The Guam market holds more than the obvious retail appeal for Home Depot which — as the Journal on Feb. 9 broke first — signed to lease land for a store on-island.
Corporate strategy for Home Depot is to derive more sales from services and supply to professional contractors and other professional markets announced from its corporate headquarters in Atlanta Ga. following a Jan. 19 meeting with analysts.
That aim was announced as Home Depot bid for the purchase of U.S. construction materials supplier Hughes Supply Inc. for $3.2 billion. Hughes distributes a range of products to municipalities builders and other contractors. That acquisition would more than double the size of Home Depot Supply the division serving business customers that currently accounts for 4% of company sales. By 2010 Home Depot Supply is expected to account for 18% to 19% of Home Depot’s total sales.
The announced huge military build-up for the island — and the resultant needs of the military and the contracting industry — adds to Guam’s attractiveness.
In an exclusive interview Jeffrey L. Nichols director of real estate for Home Depot’s Western Division told the Journal “We are an approved vendor of the U.S. government. So such would be the case for the [Guam] military’s spending as well as any of their contractors.”
Home Depot USA Inc. sent a team of seven senior executives to Guam for the occasion of the Feb. 9 signing of the contract to lease land along Airport Road for a superstore. Plans are to build a 135 000 square foot store building including an 18 000 square foot garden center with a rough estimate of about 200 jobs. Kim C. Sentovich vice president of operations for Home Depot’s West Coast Division said "We’re not known to bring people in from other locations. We want to train the right people for the area.” Sentovich who also oversees seven stores in Hawaii spoke at a Feb. 10 press conference hosted by Gov. Felix P. Camacho after she arrived on-island on Feb. 8.
She said no opening date was set beyond end of 2006 early 2007.
Nichols took the time to visit Saipan arriving on Guam on Feb. 7 but told the Journal that the company has no plans to locate a store in Saipan at this point.
Home Depot officials are meeting with members of the shipping and freight forwarding industry on Guam. Nichols told the Journal “We’re in the throes of trying to figure who the various team members ought to be.” At the Feb. 10 press conference he said “We have yet to meet with local contractors. We don’t know who we will hire to build yet.”
Sentovich told the Journal at the conference “We don’t have a set percentage on what the price increase will be with shipping from the mainland to Guam. We will conduct a study about Guam’s prices and will make sure that we offer the lowest price.
While low-cost merchandise is important Nichols said “We want to offer more variety — items that aren’t found anywhere else.”
Home Depot offers do-it-yourself clinics Nichols said. "We want to offer clinics to show people how to do projects they normally wouldn’t feel they are capable of."
Other Home Depot executives that arrived Feb. 8 also included Kari Wallace district manager for the Hawaiian islands; Michael McEnroe regional human resources director; Ray McCay regional merchandize manager for Hawaii and Alaska; Cassandra Mattison senior manager for specialty distribution from Atlanta; and Sam Philips senior manager for logistics from Atlanta.
Home Depot has leased 13 acres of a 24-acre property on airport road North of the Mai’ana Airport Plaza Hotel. Calvo Realty & Management Co. and its partner Modern ASPAC Development Inc. subleased the Airport Road property from the Mediola family which has been kept informed of progress on lease negotiations with Home Depot.
Leonard P. Calvo general manager of Calvo Realty signed for Calvo’s Realty. James Lee owner of ASPAC is resident in Hong Kong. ASPAC will lease out its share of the property as Solid Capital Investment Co. Ltd. Anita P. Arriola partner in Arriola Cowan and Arriola who represents Lee declined to say who signed for ASPAC. Daniel Swavely engineering consultant acted as consultant to Home Depot.
Whether the property can be accessed from Marine Corps Drive is still being investigated Nichols said. He told the Journal he was aware of possible plans to offer additional roadway through Tiyan.
For years the home improvement giant sent representatives periodically to Guam but in June 2003 a broker from Hawaii began to look at selected sites as exclusively reported at the time in the Journal.
The paper reported exclusively in August 2005 that the Airport Road site was chosen.
The Home Depot known for its signature “orange box” stores was founded in 1978 in Atlanta Ga. and has since become the world’s largest home improvement retailer operating more than 2 000 stores such as The Home Depot EXPO Design Center The Home Depot Supply and other subsidiary companies across North America. Stores stock up to 35 000 items of building materials landscape supplies lighting and interior décor; and offer installations service and 24-hour opening in some locations. The chain offers contractor services and commercial accounts.
Home Depot said it would open 400 to 500 stores through 2010 about half the number opened in the previous five years as it diversifies from core retail business. The company opened 183 stores in fiscal 2004 down from 204 in fiscal 2000. New products planned including more brands of tractors and more appliances. The company also said in January that services a double-digit growth business that includes installations of windows and roofs would account for 5% to 6% of overall sales by 2010.
The Home Depot operates in 50 U.S. states and in the District of Columbia Puerto Rico 10 Canadian provinces and Mexico. In addition The Home Depot recently opened two sourcing offices in China. The company said it plans to expand into China but has not released further details. MBJ
