Business Analysis of Home Depot

 Analyze Historical Performance, Strategic Priorities, And Business Improvement Opportunities of Home Depot

HOME DEPOT

Business Overview

The Home Depot, Inc. operates as a home improvement retailer. It operates The Home Depot stores that sell various building materials, home improvement products, and lawn and garden products, as well as provide installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me (DIFM), and professional customers. The company offers installation programs that include flooring, cabinets, countertops, water heaters, and sheds; and professional installation in various categories sold through its in-home sales programs, such as roofing, siding, windows, cabinet refacing, furnaces, and central air systems, as well as acts as a contractor to provide installation services to its DIFM customers through third-party installers. It primarily serves home owners; and professional renovators/remodelers, general contractors, handymen, property managers, building service contractors, and specialty tradesmen, such as installers. The company also sells its products through online. It operates through approximately 2,278 stores, including 1,977 in the United States, including the Commonwealth of Puerto Rico, and the territories of the U.S. Virgin Islands and Guam; 182 in Canada; and 119 in Mexico. The Home Depot, Inc. was founded in 1978 and is based in Atlanta, Georgia.

Home Depot

Home Depot


R&P Rank: 24
Sector: Retail
Industry:Home Improvement Retail
H.Q Location:Georgia
Website: www.homedepot.com
Company Address:
2455 PACES FERRY ROAD, ATLANTA GA 30339-4024
Ph:770-433-8211

Business Analysis of Home Depot

The Retail Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Home Depot compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Home Depot to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.

Here is the performance snapshot of Home Depot with an interactive chart.

  1. Revenue Growth: Home Depot reported a revenue growth of 6.4% year-on-year during 2016. Home Improvement Retail Industry grew at 5.7% in the same period
  2. COGS share of Revenues: As a percentage of revenue, Home Depot spent 65.8% of its total revenues on COGS. Home Improvement Retail industry average (COGS share of revenue) in the same period was 64.8%
  3. R&D share of Revenues: Home Depot R&D share of Revenues details are not available because either company does not share the data or we do not have it
  4. SG&A share of Revenues: As a percentage of revenue, Home Depot spent 19.0% of its total revenues on Sales, Marketing, and General Administration (SG&A). Home Improvement Retail industry average SG&A spending in the same period was 22.3%
  5. Inventory share of Revenues: As a percentage of revenue, Home Depot spent 13.3% of its total revenues on Inventories. Home Improvement Retail industry average Inventory spending in the same period was 15.6%
  6. Accounts Payable share of Revenues: As a percentage of revenue, Home Depot invested 7.4% of its total revenues on Accounts Payable (A/P) Home Improvement Retail industry average Accounts Payable investment in the same period was 8.2%
  7. Accounts Receivable share of Revenues: As a percentage of revenue, Home Depot invested 2.1% of its total revenues on Accounts Receivable (A/R). Home Improvement Retail industry average Accounts Receivable investment in the same period was 1.3%
  8. PP&E share of Revenues: As a percentage of revenue, Home Depot invested 25.1% of its total revenues on Property, Plants, and Equipments (PP&E). Home Improvement Retail industry average PPE investment in the same period was 26.6%
  9. Intangibles share of Revenues: As a percentage of revenue, Home Depot invested 2.4% of its total revenues on Intangibles. Home Improvement Retail industry average Intangibles investment in the same period was 2.0%
  10. Net Margins: Home Depot Net Margins in the year 2016 were 7.9%. Home Improvement Retail industry average Net Margins in the same period were 6.3%

Sector and Industry Association of Home Depot

For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.

Home Depot is associated with Retail Sector and Home Improvement Retail Industry.

Retail sector is comprised of the following industries: Broadline Retail; Grocery Retail; Specialty Retail; Apparel Retail; Home Improvement Retail; Specialized Consumer Services. The definitions for each of the industries is as follows:

  • Broadline Retail industry includes retail outlets and wholesalers offering a wide variety of products including both hard goods and soft goods.
  • Grocery Retail industry includes retail stores that primarily offer non-perishable food that is packaged in cans, bottles and boxes, with some also having fresh produce, butchers, delis, and bakeries
  • Specialty Retail industry includes retailers and wholesalers concentrating on a Single Class of Goods, such as electronics, books, automotive parts or closeouts. It also includes automobile dealerships, video rental stores, dollar stores, duty-free shops and automotive fuel stations not owned by oil companies.
  • Apparel Retail industry consists of retailers and wholesalers specializing mainly in Clothing, Shoes, Jewelry, Sunglasses and Other accessories.
  • Home Improvement Retail industry includes retailers and wholesalers concentrating on the sale of home improvement products, including Garden Equipment, Carpets, Wallpaper, Paint, Home Furniture, Blinds and Curtains, and Building materials.
  • Specialized Consumer Services industry includes providers of consumer services such as Auction Houses, Day-care Centers, Dry Cleaners, Schools, Consumer Rental Companies, Veterinary Clinics, Hair Salons and providers of Funeral, Lawn-maintenance, Consumer-storage, Heating and Cooling installation and Plumbing services.

Industry Ranking of Home Depot

With $88.5 billion revenues, Home Depot ranked number 1 of all the companies in the US Home Improvement Retail industry. There were a total of 14 public companies in the US Home Improvement Retail industry that had revenues greater than $50 million during 2016.

The top-10 companies in the US Home Improvement Retail industry by revenues during 2016 were:

  1. Home Depot ($88.5 billion)
  2. Lowe's ($59.1 billion)
  3. Bed Bath & Beyond ($12.1 billion)
  4. Williams-Sonoma ($5 billion)
  5. Restoration Hardware ($2.1 billion)
  6. Pier 1 Imports ($1.9 billion)
  7. La-Z-Boy ($1.5 billion)
  8. Tuesday Morning ($956.4 million)
  9. Haverty Furniture Companies ($821.6 million)
  10. Ethan Allen Interiors ($794.2 million)

Business Model Analysis (BMA) Framework

We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.

Next Steps

  • Conduct a holistic benchmarking; to identify and target additional sources of value
  • Get in touch with us to learn more about Business Model Analysis Framework
  • Get free data, charts, and analysis of Home Depotand its peers on select key performance indicators by clicking the reports provided below

Industry Peers and Competitors of home-depot

Lowe’s (LOW) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

Lowe's Companies Inc with $59 billion revenues in the year 2016 was the number 2 Home Improvement Retail company. Read this report to know the top competitors of Lowe's and identify growth and cost optimization opportunities of Lowe's

Bed Bath & Beyond (BBBY) Business Analysis – Analyze Historical Performance,...

Bed Bath & Beyond Inc with $12 billion revenues in the year 2016 was the number 3 Home Improvement Retail company. Read this report to know the top competitors of Bed Bath & Beyond and identify growth and cost optimization opportunities of Bed Bath & Beyond

Williams-Sonoma (WSM) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

Williams-Sonoma Inc with $5 billion revenues in the year 2016 was the number 4 Home Improvement Retail company. Read this report to know the top competitors of Williams-Sonoma and identify growth and cost optimization opportunities of Williams-Sonoma

Restoration Hardware (RH) Business Analysis – Analyze Historical Performance, Strategic Priorities,...

Restoration Hardware Holdings Inc with $2 billion revenues in the year 2016 was the number 5 Home Improvement Retail company. Read this report to know the top competitors of Restoration Hardware and identify growth and cost optimization opportunities of Restoration Hardware

Pier 1 Imports (PIR) Business Analysis – Analyze Historical Performance, Strategic...

Pier 1 Imports Inc with $2 billion revenues in the year 2016 was the number 6 Home Improvement Retail company. Read this report to know the top competitors of Pier 1 Imports and identify growth and cost optimization opportunities of Pier 1 Imports

La-Z-Boy (LZB) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

La-Z-Boy Inc with $2 billion revenues in the year 2016 was the number 7 Home Improvement Retail company. Read this report to know the top competitors of La-Z-Boy and identify growth and cost optimization opportunities of La-Z-Boy

Revenues Analysis

Home Depot (HD) Revenues And Revenue Growth From 2012 To 2016

This report provides the last five years revenues and revenue growth of Home Depot Inc (HD) from 2012 to 2016. Home Depot generated a total of $88.5 billion revenues during 2016. Home Depot reported a revenue growth of 6.4% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in January.

Home Depot (HD) Revenues And Revenue Growth From 2002 To 2016

This report provides the last fifteen years revenues and revenue growth of Home Depot Inc (HD) from 2002 to 2016. Home Depot generated a total of $88.5 billion revenues during 2016. Home Depot reported a revenue growth of 6.4% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in January.

Home Depot (HD) Revenue Growth Comparison With Industry Growth From 2012...

This report provides a comparison of Home Depot Inc (HD) revenue growth with Home Improvement Retail industry growth during the last five years from 2012 to 2016. Home Depot reported a revenue growth of 6.4% year-over-year during 2016. The Home Improvement Retail industry growth was 5.7% year-over-year during 2016. Home Depot growth was faster than the industry during 2016.

Profit Analysis

Home Depot (HD) Net Profit And Net Margin From 2012 To...

This report provides the last five years net profit and net margin of Home Depot Inc (HD) from 2012 to 2016. Home Depot reported a total net income of $7 billion during 2016. Home Depot generated a total of $88.5 billion revenues during 2016. Home Depot net profit margin was 7.9% during 2016. The net profit and the net profit margin correspond to the fiscal year ending in January.