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Non-Tech : Home Depot (HD)
HD 362.31-1.6%3:59 PM EST
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To: Edward Boghosian who wrote (344)9/9/1998 9:36:00 PM
From: Carter Patterson  Read Replies (3) of 1169
 
I truly doubt that the insider sale has anything to do with opening ONE store or even 10 in Latin America. This is an alarmist comment.

The facts are:

They have a current base of nearly 700 US/Canadian stores. Even if these stores lost mucho dollars, these stores are absolutely IMMATERIAL to their P/L for the next several years. Also, they are going in with an experienced local partner.

Unlike your typical crash and burn retailer, HD is very cautious in moving out of its core big box store format. Here are 3 examples I recollect:

(a) Mexico: they pulled the plug on this when the peso was devalued. End of story.

(b) Crossroads format: They opened one store. Problem. Killed it off immediately. End of story.

(c) EXPO: Has 5 stores after about 5 years. This has been tweaked to death. It is only now that they are going ahead with 200 stores. Obviously cautious. Most retailers would have rushed a flawed concept to market. Not HD.

Outside of the Latin America store issue, I suspect HD is a major beneficiary of a strong dollar/weak overseas markets as it imports a lot from this region. Besides, they are refining their importing operations to cut out the middleman. I have read research (Merrill ?) that says gross margins are going to improve very significantly over the next 5 years as this program is fully implemented.

I am very comfortable with HD.
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