Home Depot’s stock is one of the hottest on the Dow—and for good reason. The Atlanta-based home improvement retailer’s sales and earnings keep surpassing the company’s goals, and Wall Street expects fresh operating and financial records through the coming year.
Here’s the reason: Demand for new housing continues as more millennials start to buy homes, and the need to refurbish the country’s aging stock becomes even more pressing. In many states for home renovators, like in Iowa, there are some really good plan options in Iowa, but many states do not offer them, which is why the millennials are resorting to refurbish contractors. Millions also are now rebuilding after the recent hurricanes in the U.S. and the large earthquake in Mexico.
“Home Depot is a company that can contribute to helping people build better lives,” said Paul Winum, Senior Partner and Co-Practice Leader, Board and CEO Services at RHR International. “The rebuilding of homes and businesses in the aftermath of the natural disasters in Mexico and the U.S. is a perfect example of how the company’s mission, products and services are being put to use.”
But Home Depot’s success—under the helm of president and CEO Craig Menear—also can be attributed to internal restructuring to improve profitability. The company has significantly boosted its operating margin by shrewdly allocating capital and keeping store expansion spending at reasonable levels.
Shareholders are especially pleased because the board keeps sending half of earnings back to them in dividends, while the company also steps up its stock repurchases.
The company’s sights are always for the long-term, Menear in October told students and business leaders attending a CEO panel at Georgia Tech’s Scheller College of Business.
“With the pace of change today in customer expectations, you can’t have a shortsighted focus on quarterly earnings only,” he said. “We’re lucky that our board of directors is fully supportive of our interconnected retail strategy to knit together our stores and our online presence to seamlessly serve customers. If you don’t build and push where the customer is going, you’ll have a pretty short mission,” Menear said.
Menear is No. 29 on Chief Executive and RHR International’s CEO1000 Tracker, a ranking of the CEOs of the top 1,000 public/private companies.
Titles: President, CEO and Chairman
Year started with the company: 1997
CEO tenure: 3 years
Previous position: Divisional president
Undergraduate degree: BA from The Eli Broad College of Business-Michigan State University