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this morning that's my pleasure and my privilege
to introduce to you our speaker the CFO
and executive vice president corporate services at the Home Depot
miss Carol Tome you know when I think about Carol
there are a multitude adjectives that come to mind I think many would probably
concur with that assessment
there are two that stand out a particular and that is selfless
and active. I think that you will notice a bit of a recurring theme as I walk you
through her background in just a moment
as to why those are both applicable. you know if you ever find yourself
wishing the eternal wish if I had more time
if I just had two more hours I would be more involved in my church
would serve on this charity or take a more active leadership role
and then use that wish is an excuse for why not to do so
I think Carol will make it very difficult
for you to ever use that again and be able to look at yourself in the mirror
with a straight face
because this is a very busy person yet someone
who gives tirelessly of herself when asked and does so
in a manner that we all quite frankly get the benefit from.
Um, I got to know Carol a few years ago.
Mayor Reed had asked Carol would she please chair
the search committee to replace the CEO for the outgoing CEO at the world's
busiest passenger airport hartsfield-jackson this is
mid-year, midsummer, not an overly leisurely time
for Carol and her team and
he asked and if any of you have been through a process like this this is a
this is a pretty significant investment of time
and she obliged willingly
and I will tell you well the absolute conviction
that years later it is still as thorough
as comprehensive and as efficient
of a process but I've ever been through with a search committee and if you look at what Carol has
done and if you look at her contributions to Atlanta
to Home Depot to the country I think I think that's a
a pretty easy bridge to cross Carol joined the Home Depot in 1995
a service as its CFO since 2001
in 2007 she was named executive vice president
a corporate services Carol began her professional career as a commercial
lender
the United Bank Denver's now Wells Fargo and then spent several years
as director banking for the johns manville corporation prior to joining
the Home Depot she was VP and treasurer
river with international corporation aside from her responsibilities at the
Home Depot
Carol serves on the board of directors for UPS
where she is also chairman of audit committee and as a deputy chair of the
Federal Reserve Bank
plans for directors again a firm believer in community service
carol is an active member the committee of two hundred
she is on the board when a good
Atlanta Botanical Gardens additionally she has served as chair
for the metro Atlanta chamber of commerce in 2012 carol has received
multiple accolades during her years of service
most notably number two on the list bessie offers
in corporate America has produced by the Wall Street Journal
as well as the top 50 most powerful women
by fortune magazine I would ask that you join me this morning
and welcoming to Terry our speaker
and my good friend Carol to me well good morning everyone
sacked thank you so much for that introduction my goodness my life past
for automated thank you for that Inc truly the airport search was it
was a success but it was because exact he did
all the heavy lifting so if you ever need to put someone on your team
call him up because he can help you source the best talent
you know really is a thrill for me to be here thank you all for coming up this
morning I just want to start by saying what a gem the University
george's now I went to the University of Wyoming
and when I was out wyoming the Oh I thought about George I thought about
football but when I moved to Georgia I realized that the University of Georgia
and the Terry College of Business
produces outstanding business leaders
in fact at the Home Depot the finance team were about 700 people strong
I have eighty Terry grats working for me isn't that awesome
yes of them they could each I picked up a new york here this morning so
to be wearing high so awesome and let me just drag on took me for a moment she's
in our Investor Relations group
and last year Institutional Investor magazine do any of you read that
magazine
something you do good its covered rack but it worked for those of us in finance
ethical thing
and they rates um I Investor Relations
teens and last year the Home Depot Investor Relations team
ranked number one took it all the way so Tiffany outstanding
so it's again a thrill for me I gotta summer prepared remarks but what I'd
really like to do is have a dialogue with you because I think that's the best
kind
interaction is when we get to talk to each other so all start by sharing with
you my point of view on the economy
housing a little bit about our strategy and then wrap it up with some comments
about our financial results
and then it open it up to you because I really want to hear from you
so first on the economy yesterday's news is pretty big news lessen its
do do you expect that to happen you get
know I'll certainly the market doesn't I mean I was watching our stock price
yesterday and it was down down down and then
Chairman Bernanke he came out with his announcement at two o'clock in our stock
price just jumped
and the whole market jumped right because everyone to the BX I've relief
that the Federal Reserve is not starting to ease of quantitative easing
and I think they're probably a couple of reasons for that first if you'd look at
the general
economic environment you know that projection for GDP growth in our country
this year is between 2.3 and 2.6 percent
but we only grew 1.8 percent in the first half
which means the back after the year will be more growth be
than the first tattoo your and you might say well why is that whether couple
reasons one
exports are higher than they've been in that's good news for economic growth
also companies companies like the Home Depot we are spending more capital
than we have in prior years our capital budget this year is 1.5 billion dollars
that's up a couple hundred million dollars from what we spent last year
and we're spending more in the back half than we did in the first half a beer
so the overall economy well not robust is growing
but that's really not what the Federal Reserve looks at they look at
to things they look at unemployment
and they look at core inflation and the germans Danbury
a very opinionated about his point of view on unemployment
into unemployment reaches around six and a half percent he's gonna keep short
term rates low
that's what he said and as you know we're not there really about 7.3 percent
they also look at core inflation the one the targeting around 2 percent were not
at two percent
so when they look at those doctors I think that's what gave rise to their
decision
yesterday for us we look at the overall economy
well we spend more time looking at housing
and metric that we look at is private fixed residential investment
and Here I am showing you private pics residential investment
as a percentage of GDP and we have data that goes back to the nineteen fifties
and so you can see how private pics residential investment has performed
over sixty-some years and when I will call out is when the housing bubble
occurred back in 2006 private pics residential investment stood at 6.2
percent
a GDP and then as you all know we went into a recession
the greatest recession since the Great Depression it was a
housing lead recession and you can see what happened to private pics
residential investment
it dropped dropped as low as about 2 percent
well we at the Home Depot we felt it and we felt it hard
between 2006 and 2009 we lost
13 billion dollars in sales
that's the equivalent of a company like bed bath and beyond
wiped out now housing has started to recover
and so have we starting in 2010 are stills
started to grow and by the end of this year we will have recaptured
almost all that thirteen billion dollars in sales last
now guide is asked for a show of hands any if you shop in our stores
well thank you cuz you're helping us so we really appreciate your business
thank you for doing that know a couple other data points on this chart
first you can see private pics present that's what this means growing
and that's helping grow our cells but after the end of the second quarter
it stood at 3.1 percent GDP
well prior to the last recession that's the lowest it's ever been
so I look at that from a glass half full perspective and say hey
we've got a lot of growth ahead of us this is good news
and then all statistics revert to the mean rights and the mean
over the past six someone years is 4.6 percent
so we've got a long way to go to revert back to the me
so as we think about opportunities for growth at the Home Depot we say wow
we've got a lot of growth ahead of us just here in the United States
as housing starts to improve but it's not just the economic environment that's
impacting our business
it's also our strategy so I'd like to take a few minutes walk you through our
strategy we have a very simple
three-legged stool strategy and if you've read Jim Collins good to great
you'll recognize the construct for this strategy
%uh the first leg of our stall is what we're passionate about
and we're passionate about customer service
the second leg of our strategy stall is what we're best in the world at
and we think we're best in the world at products
for home improvement and the third like a bar stool
is what drives our economic engine and our economic engine is driven not by
capital allocation driving productivity and efficiency
in our business no this Lake the strategy has changed over time
I start with the company back in 1995 and in 1995 we have 400 stores
and revenues about fourteen billion dollars today we have over 2,250 stores
so our economic engine for a part of our history
was driven by square footage growth and we were very much like that Kevin
Costner movie
field of dreams it was billed the store they will come and that's what we did at
one point we were opening a store
every 36 hours well can you imagine
and I run real estate construction team can you imagine but would
that's really behind us now that's really behind us
ok just do not know you were here hikers TDs another 20 per person so great
sorry so anyway that make up the store has changed now we join the legs at the
store
at the seats by what we call interconnected retail
interconnected wheat ale is really just leveraging
our physical assets with are virtual assets
and other words our website and our mobile applications
because consumers are changing and you're nodding their heads right
how many people are shopping of your phone
or shopping of a PC right the consumer is changing
and we have to change along with that so just to make this real for you let me
talk a little bit about customer service
we break our customer service strategy into three major platforms
service in stock and store appearance
and from a service perspective
we've taught all of our social so we have 325,000 people working for
with Todd Oliver associates our service standard which we call first
and it's a simple acronym standing for find find the customer
inquire what they're working on them respect them solve their problems and
then thank them
we've all been trained on first I've been trained on first all the seven
train our first
and we think it's making a difference and I hope you're seen that difference
inside of our stores
from an in stock perspective we think this is a critical
component of customer service why if we're out of stock
you are dissatisfied so during the recession
we transformed our supply chain moving from a supply chain where the majority
of products were shipped directly from
are manufacturers to our stores
now the majority of our products flows through what we call rapid deployment
centers
their DC they flow to our stores and were able to
increase are in stock position are in stocks now
there over 99 percent and that store parents
know we're working warehouse we r our stores a hundred and six thousand square
feet
filled up with steel they're working warehouse but we've got it make
store better-looking if you will so we
created merchandising execution teams these are men and women who are
responsible for the way the store
looks how the items are faced on the shelf
also working on navigation you know the number one question that we
yet from a customer where can I find it
right or worse the restroom so what we understand this
so our stores are hard to navigate so what have we done
well if you haven't done it yet and if you've got a smartphone
please download our Home Depot ap it's free
and if you download the app it will localize to the store that you're
shopping
and you can bring up a storm ap and you can type in where is
in all story right where it is in store is not a good thing
outright yeah with the way would I know we are at the Home Depot we actually
the officer team we work in our stores so we adopted store
1 store one month and we work in the store every week for that month
and I guess it's a great opportunity to understand you know the experience our
customers
from working on the floor the store as well as the experienced are so ships
have working for us is a really great experience and I certainly
have been able to take those learnings backing me support your finance person
what does that matter
it matters a lot because we understand the experience that your customers are
going through
you can make sure that your allocating the capital and the resources
to make sure that that experience is the best experience
now from a product a story perspective we also breaker strategy down into
three major platforms I'll start with the bottom-up thats
page merchandising transformation this is really just
new tools that we're bringing into our store
a match in this we carry about 35,000 skews per store
600,000 skews on our website
but every store is a bit different
we need to better localize the store
for the customer we meet me to better
not only localized min a certain perspective but also from a pricing
perspective
and merchandising transformation is just how we talk about new tools that we are
introducing
to our company so we can do just that you know if you shop our bucket store
which is just down the street from here
its very different customer base that a store in Moultrie Georgia
so for mostar company remerchandised our stores
the same way well that's not the future retail the future
retail is merchandise in the store for the customer was shopping in a store
and our new tools are allowing us to do that from a product a certain
perspective
you know we really don't sell items we sell projects
and we have to make sure your that we are bringing into our stores and our
website
everything you need to complete your project
so if you're painting a room don't just the paint
any paint you need rollers the pressures you takes you meet our
except for so we really spent a lot of time making sure that we are sorted
correctly
for the project is the last thing we want to do is to go home
and realize that 0 rats I forgot something
and Anglo go to your local Ace Hardware which may be more convenient for you
or heavens for bed company headquartered in North Carolina
I mean we just don't want you to do that so we're really focused on assortment
and then portfolio strategy of course is just the way we talk about how we run
our business from a profitability perspective
just as you can appreciate I our profits are very
different based on the products that we sell
we sell appliances were the third largest retailer appliances
in our country well appliances are fabulous but they're very very low
margin
so if we saw appliances only we would make very little money as a company
so we compliment our appliances with for example
those brushes I talked about for painting projects
you make a lot of money on to us I probably shouldn't tell you that but we
do
so this is how we run our business though to make money
this is to make of course now talking about
interconnected retail just to give you a little bit more color about what we mean
here we have spent
and over invested in this experience because we know we must
if we don't we will lose so we now have
buy online pick up in store buy online
ship to store buy online return to store
we are doing everything we possibly can to bridge the experience between our
stores and our are online make sure we have the right experience for customers
and here's the cool thing about this 30 percent
all the orders that take place on our website are picked up
in our store is not also it's really awesome so
we will continue to invest in this to ensure that we've got the right
experience for our customers
let me just make it real for you why do we care
we have the number one market share most the category so much with we sell
as you would expect so let's take category like
power tools we have about 35 percent market share power tools
in total but when you go online
guess who has more market share than we online
Amazon exactly this is why we care
this is why we care so desperately about making sure that the experience
is the right experience
so what are we doing about it it's not just about buy online pick up in store
by law and return it starts at right
it's about working with our vendor partners there's no better time to work
with your vendor partners
then when you have number one market share so we can go to our vendor
partners and say
room we see that you're selling our arch competitor
we need you to stop doing that and with you stop doing that we will give you
more volume
and you will when so manufacturers like milwaukee Makita
who used to sell Amazon no longer do
they only sell us so when we are now redefining exclusivity with our vendor
partners
its exclusivity across all samples this is how we think we can win not only with
our
store experience but with our vendor partners
so on let me then kinda wrap this up with how the numbers are looking
and the numbers are looking pretty good so
last year we set for the target to take are operating margin to 12 percent
and our return on invested capital to 24 percent
by 2015 and we call this the 12-24
target reaching these targets would make us
one of the most profitable and highest returning retailers
in the world and we are well down our path
a reaching at the school so if you look at our results
for the first half this year you can see that we've had some nice cells grow
our same-store sales growth were up almost a percent
and in the second quarter we had double-digit positive cells
now this was the first time in the second quarter that we had seen that
since 1999
and the second quarter was actually our best performing quarter in 21 years
if you look at earnings our earnings are up 23 percent so for the finance people
in this room
that's called leopards and that's really good leverage to the cells up a percent
in earnings up 23 percent
pretty good number inventory turns which is part a return on invested capital
well up too tense to 4.9 times or getting more velocity
with better in stocks that's what you want no I didn't talk about the third
leg or strategist all
which is capital allocation but let me posit talk about that for a moment
we as a marketing tagline you may have seen our ads
our tagline is more saving more doing well in the finance world
our tagline is more saving more investing we're really focused on
creating a
virtual cost outlook: so that we can continue to take costs out of our
business
which allows its to invest it back and high-return projects
that defines who we are as an organization this virtual cost out blue
which generate a lot of gas as a company we generate over seven billion dollars
have cash every year we take about a billion up and a half that invested back
in our business
we pay fifty percent of our earnings in a dividend
which makes us one of the highest payout companies any retailer
and then we take excess gas we buy back shares
this year we're buying back eight and a half billion dollars our shares
mister by taxers and 2010 to you
today we have repurchased 1.1 billion shares for about forty
to billion dollars and Cass so imagine that we had purchased
the service that we have point billion dollars us on our balance
you feel a lot like Apple but we've been buying back our shares
and our average price that we PowerShares and is a little under forty
dollars
yesterday our stock closed over seventy-seven
so from a return on investment perspective pretty good return
so as we look forward we will continue to use our capital in that way
to invest it back into the business to return it to shareholders in the form of
dividends
and they will buy back shares
so let me just close out
with this chart and probably evolved charts I've used
this is my the returns you know
our company in many ways is a call to and I keep looking over and seeing more
humble people that I didn't know were here
hello y'all still you know what I'm talking about were Colts right
and for all the Home Depot people if you cut us we
bleed orange now part of our call to is our management construct
and this is the inverted pyramid where Frank Blake
our CEO his leadership team we are at the bottom of the pyramid
and at the top of the pyramid are our associates
who are serving our custom we
believe in the power this pyramid
I've been with the company for eighteen years
I'm the only the senior leader who has worked for all four
RC I work for founders bernie
are I was Bob Nardelli Seattle first say
six years and now I work for Frank play
and I will tell you there was a time in our company's history where the inverted
pyramid was turned like this
and some of you may know when that time what's
I won't mention the name but you can figure it out
now that's not necessarily wrong and maybe in your companies that kinda
management pyramid works in our company
doesn't work were all about servant leadership
so when Frank Blake became the CEO he flipped that pyramid
packed the way it needed to be and we started to find
our way back in part of our way back
is doing the right thing by our assessments the men and women who are
facing our customers
every day and let me give you make this real for you
during the recession when we lost thirteen billion dollars in cells we
have to make some hard decisions
we had to close stores we had exit are Expo business summit UMich octave
Expo which she would dispense more money there cuz we were losing eighty million
dollars a year so we had to close that business
we have to make beer we hard decisions but as we were making those decisions we
also
decided to continue to invest in our people so during the recession were many
companies are stopping
merit increases or stopping making contributions into 401
K plans or stopping bonuses
for hourly associates we didn't stop we continue to pay merit
continue to make contributions into 401 K's and we continue to pay our success
sharing
no success sharing is a program that we have our hourly associates
it's a very cool program we reward them
for doing great work and it's based off a cell's number
they get within a certain percentage of a cell's number we pay out money to our
hourly associates
for the first half of 2013 100 percent are US stores were in successor
in all the like a handful of our Canadian stores were in successor
on Sunday we had our success sharing celebration
we paid out $137 million dollars
to those associates is not exciting for them it's really
awesome and were seen in our results
you know it's not just us talking we hear from a hundred
I was some customers every week who wait us on a number
number attributes we roll it all up and we look at our net Promoter Score
and Net Promoter Score is North seventy percent
and we don't just listen to the customers who are shopping in our stores
cuz hopefully they are satisfied
we also look at survey results like the University of Michigan survey or JD
Power survey
to see how we are trending are we doing better
we still have opportunities for sure
what we're doing better so I'm often ask us Rossiya
0 if successor it's not a huge expense for your company
and I say no it's an investment
because I believe and what Bernie Marcus et
and Bernie Marcus said if you take care of your SOC its don't take care of the
customers
and the rest will take care of itself believe it to my
the other aspect of our business and why were called
our values we have 8 core values these are values that we
we're on our aprons but its we bring them
to life we bring them to life every day by trying to live the values
and when you employ over 300,000 people for sure it's the equivalent of a small
tell her big small city I should say when it has about apples and when we
finally have to deal with that but
generally speaking our people are people
cool reflected these core values and I'll what walks through the entire value
will but maybe comment on
on a few 01 entrepreneurial spirit
you might pass way your $80 billion dollar
company by definition be entrepreneurial you must be just one
bureaucratic but MF well the truth this bureaucracy creeps in every day
and we do our best to try to smash it get
rivets because bureaucracy can kill companies
so we trite every day to be nimble to look around corners
to anticipate where the customers going because the retail landscape is littered
with companies who have gone a way because they
didn't to that think about Circuit City
think about borders think about what's happening at Sears
what's happening at jcpenney retailers go away
if they don't stay nimble quick in tune with the customer
so every day we tried it keep that entrepreneurial spirit
allied the other value that I'll mention
is getting back very proud of our community efforts
and reason I wanted to comment on it now is that we're in the midst
celebration of service between September 11th Veteran's Day
we will do 300 community projects across the country
in celebration are foundation's mission which is providing affordable living for
veterans
we've committed eighty million dollars to that comes
we spent about fifty five million dollars against that and it is such a
joy for us to be able to give back not only a bar dollars
but I love our sweat equity to our communities I worked on a project
earlier this week and
it's just awesome you know southeast Atlanta overbuilding
a community garden that will service veterans as well as the community
at large in its too it's just cool thing
and let me tell you it takes a whole lot of people to do something like that we
had
200 people on site the big car so
that's another value that I wanted to share with you Zack you were kind to ask
me to come here
today you for me this is my way to get back a little bit
I hope it's been worth your while and I really would like to take
your questions on we can talk about and
and it is broadcast I think doing so we have to wait for a mic perhaps is that
rights will give them the directions felt a that's fine
are carol is going to take questions and
raise your hand and place way from Mike because we're live on
webcast so we need to be able to carry so Carol
thank you
thank you thank you very much for a most enlightening and I've earning talk
you I am I'm at one thing about your international future
know you've had some blip summer road on that
especially in South America and China what does the future hold their
yes so the question is about our international business we are the number
one player in
Canada and Mexico and your spot on our experience
in other parts of the globe have not been so successful so we did go into
Chile and Argentina
that venture did not work for lots of reasons
well you can see and growing middle class in the country
it's very very hard to do business there and we exited that this and that was the
right decision
we went into China in 2006 with the 12 store
acquisition and we did everything wrong in China
Kelly Barrett who is our chief audit executive she can tell you the horror
stories
me doing business have do business in China
gets hurt it's really hard it's a communist country for heaven sakes
but we did things wrong to we had the wrong business model
you know the chinese don't do it themselves we couldn't break through to
an three-step distribution so we made no money
it was just made no money and so I kept talking to our CEO Frank Blake about it
I'm
shut this down shut this down not making any money he's like we're not gonna shut
it down
you're gonna fix it so he gave me the retail business I'm like
itself started to you really taken apart said no this business model will not
work and we
sadly had to reach the decision to close the stores
but what we did do is we started a new business in China
and this is a stand-alone pain so we opened up about it 1200 square foot
store
with are private brand paying pink that's manufactured in the United States
and sent China we were actually
after one year making money in that business
but here's the sad thing
we looked at how big it could be in and why you think
china is this in for miss country with an enormous
economy not so much in our space
so as we model the dow we realize that would take us about ten years
to get to a hundred million dollars in sales
a hundred million dollars in sales for our company we can bring one skew into
the united states and get
hundred million dollars and one year so
we put our stuff that we can make missus make money but we're exiting
rex King China we'll keep our sourcing office there
so then we feel we study the rest the world Western Europe
you don't really wanna go to countries like Italy were more people are dying
being born
so we don't see opportunities in western europe economies been down seven
quarters in a row
it's heavily over stored from home improvement market Eastern Europe same
thing we don't see opportunities there
Asiaweek said no can't fis the price
it's not big enough we're just going to really focus on where we are
the home improvement market in the United States $300 billion dollar
there are so many cells to go get right here
in this country we can make a lot more money doing that that's a good thing for
our shareholders
for that
Carroll could you come in on the Affordable Care Act and its impact on a
retailer
well the Affordable Care Act impacts all large employers
so obviously were no exception I I'll tell you this about the Affordable Care
Act
we're not gonna let a change and law impact
doing the right thing for our customers or our associates
so we will continue to staff our stores to meet the needs of our customers
and we will continue to provide benefits for people
good morning thanks for coming actually a spitting years a big box retailer Best
Buy socket appreciate all things you're speaking about
or are so I think I found their way you know they're really losing it for a
while but it appears
why I think it's to your point about make sure you add jocelyn
invested too much real estate in integrating online experience
United really relate to what you're saying about my question is actually
about
as you know the world football fans here but I recently read an article
arm about how so many brains are drooling over the
ESPN gameday experience and how home people has such a strong presence there
so I'm curious you know along with game day
and other sort of marking ventures I know this I think I
in California Texas ya sponsors Stadium you know
how have you been if it from those types of investments arm
in an expansion of your brain well
the truth yes with the exception %uh ESPN
game day our sports marketing has a negative
our ally arm and so we are actually moving
more and more away from with the exception of gameday
the something really miraculous about at so we're really committed to that we
love that
but most marketing dollars marketing for marketers in the room
why how you're going to change how you know if you think about how we used to
spend on marketing dollars
how we do now we are way you were talking to digital
moving away from paper you know we grew up
we grew up with our flyer that was printed every Wednesday you'd walk
stalwarts with the circular are we set for the offer
all going away all
going away and it's moving digital and radio
because there's a higher return for us on radio NT
and TV is moving away from CBS and ABC the world more
loser the world things are really change we use
marketing analysis to get to determine where we get the best
return on investment period political it's merely scientific
the best way to describe for marketing for sale many of us was the sort but
most alright it's a
appealing it's becoming really a science
I'm here to talk about anything but it seems like the question may be waning
just better way for the mic
thank you on
you've talked a lot about the in store experience but talk a little bit more
about the out a store experience
in your online presence do you plan to battle Amazon online are convinced the
customer
that's better to be in the store to get that product making a lot of investments
for online experience to make sure it's the right experience for the customer
we Amazon is a fabulous item retailer
there is no experience
other than they've got a great check with us
you don't come to them before I don't necessarily come because you need
something
you got something that's not working in your house or you got an idea
you want kitchen remodel your bathroom all you want to build a base
you don't go to Amazon for that you come to us so that seeks
periods what have on
you can get it in the store what you have that experience online
so all OVR how-to videos how to fix a leaky faucet
how to install a toilet all those things you think
can do this myself just someone would help me all posted to our website
there also all posted to you because we're not gonna force the customers to
be in a closed community
we're going to get the media out there the way the customers media
and is letting people take home to put Home Depot you know I think I'll go to
Home Depot
but they may easily go to you too for that same piece of information so we're
posting it all out
getting that X your in tying it back to our stores
looking at solving the last-mile delivery
know we're building direct fulfillment facilities
that will be pardoned and and your John you're working on a surge in helping us
develop learning materials for this
these direct the film facilities will be ways getting product that's ordered
online
more passionately delivered to our customers
that I think about gosh we've got almost 2,000 points for delivery in this
country with our store
so why not leverage that Amazon doesn't
another building out distribution facilities we
them day all we have to work on is
routing and with all that last mile and for those of us who buy big bulky
products like
washers and dryers or riding lawn mowers
or barbecue grills and we've got small cars
so I need to get this home wouldn't it be great to have people just get it home
for you
know by the way when he gets home to you what about put it together and
about away Holloway of right
so this amistad doing any of that stuff this is how we can make an experience
that the sticky experience yes
what kinda returned you see your feedback
are can contribution to the experience have your in store
how to use as opposed to watch it on YouTube come down the store and learn
how to install tile
we have these wonderful workshop programs
both for DIY Rhys at large but also with that
do it herself gas a lot of fun
we get a tremendous amount a positive feedback offer those workshops
we're also working on how to make the stores more over just so
it's been attained
so we can actually try out products know that the cool thing is you can try
before you buy it so you can see that happen summer stores on the weekends
actually have demos places that you can try cuz thats you know if
we live in an experience economy you experience I just shop
that's why you know when we lost our way for a while
when our customer service you know we lost our way the customer reaction was
he violence because customers have come to know as a place for an experience
a place where they would like to shop where they'd like to talk to our
associates and
you don't have that same a motion what
a to most stores right I mean if you go to one Publix or another do you really
notes right it's not really and be
our stores in your get to what you're working on
so that's why gotta continue to focus on
that experience
well secured to stick with a quick question
I you Cheryl I we really really enjoy the presentation
from my anticipation for
other challenges that you see can you share with us just something say
you know may keep you up at night or just some the challenges that your
anticipating for the for the future sure
in a recovering environments competition
is invited so what do we do
to stay focused on our business
to make the competition irrelevant it's very easy to get sidetracked to say
of so-and-so just opened up a new lumberyard
or oh so-and-so just opens up a new store and i cant get
focused on that without losing sight on where
you need to go this is a real just just requires
discipline the state focused on where you're taking the company
meet the competition irrelevant but they are coming in so if you look like a
companies like lumber Liquidators having very good results and so some other
folks will say we've got to go kill them
like not what you need to do is have the best
laurin offer possible for your customer base
not worry about I would say that's only one thing that keeps
me up I would say you know the global economy
good and we have to be are wary of that
in and aware of that and understand that it could have implications
what happens here and what happens here had implications for the global economy
the world is flat you know we source about 11 percent of our products from
outside the United States
so it matters to us what's happening outside the United States so
always you know watching world trends and
figuring out what disruptions could come our way if things were to go really
sideways and
parts I think from a risk perspective you know
Kelly Barrett archibald executive is here from a risk perspective I think we
are all concerned about
cybersecurity tax coming in protecting our
customer data our proprietary
pricing information so our IT systems where they need to be
do we have the right detection and protection in place so those kinds of
things from a risk perspective of course
keep probably the other thing
I'm speaking very candidly is
complacency no I
I've been again with the company a long time in 1999
really great here the pot pasta double-digit cops
our stock was trading at a seventy multiple
7d multiple and we
good really good fast-forward
ten-month October up to 1000 we had our first
earnings warning ever in our company history and the stock sold off about 25
percent
that day and I'll never forget it because I'm sitting in Arthur Blank
office
on the phone with our largest shareholder who was fidelity at the time
our school me school remain at him
and I had my it in my hand and my
other hand on his desk they're just screaming
and he reached over and patted my head it was most generous
kind just her he could have done because I put a lot like I'm gonna was quote
so desperate I of
the and really I think it's because we got complacent
and shortly thereafter we have a new CEO so one
I talk to our leadership team I'm say we have got to fight against complacency
because here we are now working
feeling really good not only are we growing ourselves we are beating the
pants off her competition in North Carolina
our stock is trading at a record-high
so we're a feeling really good any
we lose that competitive edge we start feeling really good
we can get into so much trouble so we just everyday
gotta wake up saying this is the battles about fight every day focus on the
customer
focus on our strategy hope we continue to do the right thing
so I'm looking at the clock and I know you want it
finish up here soon so maybe one more question without
if there is another the
earlier conversation about Amazon and Best Buy got me thinking about
children which sure familiar with the term to some people experience much
about up that
and if so what are you doing to combat all you have to do is go into a store
and you can see people
with their smartphones you know taking pictures for the products that we sell
going to Google Shopper whatever channel that they used to do so
Roman of course with you so what do we do about it
a number thanks we acquired a company last year in Austin Texas call black
workers
and black locus is a is a big data company at those prices
scraping for us so we are constantly scraping prices
of compact competition both online in store competition
in comparing those retail prices against ours there are some products in the
store that we will not be beat
so we will make sure that we have the lowest price
there are other products that we saw in the store there were like I care about
so much
like we sell the with water coke in our store that we're not top of mind for
that so somebody's cheaper than us
gonna be cheaper than us it's a convenience so we're we are very focused
I'm pricing the other thing that we're focused on its proprietary brands
you can shower room for a proprietary brand with that
outstanding brands if you think up husky
hampton bay glacier get Glacier Bay
and the list goes on introduced a new private brand last year
called HDX haven't purchased HDX product
I would encourage you to try it out we brought into cleaning
the quality is better than anything you could find at a comparable price point
and its we try it out
we'll up this we brought it in last year
we're on track to be seven hundred million dollars on our way to a billion
dollars in
who can't showroom that's ok
it's a combination of things that we're doing to stay competitive
thank Carol Cup spare
thanks Carol for that presentation think we all understand
both why Home Depot is doing so well right now
and i cant see you somehow getting complacent just doesn't
it doesn't it doesn't calculate for me would like to give you the supplemental
ok which is a sculptor by alpharetta EB
beautiful and semi-trailers got got your name
now it's got the right color orange on it's got your name on it Tsou
thank you thank you very much appreciate it thank you
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on