The Home Depot
History
Inflection points
The Home Depot was founded in 1978 (Atlanta, Georgia). Every turn Acquired identified: founding, leadership changes, strategic pivots, crises, cultural moments.
Events and financial outcomes
A supply chain built on manufacturers shipping to the store is centralized through distribution centers. In March 2009 the slogan changes from 'You can do it. We can help.' Store productivity, not store count, becomes the growth engine.
Event source: Acquired episode The Home Depot
| Measure | FY2007 · 2008-02-03 | FY2010 · 2011-01-30 | Change |
|---|---|---|---|
| Revenue | $77.3B | $68.0B | −$9.4B |
| Operating margin | 9.4% | 8.6% | -0.8 pp |
| Net income | $4.4B | $3.3B | −$1.1B |
| Operating cash flow | $5.7B | $4.6B | −$1.1B |
| Capital expenditures | $3.6B | $1.1B | −$2.5B |
Reporting periods outside the event year; changes also reflect other decisions, market conditions, and accounting. Home Depot names each fiscal year for the calendar year in which it begins: fiscal 2025 ended February 1, 2026. Buybacks have taken stockholders' equity to near zero or below several times since fiscal 2018, so ROE and the DuPont leverage term are not meaningful for those years.
Case question. Which revenue, cost, or capital decision could explain the outcome, and what evidence would separate its effect from changes in the market?
The story
Bernie Marcus ran Handy Dan, the Los Angeles hardware chain of the Daylin conglomerate, from 1972, with Arthur Blank as his CFO. Ken Langone, the investment banker who had taken Ross Perot's EDS public, found Handy Dan in a Moody's manual trading at two years of earnings and bought nearly 20 percent of it. When Daylin's turnaround CEO, Sandy Sigoloff, bought Langone out in January 1978, he fired Marcus, Blank and their audit manager three months later on a trumped-up labor-relations charge. Marcus had already seen Sol Price's new Price Club in San Diego and had described to Langone the store that would put Handy Dan out of business. At breakfast at the Waldorf Astoria the day after the firing, Langone told him he had been kicked in the ass with a golden horseshoe and that they would go build it. Ross Perot agreed to put up $2 million for 70 percent of the company, then lost the deal in an argument over the old Cadillac Marcus drove. Langone raised the same $2 million from forty investors at $50,000 each for 50 percent, kept 5 percent for himself, and left 45 percent for management. Pat Farrah, whose 130,000-square-foot HomeCo warehouse in Los Angeles was the concept at full size, joined as the fourth founder after HomeCo turned out to be insolvent. J.C. Penney sublet four failing Treasure Island discount stores in the Atlanta suburbs; an investor's wife suggested the name; the orange came from circus-tent canvas bought cheap for signage. The first two stores opened on June 22, 1979.
Inflection points · grouped by decade
1970s
- 1972Leadership
Bernie Marcus becomes CEO of Handy Dan
Daylin, a Los Angeles retail conglomerate, hands its Handy Dan hardware chain to Marcus, a pharmacist turned discount retailer. He recruits Arthur Blank from inside Daylin as CFO. Neither owns equity; they make Handy Dan the best operator in a fragmented, unsophisticated industry whose largest player, Lowe's, does about $150 million a year.
[Acquired episode The Home Depot]
- 1976Financing
Ken Langone buys nearly 20 percent of Handy Dan
Langone finds Handy Dan in a Moody's manual at $3 a share against $1.50 of expected earnings, flies to Los Angeles for lunch, and buys every share he can, except the Brooklyn congregation's block. The last shares cost about $9.
[Acquired episode The Home Depot]
- David:He pulls out his Moody's manual, his little book, and he's going through. He looks, he finds Handy Dan. He looks at the financials. Holy crap, you're right. This is a great business. But yeah, it's trading for $3 a share. And if Moody's is right, this company is going to earn post-tax net income of $1.50 a share this year. So this company is trading at two years of post-tax earnings.[Acquired The Home Depot, ch. Ken Langone & Handy Dan]
- 1978-04Crisis
Sigoloff fires Marcus, Blank and Ron Brill
Three months after buying Langone out at $25.50 a share, Daylin's turnaround CEO fires the three on a labor-relations pretext. The next morning at the Waldorf Astoria, Langone tells Marcus he has been kicked in the ass with a golden horseshoe. Marcus goes back to San Diego for Sol Price's blessing before committing.
[Acquired episode The Home Depot; Built from Scratch]
- David:3 months later, Sigoloff fires Bernie and Arthur and the audit manager at Handy Dan, a guy named Ron Brill. The reason that Ron gets fired, too, is the pretense that Sigoloff trumps up is an accusation that the 3 of them had violated national labor relations rules in negotiating with unions.[Acquired The Home Depot, ch. Ken Buys Handy Dan, Bernie & Arthur Fired]
- David:And Ken says, Bernie, relax. You just got kicked in the ass with a golden horseshoe. That's a verbatim quote, by the way, because now we're going to go start that company that you told me about.[Acquired The Home Depot, ch. Ken Buys Handy Dan, Bernie & Arthur Fired]
- 1978Founding
The Home Depot is founded
Perot's $2 million for 70 percent collapses over the Cadillac; Langone's forty-investor syndicate puts in the same $2 million for 50 percent. Pat Farrah joins as merchandiser after due diligence finds HomeCo insolvent. The company takes four Treasure Island leases from J.C. Penney in Atlanta, a name from an investor's wife, and orange from circus-tent canvas.
[Acquired episode The Home Depot; Built from Scratch]
- David:$2 million. In return for 70% of the company. Except at the last minute, Bernie blows up the deal. He and Ross get into this big fight over management style and management philosophy. And ultimately the sticking point, you can't make this up, it's all in Built from Scratch, is the car that Bernie drives. He drives an old Cadillac.[Acquired The Home Depot, ch. Ross Perot Almost Buys Home Depot]
- David:Arthur, in the retail business, when you can't sell something, you mark it down. In my business, when we can't sell something, we mark it up.[Acquired The Home Depot, ch. Ross Perot Almost Buys Home Depot (Langone, as quoted by the hosts)]
- Built from Scratch, the founders' own account, which the hosts read from throughout the episode.[Built from Scratch, Bernie Marcus and Arthur Blank]
- 1979-06Product
First two stores open in Atlanta (June 22, 1979)
The newspaper ad never ran, so associates handed out dollar bills in the parking lot. Farrah had the polished floors scuffed with forklifts. Five hundred borrowed boxes and 2,000 empty paint cans filled the racks. Three stores did $7 million in six months; the company lost about $1 million in 1979 and made $1 million in 1980.
[Acquired episode The Home Depot]
- David:So that leads right into the opening of the first 2 Home Depot's in Atlanta on June 22nd, 1979. They opened 2 stores same day. And this all happened like pretty fast. This is just over 1 year from when Bernie and Arthur and Ron get fired from Handy Dan.[Acquired The Home Depot, ch. First Stores & Early Model]
- David:So in 1979, that first 6-month period that the company was operating, they lost about $1 million. So $1 out of the $2 million of startup capital was blown in 1979. In 1980, this next year, they made $1 million in profit. Like, this is incredible. This shows how well the model is working.[Acquired The Home Depot, ch. Home Depot Goes Public & Expands]
1980s
- 1981IPO
IPO at a $32 million market cap
Bear Stearns cut the deal from $6 million to $3 million a week before pricing; the seed investors let their stake ride instead of cashing out at 2x. About $4 million raised. The money took over J.C. Penney's empty Florida locations.
[Acquired episode The Home Depot]
- David:We can only sell $3 million. So Ken goes back to the existing investors and says, We're just going to let our investment ride rather than cashing out at slightly less than a 2x.[Acquired The Home Depot, ch. Home Depot Goes Public & Expands]
- 1986Market
$1 billion in sales with 60 stores
Thirty-one stores across Georgia, Florida and Texas in 1984; a billion dollars two years later.
[Acquired episode The Home Depot]
- 1989Market
Passes Lowe's as the largest US home-improvement retailer
118 stores nationally, ten years after the first opened. Handy Dan goes out of business the same year. The 1980s copycats, Builders Square, Home Club, Home Quarters Warehouse and Mr. HOW, all eventually disappear.
[Acquired episode The Home Depot]
- David:In 1989, they pass Lowe's to become the largest home improvement retailer in America. Also in 1989, Handy Dan goes out of business. They finally get their clock cleaned by the new HD.[Acquired The Home Depot, ch. Home Depot Goes Public & Expands]
1990s
- 1996Cultural
Olympic sponsor in its hometown; $20 billion in sales
A new store every four days, approaching 700 stores with 32 outside the United States. The pro desk, business credit accounts, pro pricing and job-site delivery arrive in this era.
[Acquired episode The Home Depot]
- David:By 1996, Home Depot is doing $20 billion in sales annually and expanding rapidly. They're averaging a new store opening every four days.[Acquired The Home Depot, ch. Arthur Blank Takes CEO & Early Cracks]
- 1997Leadership
Marcus retires; Arthur Blank becomes CEO
The same year the company settles one of the largest gender-discrimination suits to that point. Radical decentralization, worth 15 to 20 percent more sales per store in Marcus's estimate, now costs purchasing scale. Lowe's, which switched to warehouse stores in 1990, aims 'Improving Home Improvement' at younger and female buyers.
[Acquired episode The Home Depot]
- Ben:So I think it was 1990, they opened their first warehouse store, and they did a complete about-face. Obviously, when you go to a Lowe's today, it's a very, very similar concept, but this is like a real innovator's dilemma impressive thing that they did to shed their old operations and formats and close those and open only Home Depot-style stores starting in the early '90s.[Acquired The Home Depot, ch. Arthur Blank Takes CEO & Early Cracks]
2000s
- 2000-12Leadership
Bob Nardelli hired from GE as CEO
Over $40 billion in revenue, 1,000 stores, 200,000 employees and no successor inside. Six months courting Jamie Dimon come to nothing. Langone, on GE's board, calls Nardelli the day Immelt is named: a $150 million package, then a last-minute demand for the CEO title. Blank is gone within six months.
[Acquired episode The Home Depot; I Love Capitalism (Langone)]
- David:And so to incentivize Nardelli to take this job, they say, we'll make you whole on your GE stock options. We're gonna give you $150 million equity package to come join Home Depot.[Acquired The Home Depot, ch. The Bob Nardelli Era]
- 2007-01Leadership
Nardelli fired; Frank Blake becomes CEO
A special board meeting in Dallas on January 2: $18 million in severance and a package valued at $210 million. Associates celebrate on store floors. Blake, a lawyer and GE M&A head who had never run a P&L, takes 90 percent of his pay in options, calls Marcus first, and walks a Costco with him.
[Acquired episode The Home Depot]
- David:Finally, on January 2nd, 2007, Ken Langone calls a special board meeting in Dallas, and the board fires Nardelli at this meeting. He gets an $18 million cash severance payable immediately and gets a quote-unquote retirement package valued at $210 million.[Acquired The Home Depot, ch. Nardelli's Public Downfall & Firing]
- David:The first place they visit together is Costco, because to Bernie, Home Depot stores no longer embody the values and qualities of a great retailer that he wants to teach, you know, the young Jedi here.[Acquired The Home Depot, ch. Frank Blake's Turnaround]
- 2007Strategic shift
HD Supply sold for $8.3 billion; the proceeds go to buybacks
The Nardelli-era distribution business, 13 percent of revenue by 2006, goes to private equity. Fourteen percent of the shares are retired in the first year, 30 percent over Blake's tenure, mostly at $30 to $50 a share. Revenue falls from 2007, bottoms in 2010 and does not regain its 2007 level until 2014.
[Acquired episode The Home Depot]
- Ben:So right away, they bought back 14% of the total outstanding shares in the first year. And Frank would go on to buy back 30% of all outstanding shares over the course of his tenure. He dramatically shrunk the size of the shareholder base.[Acquired The Home Depot, ch. Frank Blake's Turnaround]
- Ben:But for Home Depot, their revenue would fall starting in 2007. It bottomed in 2010, and it actually did not get back to 2007 levels until 2014. So that's a 7-year span, and it's the same story with net income, where they were below their previous high watermark on revenue and profits.[Acquired The Home Depot, ch. Frank Blake's Turnaround]
- 2009Strategic shift
Twelve rapid deployment centers; 'More saving. More doing.'
A supply chain built on manufacturers shipping to the store is centralized through distribution centers. In March 2009 the slogan changes from 'You can do it. We can help.' Store productivity, not store count, becomes the growth engine.
[Acquired episode The Home Depot]
- Ben:In 2009, they opened 12 big distribution centers that they call rapid deployment centers. This is a huge shift from the original model where manufacturers would ship directly to the store. This is centralizing the supply chain.[Acquired The Home Depot, ch. E-commerce & Distribution Revolution]
2010s
- 2014Leadership
Blake retires; Craig Menear becomes CEO
The first handover to a bench built inside the company. Direct fulfillment centers for online-only SKUs start the same year. Blake's lieutenants go on to run UPS (Carol Tomé), Floor & Decor (Tom Taylor) and, from 2018, Lowe's (Marvin Ellison).
[Acquired episode The Home Depot]
- David:So when Frank retires, he hands the reins over to Craig Menear. He runs the company for another eight years and then he retires in 2022 and hands the reins over to Ted Decker. Both of them come up through the company, you know, practically lifers at Home Depot.[Acquired The Home Depot, ch. E-commerce & Distribution Revolution]
2020s
- 2020Market
Pandemic demand: revenue from $110 billion to about $160 billion in three years
A decade of fulfillment investment with no new stores meets a country stuck at home. The same year, HD Supply's most valuable piece is bought back for about $8 billion, thirteen years after the sale.
[Acquired episode The Home Depot]
- David:So during COVID, Home Depot's revenue growth goes nuts. It goes from $110 billion in revenue to about $160 billion in revenue.[Acquired The Home Depot, ch. E-commerce & Distribution Revolution]
- Ben:They actually just bought part of it back, the most valuable piece of it, for $8 billion, but there's been lots of inflation since then. It's not really fair to call it the same price.[Acquired The Home Depot, ch. Home Depot Today: Pro & DIY]
- 2022Leadership
Ted Decker becomes CEO
The second internal handover since Blake. Lowe's, across the street, is run by a Home Depot alumnus.
[Acquired episode The Home Depot]
- 2024Acquired co.
SRS Distribution for $18.25 billion
The largest deal in the company's history, a trade distributor serving roofers, landscapers and pool contractors with its own delivery fleet and distribution centers outside the stores. Buybacks pause to pay for it; a further multibillion-dollar interiors deal follows inside SRS.
[Acquired episode The Home Depot]
- Ben:The next thing they do is they buy SRS in 2024. This is a giant deal, an $18.25 billion acquisition. Largest deal in the company's history. They actually pause stock buybacks here.[Acquired The Home Depot, ch. Home Depot Today: Pro & DIY]
- 2024Cultural
Bernie Marcus dies at 95
Frank Blake runs the roughly $4 billion spend-down Marcus Foundation. Langone, nearly 91, has never sold a share; his stake is worth about $6 billion. Arthur Blank's Falcons, bought in 2002 for $545 million, sell a minority stake at a $10.6 billion valuation.
[Acquired episode The Home Depot]
- David:And Ken Langone, the GOAT, is about to turn 91 years old. Has never sold a share of Home Depot. His stake in the company is worth about $6 billion today.[Acquired The Home Depot, ch. Home Depot Today: Pro & DIY]
- Ben:So in 1985, the stock was down 66%, and Ken didn't sell. Then in 2002, down 70%, and he didn't sell a share. Then 2008, the whole Nardelli situation, the housing bubble, and then again down 70%, he didn't sell. In fact, if you bought the shares at their peak in '99, your investment would've been underwater for a full 12 years until the stock recovered in 2012, but Ken still never sold.[Acquired The Home Depot, ch. Home Depot Today: Pro & DIY]
- 2026-09Acquired covered
Acquired covers The Home Depot
Fall 2026, episode 2. The hosts' answer to why it got so big: a warehouse people enjoy shopping, a $300 billion market, 51 percent of it captured through scale, a housing stock whose median age went from 23 years in 1980 to 42 today, DIY invented at scale, and the pro market on top.
[https://www.acquired.fm/episodes/home-depot]
- Ben:The median age of the housing stock remained broadly stable at about 23 years old from 1940 all the way to 1980. Post-war construction, you kept adding new homes to the overall stock. Today, the age of the median home in the United States is 42 years old. This company was founded and IPO'd into a market of houses that were only getting older and needed ever more repairs.[Acquired The Home Depot, ch. Quintessence: Why It Got So Big]
- The company's own timeline, from the first stores to the present.[The Home Depot corporate timeline (PDF)]