The Home Depot Presents 2007 Key Priorities and Financial Outlook

    ATLANTA, Feb. 28 /CNW/ -- The Home Depot(R), the world's largest home
improvement retailer, today reported its financial outlook and key priorities
for driving retail growth in 2007 and beyond at its Annual Investor and
Analyst Conference.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20030502/HOMEDEPOTLOGO)

    Chairman and CEO Frank Blake stated that the Company does not expect
residential construction and the housing market to improve until late in the
second half of 2007 or early 2008.  The Company's outlook for 2007 reflects
this broader economic dynamic, as well as the Company's customer priorities
and strategic investments.
    "We are first and foremost a retail business, and our 2007 plans reflect
that commitment," said Frank Blake, chairman & CEO.  "While the current home
improvement market remains challenging, the long-term fundamentals of our
company are strong, and we believe we can improve our performance and grow at,
or faster than, the market beyond 2007.  That's why we are making significant
investments in our associates and our stores."
    The Company's five key priorities and the anticipated investment that
will be applied to each are outlined below. Total investment in these
priorities in fiscal 2007 is projected to be approximately $2.2 billion,
comprised of $1.6 billion in capital spending and $600 million in expense.

    Associate Engagement

    The Home Depot's goal is to provide a unique warehouse shopping
experience characterized by available, helpful and knowledgeable associates. 
Customers know that the orange apron means something special, and the Company
intends to focus on know-how and service as a competitive edge.  During 2007,
the Company plans investments in associate engagement to total $360 million,
including recruitment of master trade specialists, a simplified staffing
model, technology-enabled customer assistance, and redesigned compensation and
reward plans.

    Product Excitement

    Product innovation, more focused promotions and everyday low pricing will
drive The Home Depot's merchandising initiatives in 2007.  The Company expects
to invest $260 million in 2007 on merchandising resets, product innovation,
pricing strategies and sourcing initiatives.

    Product Availability

    Keeping the right quantities of merchandise on the store shelves is a key
priority for 2007 and beyond.  The Home Depot will focus on improving its in-
stock position by investing in its logistics capabilities, including demand
forecasting and distribution.  The Company plans to invest $275 million in
these efforts.

    Shopping Environment

    The Home Depot consistently hears through surveys that customers want to
shop in safe, clean and uncluttered stores.  In 2007, the Company plans
investments to total $865 million to support the shopping experience,
including sustained maintenance and merchandising reset programs.

    Own the Pro

    The Home Depot's goal is to be the number one destination for pro
customers, primarily repair and remodel professionals.  During 2007, the
Company expects to spend $415 million on programs such as loyalty programs, a
pro bid room to handle large customer orders with volume discounts, direct
ship programs, credit programs and other specialty sales initiatives.

    "Our 2007 sales and earnings per share targets reflect the reality of the
home improvement market and our commitment to invest for the long-term health
of our business," said Carol Tome, CFO & executive vice president -- Corporate
Services.

    2007 Financial Targets

    (*) Total sales growth of 0 percent to 2 percent, with HD Supply growing
      from 13 percent of total sales to approximately 15 percent of total
      sales by the end of the year

    (*) Retail comps in the negative mid-single-digit area

    (*) Approximately 115 new store openings; 4.6 percent square footage growth

    (*) Diluted earnings per share decline of 4 percent to 9 percent

    (*) Capital expenditures to increase 29 percent to $4.5 billion, focused on
      new stores and retail reinvestment

    2007 financial targets reflect 52 weeks and do not include the impact of
the 53rd week.  The Company will have 53 weeks of operating results in its
fiscal 2007 financial results.  Including the impact of the 53rd week,
consolidated sales are expected to increase by 1 percent to 2 percent, and
diluted earnings per share are expected to decline by 3 percent to 8 percent.

    Retail Outlook

    Beyond 2007, the Company believes that investments made in its retail
business will allow sales in the retail business to return to above market
growth rates.  Additionally, the Company expects that these investments will
drive productivity, which will cause earnings to grow faster than sales.
Coupled with its commitment to share repurchases, the Company anticipates
diluted earnings per share growth of more than 10 percent annually.  The
overall retail outlook beyond 2007 is as follows:

    (*) Annual sales growth of approximately 5 percent

    (*) Annual earnings growth greater than 5 percent

    (*) Annual diluted earnings per share growth of 10 percent or more

    Capital Allocation Outlook

    The Company outlined its intent to use available cash after investing to
deliver a predictable dividend payout targeting approximately 30 percent, to
generate value-creating share repurchases and to maintain a high return on
invested capital.
    "Speed, flexibility and entrepreneurial spirit are hallmarks of The Home
Depot and will guide our decision making in 2007," said Blake.  "We have
aligned our leaders and resources around our five key priorities, and we
believe this strategy will deliver the most value for our customers,
associates and shareholders."

    The Home Depot(R) is the world's largest home improvement specialty
retailer, with more than 2,163 retail stores in all 50 states, the District of
Columbia, Puerto Rico, U.S. Virgin Islands, 10 Canadian provinces, Mexico and
China.  Through its HD Supply(SM) businesses, The Home Depot is also one of
the largest diversified wholesale distributors in the United States, with
nearly 1,000 locations in the United States and Canada offering products and
services for building, improving and maintaining homes, businesses and
municipal infrastructures. In fiscal 2006, The Home Depot had sales of $90.8
billion and earnings of $5.8 billion.  The Company employs approximately
355,000 associates and has been recognized by FORTUNE magazine as the No. 1
Most Admired Specialty Retailer and the No. 13 Most Admired Corporation in
America for 2006.  The Home Depot's stock is traded on the New York Stock
Exchange (NYSE: HD) and is included in the Dow Jones industrial average and
Standard & Poor's 500 index. HDG

    Certain statements contained herein, including any statements related to
Net Sales growth, comparable store sales, state of the housing market,
implementation of store initiatives, Net Earnings performance, earnings per
share, store openings and closures, capital allocation and expenditures,
margins, return on invested capital, declaration of dividends and share
repurchases, strategic direction and the demand for our products and services,
constitute "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. These statements are based on currently
available information and are based on our current expectations and
projections about future events.  Risks and uncertainties include but are not
limited to: economic conditions in North America; our ability to develop
relationships with a sufficient number of qualified suppliers; changes in our
cost structure, including fluctuating commodity prices; the availability of
sourcing channels consistent with our strategy of differentiation; the effect
of changes in our leadership on our operations and strategic direction; the
strategic evaluation of HD Supply, including whether or not any transaction
will occur and the terms, timing and conditions associated with any such
transaction; conditions affecting new store development, such as our ability
to find suitable store locations, obtain required permits and open stores on
schedule; conditions affecting customer transactions and average ticket,
including, but not limited to, weather conditions; the success of our
technology initiatives in improving and streamlining operations and customers'
in-store experience; our ability to identify and respond to evolving trends in
demographics and consumer preferences; our ability to design stores that
appeal to customers; the costs of redesigning stores in light of evolving
customer expectations; the success of new store formats and businesses; the
relative success of our expansion strategy, including our ability to identify
acquisition opportunities, particularly in markets outside the United States,
and our ability to complete acquisitions on financially attractive terms and
integrate them with our other businesses; our ability to create appropriate
distribution channels for key sales platforms; our ability to successfully
execute our online strategy; our ability to attract, train and retain highly
qualified associates; the impact of new accounting standards; subjective
assumptions, estimates and judgments by management related to complex
accounting matters; decisions by management related to possible asset
impairments; the impact of competition; regulation, government inquiries or
investigations and litigation matters; and possible restatement or adjustment
of financial statements. Undue reliance should not be placed on such forward-
looking statements, as they speak only as of the date hereof and we undertake
no obligation to update these statements to reflect subsequent events or
circumstances except as may be required by law. Additional information
regarding these and other risks and uncertainties is contained in our periodic
filings with the SEC, including our Annual Report on Form 10-K for the fiscal
year ended January 29, 2006.

For further information: Financial Community, Diane Dayhoff, Sr. Vice 
President of Investor Relations, +1-770-384-2666, or 
diane_dayhoff@homedepot.com, or News Media, Paula Drake, PR Manager, 
+1-770-384-3439, or paula_drake@homedepot.com, both of The Home Depot Web
Site: http://www.homedepot.com