The Home Depot CEO
Long before he got named The Home Depot CEO, Craig Menear was born in 1958 and raised among the bustling automobile manufacturing factories of Flint Michigan, a blue-collar town that once boasted some nine General Motors (GM) plants. His own father was a tool and die maker that worked at GM for forty-one years, and on the few off days to be had, the working-class man often recruited the help of his son for strenuous home improvement projects; perhaps Craig enjoyed these early boyhood do-it-yourself construction tasks, considering the billion-dollar company he’d ultimately helm.
Fostering his own entrepreneurial spirit, as a kid, he set up a neighborhood lawn care business that triumphantly led to him purchasing his first car with personal savings. That relentless work ethic the future executive displayed must have had something to do with the rugged midwestern upbringing he experienced, after all, his father frequently battered him with the mantra, “if you’re going to do something, do it 110%, or don’t do it at all.”
Around ten years old, Craig remembers noticing a girl about the same age living just five houses down from him, her name was Dawn. The two youthful love birds were dating by junior high, eventually graduated hand in hand from Central High School, and forever sealing their vintage Americana status as high school sweethearts, got married during the mid-80s; over three decades later, they are still going strong! “I couldn’t do this without her,” he humbly admitted to the Atlanta Business Chronicle in 2018.
Michigan State University
Excelling academically, Craig Menear finished high school in the spring of 1975 and earned his way into Michigan State University’s Eli Broad College of Business that next fall semester. A persistent Spartan, he’d drive the aging aforementioned vehicle to and fro’ the college campus where he slogged his way through two years of math and statistics that didn’t come easy.
“Michigan State was a great economic opportunity to be able to get a great education and a great life, and I am very happy to be able to give back some of what was given to me,” he divulges to the school’s newspaper, having earned his bachelor’s degree in a fairly swift four years, with the class of 79′.
The Career of Craig Menear
After graduating from MSU, Menear began his career at the modest, now-defunct retailer, Montgomery Ward; which was a pioneering mail order and department store retailer that operated between 1872 and 2001. Following his departure from that initial outfit, he took on roles among numerous home improvement retail companies (each notably vying in the field of do-it-yourself projects), such as Grace Home Centers, Builders Emporium, and IKEA, at one point, he was a distribution manager for the latter.
The Home Depot
Craig Menear got hired by The Home Depot in 1997 as a divisional merchandise manager for the southwest division. He’d get a front-row seat to one of the greatest supply chain overhauls since Amazon began threatening the entire brick and mortar retail business community with speedy home delivery of goods spanning nearly every product category.
“Logistics is huge, and if you step back to just twelve years ago, our business has changed pretty dramatically [since then],” he explained at a 2018 Michigan leadership summit. “When I joined the company, we were still decentralized, 75% of our goods went direct from the manufacturer to each individual store, and as the business evolved, that supply chain just didn’t work anymore; it was really inefficient.”
Rapidly putting his know-how to work, the young man from Flint climbed his way up from divisional merchandise manager for the southwest division to senior vice president of merchandising for hardlines by 2003. In 2007 he was appointed to Executive Vice President of Merchandising, a position that he’d flourish in for seven years.
In 2006, Home Depot brought on Office Depot logistics veteran Mark Holifield as senior vice president of Supply Chain. Holifield’s team then proceeded to engineer and execute on the company’s supply chain transformation, adding a network of eighteen Rapid Deployment Centers to supply stores with unprecedented efficiency.
These innovations had an immensely positive role on Menear’s merchandising side of things; think smoother stocking of inventory and more cost-effective operating expenses, which tends to create wiggle room for competitively priced products.
Life Under a Questionable CEO
Recruited from General Electric, Robert Nardelli was CEO of The Home Depot between 2000 and 2007, his tenure at the home improvement giant has since been scrutinized by analysts as far-reaching as the Wharton School of Finance, where one published study argues he brought the wrong toolbox to the job.
For starters, seasoned associates at the company were less than thrilled to watch him oust long-time, trusted executives and replace them with outsider GE alumni. Dealing a further blow to internal morale, he also increased the number of less knowledgeable part-time workers at Home Depot’s stores, which left full-time employees fuming and led to a diminishment of customer service, one of the company’s strengths, recounted Barry Henderson, an equities expert at T. Rowe Price.
Home Depot’s stock value dropped 8% by the time Nardelli was exiled by the company’s board in 2007, for comparison, during that time, Lowe’s shares soared some 180%. Despite the fact he walked away with a dreamy retirement package worth up to $210 million, his practices left Home Depot in a compromised position, particularly due to the cost cuts that were being made to reach inauthentic quarterly objectives – they inadvertently wreaked havoc on the ground floor, in other words, where the customer spends their money.
“You’ve always got to be aware of what you’re competing against but we’ve learned this the hard way,” laments Menear. “You have to stay focused on the customer’s needs and when you lose that focus, bad things happen. We lost that focus in the mid-2000s and candidly, we blew one of the biggest housing booms this country has ever seen – in the 2004, 2005, 2006 era.”
A Lasting Rebuild
Others in the loop would argue the contrary, that executives weren’t informed enough on the competition, given Lowe’s stellar rise; the one thing folks seem to universally agree about regarding this period in Home Depot’s history is its disheartening impact on all involved parties.
Executing a move that initially left some scratching their heads, the board appointed Frank Blake CEO after Nardelli’s departure, he had come from GE as well, and many feared a catastrophic repeat of the past seven years. Little did they know, Blake’s selfless leadership style would be exactly what The Home Depot needed to mend soar wounds.
It became apparent this rebuild was reaching for the long-term as the great recession took hold, plunging the company’s net income to $756 million in the three months ended Nov. 2, 2008, down 30.7% from $1.1 billion in the same period a year before. Still, amidst troubled financial waters, Blake chose to make investments in his operations by continuing to modernize their supply chain, rethinking the role technology could play in their retail strategy, and most importantly, emphasizing the tremendous impact that each hired hand in each store has on Home Depot’s success.
Frank Blake Rights the Ship
Transactions of nine hundred dollars or more, which represent around 20% of Home Depot’s sales in the United States, began stabilizing by the start of 2010. As Craig Menear put it: that was “a significant improvement compared to double-digit declines in previous quarters in 2009.” He attributed the improvement to consumers snapping up values in Home Depot’s appliances, water heaters, and windows categories.
On Sundays, the Fortune 500 corporation’s new chief executive hand-wrote thank-you cards to employees, a meaningful gesture he learned from President George H. W. Bush while serving as deputy general counsel from 1981-1983, during his vice presidency years. “As a staff member, I remember the feeling of getting a note from the vice president of the United States saying ‘nice job’ on something. That makes a difference,” believes Frank Blake.
“The culture was always here,” he retrospectively told Institutional Investor in a 2011 interview. “If somebody had said, ‘Okay, Frank, here – blank sheet of paper. Go create a customer-focused culture in a company of 300,000 people,’ that would have been pretty difficult. We just went back to some foundational statements from [founders] Bernie Marcus and Arthur Blank in terms of our company values and what we stand for. People go: ‘Got it. I remember that. I know what that felt like.’ If you take care of your associates and take care of your customers, everything else takes care of itself.”
Home Depot Chief Executive
On August 21st of 2014, The Home Depot announced that Craig Menear, then president of U.S. retail, was named CEO and president, effective November 1, 2014. “Craig has taken on increasing leadership responsibility over the last several years and has excelled in all his roles,” said Blake. “As a long-time Home Depot veteran, Craig lives our values and embodies our culture. He’ll do an outstanding job leading our company in the years ahead.”
During Blake’s tenure, Home Depot’s stock rose more than 100%, by the end, they were operating the world’s largest home improvement specialty retailer, with 2,265 retail stores in all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, and Mexico. In fiscal 2013, the company reached sales of $78.8 billion and earnings of $5.4 billion.
Needless to say, Menear inherited a fairly advantageous situation when compared to the circumstances his predecessor encountered. However, we must acknowledge that he did have his helpful hands intimately engaged in numerous facets of the business throughout this monumental turnaround, areas as diverse as online presence, merchandising, private-brand, global sourcing, marketing operations, and obviously, merchandising.
One of the biggest challenges looking ahead manifested in the form of consumer habits shifting, as online sales grew to 4% with no signs of slowing, leadership needed to ponder how best to sell items from barbecue grills and patio sets to actual bricks and mortar over the Internet. “We need to transform Home Depot to allow customers to shop when, where, and how they want to,” Menear said in a 2014 interview at the company’s Atlanta headquarters.
It’s worth noting that while board room deliberations ensued regarding Blake’s successor, the company’s head of U.S. stores, Marvin Ellison and CFO Carol Tome were also potential contenders for the top spot. Not long after the board appointed Menear, the former moved on and accepted an opportunity to become CEO of J.C. Penny. Following his brief stint with the fledgling clothing store, Ellison got named CEO of Lowe’s, an international home improvement retailer that is largely considered his previous employer’s most fervent competitor.
An $11 billion Investment
Between the day Craig Menear was made chief executive in 2014 and December 2017, The Home Depot’s single share value increased from roughly $92 to $192, at which point, the company revealed a plan to invest north of $11 billion to position itself as “One Home Depot.”
Over the course of five years, the internal funding should spur innovations in everything from store enhancements and new e-commerce solutions to industry-leading delivery options, and a comprehensive ecosystem conducive to professional contractors (Pro). The idea is to further unlock the interconnected retail vision the company began building many years ago.
Home Depot feels its downstream network consists of four relatively unconnected and independent components, which are store-based delivery, online delivery from direct fulfillment centers (DFC) and vendors, appliance delivery, and Interline brands delivery, explains Forbes.
Among other initiatives, they plan on adding 170 distribution facilities across America to reach 90% of the U.S. population in one day or less, moreover, another goal is to open hubs that will consolidate the freight for dispatch on to final-mile delivery vehicles appliances for Interline MRO, Pro, and “do it yourself” (DIY) hobbyist’s delivery from DFCs, vendors, and stores, in about 100 locations.
“It [the investment] will also go into our associates in forms of both wage benefits and technology to help them do their job,” Menear adds in a brief chat with Bloomberg. “With the $11 billion investment, we told our investors we’ll actually produce an ROIC north of 40.”
By December of 2019, The Home Depot was riding high considering online sales had been increasing about $1 billion in each of the previous six years, ultimately making them the 5th largest e-commerce operation in the United States; 50% of the time, customers were choosing to pick up their orders inside their neighborhood store – a testament to the home improvement giant’s interconnected strategy.
Even as the pandemic took hold shortly thereafter, demand for construction-type products actually soared due to homeowners being quarantined inside all day long with not much to do but pursue do-it-yourself projects around their household.
Home Depot’s same-store sales in the U.S., which includes sales online and at stores open for at least 12 months, grew 24.6% in the pandemic’s first quarter. Digital sales rose 80% year over year, furthermore, customers picked up about 60% of those orders at a physical store. Of course, eager investors rewarded the stock by skyrocketing its value throughout the nationwide lockdown period to the tune of a record high of $339 per share in May 2021.
Many Wall Street analysts attempted to make sense of the dramatic sales spike and what it could mean for future investors, here is a take from CNBC’s Squawk Box covering the home improvement giant’s quarterly results:
About 45% of Home Depot’s total sales come from Pro customers, and according to CNBC, as the pandemic winds down, they are seeing pent-up demand for professional projects as people feel comfortable inviting contractors back into their homes.
“In talking to the pro, they all have very strong books of business,” Home Depot president and chief operating officer Ted Decker said. “They all have backlogs.” In order to best position themselves for this rush in Pro sales, Craig Menear and company have continued streamlining their delivery process, outfitting it to handle larger orders, while also ensuring they have stocked up on as much inventory as possible.
Leadership Advice From Craig Menear
He isn’t necessarily the prototypical hotshot CEO we all imagine in our heads when thinking of somebody who has experienced his degree of success or that wields so much economic power, as a matter of fact, he’s humble, soft-spoken, and were you to encounter him on the street, there’s probably no way you’d know he leads an army of 300,000 ready to help associates spread across the North American continent.
“We’ve done a number of things throughout our facilities to be able to be more flexible, we’re working on expanding childcare services, and we’ve changed the configuration of our buildings in order to facilitate more team integration,” Menear explains. “But I’d say, the most important thing, that we’ve found spans across generations, is: people want to understand the strategy of your company, they want to understand how they fit in that, and how they contribute to that.”
With this being said, his executive staff has dedicated a lot of time, energy, and effort to making sure they are clearly communicating their approach, strategy, and how each team member has a profound impact on achieving The Home Depot’s outlined goals.
If you enjoyed this story on the life of Home Depot CEO Craig Menear, be sure to check out our biography of Lowe’s CEO Marvin Ellison!