Home Depot remodels its business
The home-improvement giant is moving to get its house in order.
Thanks to the housing collapse, Home Depot sales have tumbled by $13 billion over the past three years.
But the company is trying to offset that with cost cutting and improved efficiencies. Home Depot invested $260 million to improve how it gets merchandise to its stores. The firm plans to open 19 cutting-edge regional distribution hubs that will allow stores to stock up in 25% less time, trimming transportation costs and boosting margins.
CFO Carol Tomé says the company hopes to raise operating margins to around 8% by the end of 2010. And while analysts think that's doable, ultimately the company will need to find a way to boost sales to achieve sustainable profit growth.
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But the company is trying to offset that with cost cutting and improved efficiencies. Home Depot invested $260 million to improve how it gets merchandise to its stores. The firm plans to open 19 cutting-edge regional distribution hubs that will allow stores to stock up in 25% less time, trimming transportation costs and boosting margins.
CFO Carol Tomé says the company hopes to raise operating margins to around 8% by the end of 2010. And while analysts think that's doable, ultimately the company will need to find a way to boost sales to achieve sustainable profit growth.
NEXT: Seeking big spenders
Last updated September 24 2010: 10:04 AM ET
Profit margins for 2010 - 2012 are Edward Jones estimates.