees the potential for $1 billion in sales by 2006.
