Home Depot’s $101 billion plan

Home Depot has revealed a new set of ambitious financial targets it expects to achieve in three years by focusing on a uniquely Home Depot strategy called, “interconnecting retail.”

Just weeks after releasing impressive third quarter financial results, Home Depot convened an investor conference where executives detailed how the home improvement retailer expects to achieve annual sales of $101 billion, a 14.5% operating margin and a 35% return on invested capital by 2018. If achieved, those figures represent a marked improvement from goals established in December 2013 that the company expects to achieve by year end of 2015 of a 13% operating margin rate and 27% return on invested capital. If the company achieves the $101 billion sales target by 2018 it equates to a compound annual growth rate of about 4.7% from the $88 billion in sales it expects to tally by year end.

"While our strategic priorities are evolving to reflect the changing needs of our customers and our business, we will continue to focus on delivering the experience and value that our customers and shareholders expect from The Home Depot," said Craig Menear, Home Depot’s chairman, CEO and president.

During the meeting, the company offered an update on how it plans to create value by connecting the business end-to-end with a framework it calls “interconnecting retail” which places an emphasis on customer experience, product authority and productivity.

The company also confirmed its sales and profit forecast for the fourth quarter and current fiscal year, which was not surprising since it had just increased its full year outlook on Nov. 17 with the release of third quarter results. Home Depot currently operates 2,273 stores in the U.S., Canada and Mexico.