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August 15, 2006

Home Depot Supply reported 325% sales growth in the second quarter, thanks to its rapidly expanding base of newly acquired wholesale businesses. Sales at HD Supply were $3.38 billion for the quarter or 13% of Home Depot's overall $26 billion in sales for the period.

The Home Depot Supply reported $2.1 billion in first quarter 2006 sales, putting its year-to-date sales at about $5.4 billion.

HD Supply's year-over-year organic growth was 12%. HD Supply chief Joe DeAngelo said in HD's second-quarter earnings call with investors that his division is focused on becoming an "organic growth machine." "If you don't have a great organic growth model, you don't earn the right to acquire," he said.

The division will continue on the acquisition trail however. "We look at 10-15 for every one that we get," he says.

DeAngelo is not concerned about a possible slowdown in the economy. "When you look at Home Depot Supply, we have a very diverse portfolio now, which helps through any cycle," he explained. He broke out HD Supply's base: 36% infrastructure; 43% construction; 16% maintenance; 4% repair/remodel; and 2% international. 

"No matter what is happening in the cycle, our philosophy is that we're going to be No. 1 in every one of those segments. When certain things go down, other things go up," DeAngelo said.

During the quarter, HD Supply acquired: Western Fasteners, distributor of construction fasteners, power tools and accessories with eight branches; Texas Contractors Supply, distributor of forming, concrete accessories, tilt-wall and power tools; Rice Planter Carpets, provider of flooring design, sales and installation services with two locations; and Forest Products Supply, supplier of lumber, doors, millwork, and windows with two locations.

The Home Depot, Atlanta, GA, reported a 16.7% increase in overall sales from the second quarter fiscal 2005. Net earnings were $1.86 billion, up 9.8% compared to the same period in fiscal 2005.

Year-to-date, The Home Depot reported sales of $47.48 billion, up 15% from the year before. Profit for the first six months was $3.34 billion, up 11%.

Total sales in the Retail segment grew 5.1% to $22.6 billion, reflecting new stores and comparable store sales of -0.2 percent.

The company saw growth in average ticket across most merchandise categories. In the second quarter of fiscal 2006, The Home Depot increased its average ticket by 4.2% to $59.98.

During the quarter, Home Depot opened 30 new stores, including two relocations, with two new stores in Canada and one new store in Mexico, bringing the total store count to 2,079. As of the end of the quarter, approximately 10% of the company's store base was in Canada and Mexico, as compared to 9% for the same period last year.

Related Links
Home Depot Supply Hits $2.1B in 1Q
Home Depot Supply Aims for $23-$27B by 2010
What's Home Depot's Impact?
Home Depot Supply Acquisition History

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