Most question-and-answer segments of earnings calls have a signature exchange that deserves to make the highlight reel on the 10 p.m. news.
From the recent Home Depot conference—the one during which the company reported upticks in sales and earnings for its third quarter—included the following:
Analyst: “Are there other types of opportunities outside of the core stores that would make sense to you?”
CEO Frank Blake: “We are focused on our core business.”
Executive VP merchandising Craig Menear: “There’s several billion dollars over the past two years that we gave up that we need to go get.”
Indeed, since a 2006 peak of $79 billion in annual sales, the world’s largest home improvement retailer has seen annual revenues shrink steadily. It finished with $66.2 billion last year.
Third-quarter results shows sales and earnings gains, and the company is on page to deliver about a 2.2% sales gain over last year—though the estimate was revised downward from an August forecast of 2.6%.
During the conference call, Home Depot executives were very careful to use the word “stabilizing” as opposed to “stabilized,” and, at one point, CFO Carol Tomé corrected an analyst for slipping into the past tense.
To show a stabilizing market, Blake pointed to lower standard deviation in the performance of the top 40 markets. The spread between the best and worst in 2009’s third quarter was about 35 percentage points. That’s down to about 18 percentage points in the recent quarter.
“So, from an overall perspective, we see a stabilizing business,” Blake said. “And as the business stabilizes, we continue to improve our operational performance.”
He talked about the massive supply chain transformation (see article.) But he also talked about a business strategy that fits in the palm of your hand. It’s called the F.I.R.S.T. Phone—a combination communicator, scanner and portable checkout.
The phone, named for the company’s “Customer F.I.R.S.T.” initiative, “was developed through close cooperation with our store operations and IT teams—perhaps the best collaboration we’ve ever had on a project like this,” Blake said. “And we see it as a foundational element o