Home Depot’s annual meeting on May 24 was a marked contrast to last year’s debacle, when Bob Nardelli, the company’s chairman, president and CEO, shut off the microphones and refused to take questions from shareholders. The company later issued an apology, and Nardelli stepped down in January.
Frank Blake, Nardelli’s replacement, set the tone early with his opening statement. “We apologize for last year’s meeting,” he said. “It was a mistake, and it won’t happen again.” The unflappable CEO then let shareholders have their say, and many took aim at lagging customer service and sinking stock value. Shareholders put forth nine resolutions, including ones that would give them input on executive compensation and retirement benefits. None of the resolutions passed, however.
Blake reassured shareholders that Home Depot was returning to its core values of good merchandising, clean stores and helpful employees. To underscore the point, Blake quoted from, “Built from Scratch,” written by Home Depot co-founders Bernie Marcus and Arthur Blank. He also introduced Marcus and Blank, who attended the meeting in Atlanta, to a standing ovation.
|Q1 Net income|
|Down 29.5 percent|
|Up 0.6 percent|
Home Depot’s board of directors, which was absent in 2006, also attended this year. (The one exception was Mitch Hart, who had a previous engagement.) All but two of the directors, chief executive Angelo Mozilo of Countrywide Financial Corp. and former Homeland Security Secretary Tom Ridge, stood for re-election. When the votes were tallied, all had been re-elected.
“We’re at a turning point for our company,” Blake told the assorted investors, employees and customers inside the Cobb Galleria Centre in Atlanta. “We’re going to invest now so that when the sector turns, we’ll be stronger than ever.”
This was the same message Blake conveyed to analysts a week earlier, during the company’s first-quarter earnings conference on May 15. Despite some badgering over planned capital expenditures on additional staffing initiatives, Blake insisted that the key to better customer service was improved employee morale.
The CEO would not comment on the possible sale of the HD Supply division, saying that the company was still reviewing its alternatives.
It was a tough first quarter for big-box home centers (see Lowe’s article on this page) .Home Depot reported net earnings of $1.05 billion, down 29.5 percent from $1.48 billion in the same period in fiscal 2006.
Home Depot sales for the first quarter totaled $21.6 billion, a 0.6 percent increase from the first quarter of fiscal 2006. Total sales in the retail segment declined 4.3 percent to $18.5 billion, and comparable-store sales declined 7.6 percent. Total sales in the HD Supply segment grew by 46 percent to $3.1 billion, reflecting sales from acquired businesses.