2. Executive Summary Research MethodsResearch Methods S&P ReportsS&P Reports Site visitsSite visits Census reportCensus report Research InsightResearch Insight Market GuideMarket Guide FindingsFindings Currently employing their best alternativeCurrently employing their best alternative

3. Table of Contents Historical Performance New Marketing Strategy Concept Design Implementation Issues Expectations

4. Historical PerformanceHistorical Performance New Marketing Strategy Concept Design Implementation Issues Expectations

5. Delivering value to customers –Low Price Sensitivity –Focus on Specialized Know-How Broader line of products Greater depth of products Home Improvement Market

6. Sales Increase

7. Net Income

8. Operating Income

9. Gross Profit Margin

10. Sales per square foot

11. Revenue per Employee (TTM)

12. Inventory Turnover (TTM)

13. Closing HomeBaseClosing HomeBase Enter New MarketEnter New Market Alternatives

14. Long-Term Leases 65 Stores (January 1998) Leases from 4 to 20 years with average of 13 $530M non- cancelable terms over one year Total Equity $395M PV $530M

15. Historical Performance New Marketing StrategyNew Marketing Strategy Concept Design Implementation Issues Expectations

16. Retail Industry

17. Specialty Retail Home Furnishing –Large Market –Strong Growth –Low Entrance Barrier –Knowledge of the Market

18. Home Furnishing Retail

19. Home Furnishing Market Features –Highly Fragmented and Competitive –Strong Growth –Number of stores equals strength –Store size expanding –Importance of Women

20. Home Furnishing Market Key Local Factors –New housing growth in California of 13.7% vs. 7.4% in U.S. –Women’s population growth of 2.5% in California vs. 1.9% in the U.S.

21. Historical Performance New Marketing Strategy Concept DesignConcept Design Implementation Issues Expectations

22. New Market Segment Baby Boom –(35 to 52 years) –70 Million Women Buying Power

23. Store Format Broad but limited selection in each category –10 Departments High quality product/service –Designer brands

24. Product Scope Change product offering to home furnishing Include outdoor home products –$33 Billion

25. Product Mix Home Furnishing Other Home Accessories Home Improvement The Incredible Decorating Superstore

26. Store Concept Personalized Attention –45% more store employees Focus on Kids –Play Areas –Kid´s Products Cafe

27. Historical Performance New Marketing Strategy Concept Design Implementation IssuesImplementation IssuesExpectations

28. Test Stores Estimated

29. Sales per square foot (Expected)

30. Financial Analysis Liquidity Debt Inventory management ratios

31. Quick Ratio

32. Current Ratio

33. LT-Debt to Equity

34. Other Issues Hiring –Change from technical to service oriented –Fitting the service with the new target market

35. Historical Performance New Marketing Strategy Concept Design Implementation Issues ExpectationsExpectations

36. Retail Industry Key Factors –GDP Growth Economy will slow with real GDP rising 2.5%, after 5.1% in 2000 –Disposable Personal Income Estimated 5.3% in 2000, and 5.1% in 2001

37. Beta

38. Retail Industry Key Factors –Consumer Confidence Index

39. Market Trends 1,300 1,878 Revenue 1999* 6.422.0 Linens´n Things 9.234.4 Bed Bath & Beyond SSS % Change from 1998 Company 1,3846.425.4 Williams Sonoma *$ Millions

40. Market Trends Expected Rate of Growth of 10% for Home Furnishing Market

41. Threats Home Depot´s EXPO Centers Competitor´s Expansion Rate Ability to transform the organization toward service Lack of support due to Analyst´s response to strategy

42. We conclude that the strategy is an appropriate alternative to follow in this stage of life of HomeBase. The concept has a good format and has potential to become a growth driver. The Incredible Home Decorating Superstore

43. Questions ? The Incredible Home Decorating Superstore