1. Situational Analysis Team A1 Project March 11, 2006 Kerrie Cox Adrienne P. Love Jeff Koda Garland Collier Jim Clifton

2. Company Overview Founded in 1979 in Atlanta, GA by Bernie Marcus and Authur Blank Robert L. Nardelli- president/chairman/CEO Employees- 100,000 plus Over 2000 stores throughout US, Canada, Mexico, Puerto Rico and St. Thomas –Approx. store size-108,000 sq ft, –40,000+ SKUs 2005 Revenue- $81.5 billion “World’s largest home improvement retailer”

3. Company Culture Very customer focused 8 core values –Taking Care of our People –Respect For all People –Doing the Right Thing –Strong Relationships –Giving Back –Excellent Customer Service –Shareholder Returns –Entrepreneurial Spirit “Excellent Customer Service”

4. Company Culture All businesses under corporate umbrella follow the same values –EXPO –Apex –Home Depot Landscape Supply Welcome Aboard broadcast from chairman Extensive Community Relations Program –Building and refurbishing playgrounds –Ensuring safe community spaces –Building affordable housing –Preparing communities for emergencies Hire Nice –100,000+ employees hired annually “Communicate Corporate Value Throughout”

5. Revenue Plan 9 to 12 percent sales growth guidance over the next 5 years Open 175 new stores www.yahoofinance.comwww.yahoofinance.com www.homedepot.comwww.homedepot.com

6. Operating Margin Focus on increased revenues and cost control www.yahoofinance.comwww.yahoofinance.com www.homedepot.comwww.homedepot.com

7. Earnings 10-14 percent earnings guidance www.yahoofinance.comwww.yahoofinance.com www.homedepot.comwww.homedepot.com

8. ROA-ROE Efficient use of assets and equity for profitable returns www.yahoofinance.comwww.yahoofinance.com www.homedepot.comwww.homedepot.com

9. ROIC Wise use of capital to grow the business www.yahoofinance.comwww.yahoofinance.com www.homedepot.comwww.homedepot.com

10. Average Sale Focus on higher dollar products and transactions www.yahoofinance.comwww.yahoofinance.com www.homedepot.comwww.homedepot.com

11. Main Competitors www.hoovers.com

12. Customers Contractors Do it yourselfers Handymen and Women Designers Retail Customers www.homedepot.com

13. Company Strengths Size, diversity and continuous growth Business Model –Broad assortment of high-quality merchandise and services at competitive prices using highly knowledgeable, service-oriented personnel and strong marketing and co- op promotions –Knowledgeable associates Distinctive product range –40,000 SKUs including both national brand name and proprietary items –Strategic alliances with certain suppliers to market products New Capital Expenditures –Yearly revenue growth – 9 Billion return to shareholders “Continuous Growth” www.mindbranch.com/listing/product/P313-8421.html - 9k

14. Company Weaknesses Weak new store productivity Rising expenses –5 consecutive years –Expense ratio has increased at a faster pace than competition Lowe's expenses per foot 19% lower Store layout and appearance –Criticized for inconsistencies in layout/appearance –Resulted in negative publicity and customer dissatisfaction “Rising Expenses” www.mindbranch.com/listing/product/P313-8421.html - 9k

15. Company Opportunities International Expansion Acquisition Additional Products and Services Vendor Strategic Alliances “Global Expansion” www.mindbranch.com/listing/product/P313-8421.html - 9k

16. Company Threats Competitive Environment Polictical and Regulatory Issues Entry to New Markets Cost of Capital and Expenses “Proceed with Caution” www.mindbranch.com/listing/product/P313-8421.html - 9k

17. Opportunity Threat Matrix Probability of Occurrence (2011) Level of ImpactHighLow High32 Low14 1 Positioning Store Locations Against Competition 2 Regulatory/Political Issues 3 Real Estate Development Industry Bubble 4 Public Perception

18. References www.homedepot.com www.mindbranch.com/listing/product/P313-8421.html - 9k www.yahoofinance.com www.mindbranch.com/listing/product/P313-8421.html - 9k Joint Center for Housing Studies by Harvard School 2005

19. Chart Appendix