2. Cautionary Statement Pursuant to the Private
Securities Litigation Reform Act of 1995
Certain statements contained herein, including any statements related to the state of the
home improvement market, the state of the housing market, continuation of
reinvestment plans and other factors affecting earnings and sales, earnings and
earnings per share guidance for Fiscal 2008 constitute quot;forward-looking statementsquot; as
defined in the Private Securities Litigation Reform Act of 1995. These statements are
based on currently available information and on our current expectations and
projections about future events. Risks and uncertainties include, but are not limited to:
economic conditions in North America; fluctuating commodity prices; our ability to
successfully operate in countries outside the United States; conditions affecting
customer transactions and average ticket, including, but not limited to, weather
conditions; improving and streamlining operations and customers' in-store experience;
and the impact of competition. Undue reliance should not be placed on such forward-
looking statements as they speak only as of the date hereof, and we undertake no
obligation to update these statements to reflect subsequent events or circumstances
except as may be required by law. Additional information regarding these and other
risks and uncertainties is contained in our periodic filings with the SEC, including our
Annual Report on Form 10-K for the fiscal year ended February 3, 2008.
4. Ja
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$20
$25
$30
$35
$40
$45
7
M
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7
HD Stock Price
Ju
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Se
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5. Private Residential Investment
Private Residential Investment as a % of GDP
8%
7%
6%
60 yr average: 4.8%
5%
4%
Q108: 3.8%
3%
2%
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
Residential Investment Declined $270+ Billion in Past 2 Years
Source: Bureau of Economic Analysis (BEA)
6. 2007 Accomplishments
Invested in Five Priorities
Divested HD Supply in August 2007
Returned excess cash to our shareholders
― Bought back $10.7 billion through a tender offer
Achieved almost half of our $22.5 billion recap plan
― Dividend payout ratio was 38% in 2007
Investing in the Core
8. Associate Engagement
Objective
Deliver excellent customer service
Key ’07 Actions
• Focused on Taking Care of our Associates
• De-leveraged payroll
• Invested in know-how - Master Trade Specialists
• Launched Aprons on the Floor campaign
• Improved training
Availability of Associates
Mean (1 to 10 Scale)
7.61
7.33
Voluntary
Hourly Attrition
down 14%
FY 2006 FY 2007
9. Shopping Environment
Objective
Provide clean and enjoyable shopping environment to our customers
Key ‘07 Actions
• Completed an aggressive list of maintenance projects, including new
lighting and basic clean-up in over half of our stores
• Implemented programmatic maintenance schedule
• Established store standards nationwide
Clean & Uncluttered Aisles
Mean (1 to 10 Scale)
7.93
7.69
FY 2006 FY 2007
10. Product Availability
Objective
Improve in-stock rates and reduce lead times and costs
Key ’07 Actions
• RDC (Rapid Deployment Center) pilot successful
• 3 RDCs live, 5 more planned for 2008
• Launched a new warehouse management system
• Implemented enhancements to our replenishment systems
Products in Stock
Mean (1 to 10 Scale)
8.23
8.09
FY 2007
FY 2006
11. Product Excitement
Objective
Focus on providing great value and product innovation
Key Actions
• Launched Merchandising Transformation
• Accelerated product line reviews
• Expanded Eco Options
Likely to Recommend
Mean (1 to 10 Scale)
8.53
8.48
FY 2006 FY 2007
12. Own the Pro
Objective
Be the number one destination for the Pro customer
Key Actions
• Focused on job lot quantities in key Pro categories
• Expanded Pro Bid Room, including direct ship programs
• Tapped local vendors to provide local product
Pro, Likely to Recommend
Mean (1 to 10 Scale)
8.51
8.43
FY 2006 FY 2007
13. International
CHINA
MEXICO
CANADA
#1 Home Improvement #1 Home Improvement 12 Stores in 6 cities
Retailer in Canada Retailer in Mexico 3,000 Associates
165 Stores 66 Stores Positive ’07 Comps
28,000 Associates
7,000 Associates Market Opportunity:
Nearly $6 Billion in Sales
Nearly $1.5 Billion in Sales $50 Billion
Positive ’07 Comps
Double Digit Positive ’07
Market Opportunity:
Comps
$32 Billion
Market Opportunity:
$17 Billion
14. 2008 Outlook
2008 will be another difficult year
– Sales guidance down 4%-5%
– Earnings per share guidance down 19%-24%
Will continue to invest in our key priorities
Will continue to allocate capital in the most efficient
manner
15. Inventory of Homes for Sale
New
Months Supply of Homes for Sale
11 Homes
10
Existing
Homes
9
8
7
6
5
4
3
Q199
Q399
Q100
Q300
Q101
Q301
Q102
Q302
Q103
Q303
Q104
Q304
Q105
Q305
Q106
Q306
Q107
Q307
Q108
Source: NAR, Moody’s Economy.com, Bureau of Census
Housing inventory continues to grow
17. 2008 Focus
Associate Engagement
– Re-deploy $180 million from non-selling expense to Aprons on the
Floor
Store Environment
– Maintain spend to provide enjoyable shopping environment
Product Excitement
– Complete SCORE implementation in Canada and key elements of
our US merchandising transformation
Product Availability
– Build and operate Rapid Deployment Centers sufficient to supply
40% of US stores, with 30% of COGS flowing through those stores
Own the Pro
– Invest to Serve Pro Needs
19. 1st Lt. Michael
Sgt. 1st Class Cpl. Victor Capt. Sean E.
W. Vega
Travis S. Manuel Lyerly
Bachman Langarica Pro Account
D28 Dept
Supervisor, 6653 Sales Associate,
Receiving D28 Sales
662
Supervisor, 2219 Associate, 443
20. Sgt. Shakere Sgt. Clarence Sgt. Regina C. Sgt.
Taffari Guy “Lavon” Reali Christopher B.
Floyd, Jr. Williams
Lot Associate, Special Services
1084 Associate, 644
D21 Sales Electrical Dept
Associate, 4106 Associate,
HD Supply