HOME DEPOT: SURVIVING THE DOWNTURN

CEO Strategic Memo

June 2030 | CEO Edition

Our revenue is down 16% from peak. Margins have compressed 500 basis points. Wall Street patience for housing sector recovery is wearing thin.

We need to demonstrate that Home Depot can generate returns even in a depressed housing market.

THE STRATEGY

1. Shift Mix to Higher-Margin Categories - Focus on kitchen/bath remodels (higher margin than commodity lumber) - Emphasize tool rentals, installation services (10-12% margin) - Move away from bulk commodity products

2. Aggressive Cost Reduction - Target $1.2B in annual cost savings by 2032 - Close 40-50 underperforming stores - Reduce overhead by 15%

3. Expand Services - Installation services revenue: Target $4.2B by 2033 (vs. $2.1B today) - This provides high-margin revenue that doesn't depend on home sales

4. Digital Integration - Drive 25% of sales through omnichannel by 2033 - This improves margins and provides alternative growth path

THE FINANCIAL CASE

2030 Actual: $112.8B revenue, 21% margin, $4.2B operating income 2033 Target: $118B revenue (modest growth), 23% margin, $5.1B operating income

This requires: - Housing starts to recover to 1.1M by 2032 (+30%) - Services business to grow to $4.2B (+100%) - Operating leverage on cost reductions

THE TIMELINE

By Q4 2030: - Announce cost reduction plan - Launch new services initiatives

By Q2 2031: - Demonstrate cost savings are materializing - Show services revenue accelerating

By Q4 2032: - Prove model is working: revenues stabilizing, margins recovering - Be in position to benefit from housing recovery starting in 2033