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Home Depot customers, and employees have plenty to say!

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The large number of responses we received to my story Home Depot management should stock shelves & help some customers tells me I touched an important subject in the minds of our readers. Almost all the comments supported my contention that the first step toward improvement of The Home Depot (NYSE: HD) must come from management creating a deeper dialog with employees, customers and shareholders. This means management must roll up their sleeves and get personally involved with customers and staff.

Not surprisingly Home Depot executive management had nothing to say and no comments were received from Home Depot, not even a public relations person. It would have been spectacular if there was a dialog. I have been a supporter of giving management time and have viewed the stock as a value proposition this year. I might change my mind if Home Depot does not radically improve the level of dialog. If any Home Depot Executives read this I hope they will add their voice. I think I will send this post to Home Depot and see what happens.

Meanwhile Home Depot also announced the sale of its HD supply to private equity group for $10.3 billion as well as a $22.5 billion Increase in its share buyback plan. This jump started the stock for a day or two, and maybe the reduction in the number of shares will have the desired effect in raising shareholder value, but if you get the cash from borrowing or by selling assets the value may be dubious since each share is part of a smaller company. Prettier picture, less substance.

Earlier in the week Home Depot's chief financial officer, Carol Tome, said in an interview this week that the world's largest home improvement store chain is doing more than just buying back stock to improve shareholder value. It's also reinvesting and has plans to improve its supply chain, store environment, employee morale and customer service. The return on investment from these actions is critical to the long term value of the company. It does make it seem they are aware of the points of dissatisfaction and perhaps are reading what you all have to say!

The following excerpts from the comments we received cover most of the sentiment expressed and I invite additional comments that might add further to the discussion. The most important thing that is missing, partially because managements views are absent, is how Home Depot can implement corrective action with diminishing capital?

Customers:

  • John Katica: This suggestion is right on the money....literally. Anytime any business puts customer service below #1 on their formula for success plan, they're destined for problems. Management should definitely teach by "on the floor" example. Put on an orange smock over a tee shirt and levis and show your staff you care. Perspiration will improve the bottom line more than another report.
  • haveittodayray: "Lowes is still the growth company for the future of Home Improvement, they will continue to take market share and a greater slice of the pie awasy from Home Depot."
  • TEE: "My local HD is a pig pen! I feel dirty just shopping there, whether I buy or not."
  • Schatzie Caldwell: "HD had a sale for Thanksgiving so we waited in line at 5:AM and the sale items were still in their boxes not cut open and salesperson stood there and refused to help we, each one of us that were there for the drills, picked up an entire box of 6 battery operated drills and took them to the cash register. There is no need to tell you other customers were furious. WE bought ours and never went back to that store."
  • K: "Amen - they need to put their heads down and get to work. They cannot manage what they do not understand and with their recent push to hire from outside they need to change their management philosophy so that their outside hires can get a taste of the business."

Employees:

  • Marlys: "I'm the wife of a HD employee. I have to live with my husband's schedule. The lack of HD's ability to give someone a regular schedule means you cannot plan and always have to trade days or bother the scheduler because you have doctor's appointment. This is ridiculous along with their pay schedule. My husband does his best for the client and will bend over backwards in the name of customer service. He sometimes brings his work home with him because he's so frustrated over store policy and the limitations that management puts on their ability to provide what the customer needs."
  • John: "I think that a lot of the problems at HD are caused because of low salary and inexperience help...Just as others have stated you can't expect a pro to work for what the store is willing to pay....I work at a store where there are times you have one associate for three or four departments...It doesn't matter if you know anything about the departments that you cver, just get over there and do it..If you say that you are not comfotable in the department , because you are not skilled , you are told,LEARN IT... "
  • Elie M: I think the pionts are valid, and there is alot of things that we are working on to improve. As you may guess i am a current employee of THD. More than an employee i am a manager for the Totowa,NJ store. For those of you folks that believe that we do not take your comments or concerns seriously, your sadly mistaken. I challenge you folks to gear your comments to your local store managers; contrary to your beliefs, many of us are "down in the treches" to make sure service and safety are priorities.
  • Skidoo: "-Frank Blake has been in position for less than a year, give him a break people, you aren't going to see changes overnight.
    -During his time in the company though, there have been more changes for the good in that one year than I have seen in my 3.5 years with the company.
    -Yes, he is consulting the founders Arthur & Bernie. Arthur & Bernie's take on the Nardelli regime: "What the hell did you do to my stores?"

It seems to me that The Home Depot is suffering from ailments that remind me of a losing sports team. When the team is winning all is forgiven and when it's losing, the locker room gets nasty, the seats are not filled, and everything is put under a magnifying glass. In particular things like Ex-CEO's Bob Nardelli's pay and severance package resemble the outlandishness of doubling ticket prices for an unwatchable losing team.

All this said customers must recognize that management is struggling to find the dollars to make the kind of improvements we would all like to see. Home Depot has very large fixed costs in their "physical plant" (buildings) employee costs, and everything else. When things get tight, be it at your home or The Home Depot, things can become ragged around the edges. You decide to re-stripe the parking lot every four years, instead of every three; you decide to extend roof repair cycles, and slow down or reduce employee costs and more. While Nardelli was the poster boy for many of the companies ills, his ridiculous compensation is only a drop in a very large bucket.

From my perspective as an architect I would be addressing energy consumption as a major line item, but they may have been doing this all along and not made it known. Maybe a more dramatic approach is needed. It's your turn now...what do you think? Lets talk about financially viable solutions. In the original story I asked management to come back down to earth. Now I am extending the conversation to put customers and employees in management's role. Where would you find the money for the corrective action you would implement? We have heard the problems, what are the potential solutions?

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

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Last updated: November 25, 2009: 12:00 PM

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