What changed in this filing

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Item 1. Business

2023-03-15 compared with 2022-03-23 · 163 added, 133 removed, 219 unchanged (57% of the section changed)

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is the world’s largest home improvement retailer based on net sales for fiscal 2022.

We offer our customers a wide assortment of building materials, home improvement products, lawn and garden products, décor products, and facilities maintenance, repair and operations products and provide a number of services, including home improvement installation services and tool and equipment rental.

We offer our customers a wide assortment of building materials, home improvement products, lawn and garden products, décor products, and facilities maintenance, repair and operations products.

We also provide a number of services, including home improvement installation services and tool and equipment rental.

As of the end of fiscal 2022, we operated 2,322 stores located throughout the U.S.

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is a Delaware corporation that was incorporated in 1978.

Our Store Support Center (corporate office) is located at 2455 Paces Ferry Road, Atlanta, Georgia 30339.

Our Store Support Center (corporate headquarters) is located at 2455 Paces Ferry Road, Atlanta, Georgia 30339.

Our telephone number at that address is (770) 433-8211.

The retail landscape has changed rapidly over the past several years, with customer expectations constantly evolving.

In fiscal 2021, this trend continued due to the challenges created by the ongoing COVID-19 pandemic and the broader domestic and global business environment, including supply chain disruptions, tight labor market conditions, and inflationary pressures.

To navigate this dynamic environment and meet heightened levels of home improvement demand throughout the year, we had to operate with agility while also managing evolving requirements to support customer and associate safety.

Our ability to operate successfully and meet the needs of our customers was due in significant part to our strategic investments over the past several years aimed at creating an interconnected, frictionless shopping experience that enables our customers to seamlessly blend the digital and physical worlds.

Going forward, we will leverage the momentum of these strategic investments and continue to invest in our business in support of the following goals:

In fiscal 2022, we continued to operate with agility to meet the challenges created by a fluid domestic and global business environment, including supply chain disruptions, tight labor market conditions, and ongoing inflationary pressures.

Our ability to operate successfully and meet the needs of our customers was due in significant part to our investments over the past several years aimed at creating an interconnected, frictionless shopping experience that enables our customers to seamlessly blend the digital and physical worlds.

Going forward, we will leverage the momentum of these investments and continue to invest in our business in support of the following goals:

• We intend to provide the best customer experience in home improvement;

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• First, we intend to reinvest in our business to drive growth faster than the market.

• Second, after meeting the needs of the business, we look to return excess cash to our shareholders through dividends and share repurchases.

We intend to increase our dividend as we grow earnings.

In fiscal 2021, we invested $2.6 billion in capital expenditures to support an interconnected customer experience.

• Second, after meeting the needs of the business, we look to pay a quarterly dividend, which we intend to increase as we grow earnings.

• Third, after reinvesting in our business and paying our dividend, we intend to return excess cash to our shareholders through share repurchases.

In fiscal 2022, we invested $3.1 billion in capital expenditures to support our business, advance our goals, and continue to build an interconnected customer experience.

We also focused on driving productivity throughout the business to lower our costs.

The combination of reinvesting in the business to drive higher sales and driving productivity to lower costs creates what we refer to as a virtuous cycle, which has allowed us to improve the customer experience, increase our competitiveness in the market, and deliver shareholder value.

In fiscal 2021, we returned approximately $22 billion to shareholders in the form of dividends and share repurchases.

We paid $7.0 billion in cash dividends and returned approximately $15.0 billion to our shareholders in the form of share repurchases in fiscal 2021.

Our capital allocation is discussed further in Item 7, “ Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The combination of reinvesting in the business to drive higher sales and supporting productivity to lower costs creates what we refer to as a virtuous cycle, which has allowed us to improve the customer experience, increase our competitiveness in the market, and deliver shareholder value.

In fiscal 2022, we returned over $14 billion to shareholders in the form of cash dividends and share repurchases.

Our capital allocation is discussed further in Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Fiscal 2022 Form 10-K 1

OUR CUSTOMERS

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Professional Customers (or “Pros”)

These customers are primarily professional renovators/remodelers, general contractors, maintenance professionals, handymen, property managers, building service contractors and specialty tradesmen, such as electricians, plumbers and painters.

These customers build, renovate, remodel, repair, and maintain residential properties, multifamily properties, hospitality properties, and commercial facilities, including education, healthcare, government, institutional, and office buildings.

We have a number of initiatives to drive growth with our Pros, including a customized online experience, a dedicated sales force, an extensive delivery network, our Pro Xtra loyalty program, enhanced credit offerings and inventory management programs.

In the fourth quarter of fiscal 2020, we extended our reach in the MRO marketplace with our acquisition of HD Supply, a leading national distributor of MRO products to multifamily, hospitality, healthcare, and government housing facilities, among others.

In fiscal 2021 we integrated our legacy Interline Brands business into HD Supply.

Our MRO operations use a distribution center-based model that sells products primarily through a professional sales force and through our e-commerce platforms and print catalogs.

We have a number of initiatives designed to drive growth with our Pros, including a customized online experience, a dedicated sales force, an extensive delivery network, our Pro Xtra loyalty program, enhanced credit offerings, and inventory management programs.

Building on our historical strength as a destination for urgent purchase needs, we are investing in capabilities that will help us better serve our Pros’ planned purchase needs (in-store or via our dedicated sales team), including our expanded supply chain capabilities and advance ordering through our interconnected digital platforms.

We believe that focusing on meeting the Pros’ planned purchase needs, particularly for larger renovator/remodeler Pros, will help us drive growth and deliver value to our shareholders.

We extended our reach in the MRO marketplace with our fiscal 2020 acquisition of HD Supply, a leading national distributor and provider of MRO products and related value-added services to multifamily, hospitality, healthcare, and government housing facilities, among others, and in fiscal 2021 we integrated our legacy Interline Brands business into HD Supply.

Our MRO operations use a distribution center-based model that sells products primarily through a professional sales force and through e-commerce platforms and print catalogs.

We recognize the great value our Pros provide to their clients, and we strive to make their jobs easier and help them grow their businesses.

We believe that investments aimed at deepening our relationships with our Pros are yielding increased engagement and will continue to translate into incremental spend.

We believe that investments aimed at deepening our relationships with our Pros are yielding increased engagement and will continue to translate into incremental sales to these customers.

DIFM Customers

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These customers are typically homeowners who use Pros to complete their project or installation.

Currently, we offer installation services in a variety of categories, such as flooring, cabinets and cabinet makeovers, countertops, furnaces and central air systems, and windows.

Currently, we offer installation services in a variety of categories, such as flooring, water heaters, bath, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows.

DIFM customers can purchase these services in our stores, online, or in their homes through in-home consultations.

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A typical The Home Depot store stocks approximately 30,000 to 40,000 items during the year, including both national brand name and proprietary products.

Our online product offerings complement our stores by serving as an extended aisle, and we offer a significantly broader product assortment through our websites, including homedepot.com, our primary website;

Our online product offerings complement our stores by serving as an extended aisle, and we offer a significantly broader product assortment through our websites and mobile applications, including homedepot.com, our primary website;

homedepot.ca and homedepot.com.mx, our websites in Canada and Mexico;

hdsupply.com, our website for our MRO products and related services;

blinds.com, our online site for custom window coverings;

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We believe our merchandising organization is a key competitive advantage, delivering product innovation, assortment and value, which reinforces our position as the product authority in home improvement.

In fiscal 2021, we continued to invest in merchandising resets in our stores to refine assortments, optimize space productivity, introduce innovative new products to our Pros and consumers, and improve visual merchandising to drive a better shopping experience.

In fiscal 2022, we continued to invest in merchandising resets in our stores to refine assortments, optimize space productivity, introduce innovative new products to our customers, and improve visual merchandising to drive a better shopping experience.

At the same time, we remain focused on offering everyday values in our stores and online.

To help our merchandising organization keep pace with changing customer expectations and increasing desire for innovation, localization and personalization, we are continuing to invest in tools to better leverage our data and drive a deeper level of collaboration with supplier partners.

As a result, we have continued to focus on enhanced merchandising information technology tools to help us:

To help our merchandising organization keep pace with changing customer expectations and increasing desire for innovation, localization, and personalization, we are continuing to invest in tools to better leverage our data and drive a deeper level of collaboration with our supplier partners.

As a result, we have continued to focus on enhanced

Fiscal 2022 Form 10-K 2

merchandising information technology tools to help us:

(1) build an interconnected shopping experience that is tailored to our customers’ shopping intent and location;

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and (3) optimize our product assortments.

In light of the challenges faced due to the COVID-19 pandemic, our merchandising team has leveraged technology while working with our inventory and supply chain teams, as well as our supplier partners, to adjust our assortments, introduce alternate products where needed, and build depth in high-demand products.

Our merchandising team leverages technology and works closely with our inventory and supply chain teams, as well as our supplier partners, to manage our assortments, drive innovation, and adjust inventory levels to respond to fluctuations in demand, which helped us navigate the challenges of continuing global supply chain disruption in fiscal 2022.

As cost pressures have risen in several product categories in the current environment, our tools have helped our merchandising, finance and data analytics teams as they work with our supplier partners to manage these pressures.

To complement our merchandising efforts, we offer a number of services for our customers, including installation services for our DIY and DIFM customers, as noted above.

We also provide tool and equipment rentals at over 1,400 locations across the U.S.

We also provide tool and equipment rentals at locations across the U.S.

and Canada, providing value and convenience for both Pros and consumers.

To improve the customer experience and continue to grow this differentiated service offering, we are continuing to invest in more locations, more tools, and better technology.

To improve the customer experience and continue to grow this differentiated service offering, we are continuing to invest in more locations (including piloting rental locations in Mexico), more tools, and better technology.

Sourcing and Quality Assurance

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Under our supplier contracts, our suppliers are obligated to ensure that their products comply with applicable international, federal, state and local laws.

These contracts also require compliance with our responsible sourcing standards, which cover a variety of expectations across multiple areas of social compliance, including supply chain transparency, health and safety, environment, compensation, hours of work, and prohibitions on child and forced labor.

To drive accountability with our suppliers, our standard supplier buying agreement includes a factory audit right related to these standards, and we conduct factory audits and compliance visits with our suppliers of private branded and direct import products.

Our 2021 Responsible Sourcing Report, available on our website at https://corporate.homedepot.com/responsibility/sourcing-responsibility, provides more information about this program.

These contracts also require compliance with our responsible sourcing standards, which cover a variety of expectations across multiple areas of social compliance, including supply chain transparency, compliance with local laws, health and safety, environmental laws and regulations, compensation, hours of work, and prohibitions on child and forced labor.

suppliers of private branded and direct import products.

Our 2022 Responsible Sourcing Report, available on our website at https://corporate.homedepot.com under “Responsibility > Sourcing Responsibly,” provides more information about this program.

In addition, we have both quality assurance and engineering resources dedicated to establishing criteria and overseeing compliance with safety, quality and performance standards for our private branded products.

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However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained.

We also maintain patent portfolios relating to our business operations, retail services and products and seek to patent or otherwise protect innovations we incorporate into our business.

We also maintain patent portfolios relating to our business operations, retail services, and products, and we seek to patent or otherwise protect innovations we incorporate into our business.

Patents generally have a term of twenty years from the date they are filed.

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Our industry is highly competitive, very fragmented, and evolving.

As a result, we face competition for our products and services from a variety of retailers, suppliers, distributors and manufacturers that sell products directly to their respective customer bases, and service providers, ranging from traditional brick-and-mortar, to multichannel, to exclusively online.

These competitors include a number of other home improvement retailers;

As a result, we face competition for customers for our products and services from a variety of retailers, suppliers, service providers, and distributors and manufacturers that sell products directly to their respective customer bases.

These competitors range from traditional brick-and-mortar, to multichannel, to exclusively online, and they include a number of other home improvement retailers;

electrical, plumbing and building materials supply houses;

and lumber yards.

With respect to some products and services, we also compete with specialty design stores, showrooms, discount stores, local, regional and national hardware stores, paint stores, mail order firms, warehouse clubs, independent building supply stores, MRO distributors, home décor retailers, and other retailers, as well as with providers of home improvement services and tool and equipment rental.

With respect to some products and services, we also compete with specialty design stores, showrooms, discount stores, local, regional and national hardware stores, paint stores, specialty and mass digital retailers, warehouse clubs, independent building supply stores, MRO distributors, home décor retailers, and other retailers, as well as with

Fiscal 2022 Form 10-K 3

providers of home improvement services and tool and equipment rental.

The internet facilitates competitive entry, price transparency, and comparison shopping, increasing the level of competition we face.

We compete primarily based on customer experience, price, quality, product availability and assortment, and delivery options, both in-store and online.

Both in-store and online, we compete primarily based on customer experience, price, quality, product availability and assortment, and delivery options.

We also compete based on store location and appearance, presentation of merchandise, and ease of shopping experience.

Furthermore, with respect to delivery options, customers are increasingly seeking faster and/or guaranteed delivery times, low-price or free shipping, and/or convenient pickup options, including curbside pickup.

Our Pros also look for a dedicated sales team, competitive credit and pricing options, project planning tools, and product depth and job lot quantities, particularly for their planned purchase needs.

Furthermore, with respect to delivery options, customers are increasingly seeking faster and/or guaranteed delivery times, low-price or free shipping, and/or convenient pickup options.

Our ability to be competitive on delivery and pickup times, options and costs depends on many factors, including the success of our supply chain investments, described more fully under “Our Supply Chain” below.

Our business is subject to seasonal influences.

Generally, our highest volume of sales occurs in our second fiscal quarter, and the lowest volume occurs either during our first or fourth fiscal quarter.

Generally, our highest volume of sales occurs in our second fiscal quarter, as we move into the spring season in the regions in which we operate.

INTERCONNECTED SHOPPING EXPERIENCE

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Digital Experience

Enhancements to our digital properties are critical for our increasingly interconnected customers, who research products online and check available inventory before going into one of our stores to view the products in person or talk to an associate and then make their purchase in store or online.

Enhancements to our digital properties are critical for our increasingly interconnected customers, who often research products online and check available inventory before going into one of our stores to view the products in person or talk to an associate and then make their purchase in store or online.

While in the store, customers may also go online to access ratings and reviews, compare prices, view our extended assortment, and purchase additional products.

Our investments in a truly interconnected experience are focused on bringing together the power of our physical retail presence and the frictionless interaction of our digital capabilities.

A significant majority of the traffic in our digital channels is on a mobile device.

A significant majority of the traffic in our digital channels is on mobile devices.

Mobile customers expect more simplicity and relevancy in their digital interactions.

As a result, we have made significant investments to our digital properties to improve the overall presentation and ease of navigation for the user.

We have also enhanced the “shopability” of an online product by including more information on the product’s landing page, including related products and/or parts of a collection, and a multitude of fulfillment options.

Our focus on improving search capabilities, site functionality, category presentation, product content, speed to checkout, and enhanced fulfillment options has yielded higher traffic, better conversion and continued sales growth.

It has also been critical during the COVID-19 pandemic, as customers have gravitated even more to the digital environment.

As a result, we have made investments to our digital properties to improve the overall presentation and ease of navigation for the user.

We believe our focus on improving search capabilities, site functionality, category presentation, product content, speed to checkout, and enhanced fulfillment options has yielded higher traffic, better conversion and continued sales growth.

Further, we do not view the interconnected shopping experience as a specific transaction;

rather, we believe it encompasses an entire journey from inspiration and know-how, to purchase and fulfillment, to post-purchase care and support.

Customers expect more personalized messaging, so we are focusing on connecting marketing activities with the online and in-store experiences to create a seamless series of engagements across channels.

From the inspirational point of the purchase journey to providing product know-how, we are continuing to invest in the infrastructure and capabilities needed to deliver the most relevant marketing messages to our customers based upon what is important for them today.

Customers expect more personalized messaging, so we are continuing to focus on connecting marketing activities with the online and in-store experiences to create seamless engagement across channels.

From the inspirational point of the purchase journey to providing product know-how, we continue to invest in the infrastructure and capabilities needed to deliver the most relevant marketing messages to our customers based upon what is important to them today.

Store Experience

Our stores remain the hub of our business, and we are investing to improve the customer shopping experience through easier navigation and increasing the convenience and speed of checkout.

For several years, our associates have used web-enabled handheld devices we call “GET phones” to help expedite the online order checkout process, locate products in the aisles and online, and check inventory on hand.

Our stores remain the hub of our business, and we continue to invest to improve the customer shopping experience through easier navigation and increased convenience and speed of checkout.

In fiscal 2022, we continued to leverage the investments made in our stores over the past several years to operate effectively and meet changing customer expectations.

These investments include wayfinding signage and store refresh packages;

self-service lockers, online order storage areas at front entrances and curbside pickup to provide convenient pickup options for online orders;

electronic shelf label capabilities;

and the re-design of front-end areas, including reconfigured service desks, improved layouts in checkout areas, and expanded and enhanced self-checkout options.

To improve the customer’s experience in our stores, we have also empowered our customers with additional self-help tools, including mobile app-enabled store navigation.

Our app provides store-specific maps, which allow customers to pinpoint the exact location of an item on their mobile devices.

In fiscal 2021, we leveraged the investments made in our stores over the past several years to operate effectively in the dynamic environment we faced throughout the year.

These investments include our wayfinding sign and store refresh package in all of our U.S.

our self-service lockers, online order storage areas at front entrances, and curbside pickup, which offer convenient pickup options for online orders;

electronic shelf label capabilities;

and the re-design of the front-end area, including reconfigured service desks, improved layouts in all checkout areas, and expanded and enhanced self-checkout options.

We believe these investments are driving higher customer satisfaction scores, and we will continue to invest to improve the customer experience going forward.

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To this end, we have continued to focus our efforts in such areas as optimizing product flow to decrease the amount of time a store associate spends locating product and to improve on-shelf product availability;

creating a simpler order management system;

Fiscal 2022 Form 10-K 4

simpler order management system;

expanding in-aisle, real-time mobile learning tools for our associates’ own development and to assist with customer questions;

and using labor model tools to better align associate activity with customer needs.

For several years, our associates have used web-enabled handheld devices to help them more efficiently meet the needs of the business and serve customers.

In fiscal 2022, we began rolling out the next generation of digital phones to our stores, which we call “hdPhones,” so that each associate will have a digital device during their shift.

The new devices offer enhanced functionality to allow associates to readily query inventory, access applications that support customer service, and drive on-shelf availability of product.

Investing in Safety.

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Our EH&S policies are woven into our everyday operations and are part of The Home Depot culture.

Common program elements include:

daily store inspection checklists (by department);

Common program elements include daily store inspection checklists (by department);

routine follow-up audits from our store-based safety team members and regional, district and store operations field teams;

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training and education programs for all associates, with varying degrees of training provided based on an associate’s role and responsibilities;

and awareness,

communication and recognition programs designed to drive operational awareness and an understanding of EH&S matters.

We also continued to undertake a number of additional measures for the safety of our associates and customers in response to the COVID-19 pandemic.

and awareness, communication and recognition programs designed to drive operational awareness and an understanding of EH&S matters.

OUR SUPPLY CHAIN

We continue to focus on building best-in-class competitive advantages in our supply chain to be responsive to our customers’ expectations for how, when and where they choose to receive our products and services.

As part of enhancing the interconnected shopping experience, we continue to invest in expanding our supply chain network, with the goal of achieving the fastest, most efficient and reliable delivery capabilities in home improvement.

As part of enhancing the interconnected shopping experience, we continue to invest in expanding our supply chain network, with the goal of achieving the fastest, most efficient and most reliable delivery capabilities in home improvement.

Our efforts are focused on ensuring product availability and increasing the speed and reliability of delivery for our customers while managing our costs.

Despite the challenges faced by the global supply chain in fiscal 2021, our supply chain investments permitted us to continue to operate effectively and meet our customers’ needs.

Our supply chain investments have helped us to operate effectively and meet our customers’ needs throughout the challenging environment over the past few years.

We centrally forecast and replenish the vast majority of our store products through sophisticated inventory management systems and utilize our network of distribution centers to serve both our stores’ and customers’ needs.

Our supply chain includes multiple distribution center platforms in the U.S., Canada, and Mexico tailored to meet the needs of our stores and customers based on types of products, location, transportation, and delivery requirements.

These platforms include rapid deployment centers, stocking distribution centers, bulk distribution centers, and direct fulfillment centers.

These platforms include rapid deployment centers, stocking distribution centers, bulk distribution centers, and direct fulfillment centers, among others.

As part of the expansion of our supply chain, we have invested to further automate and mechanize our rapid deployment center network to drive efficiency and faster movement of product.

We are also expanding our fulfillment network, investing in a significant number of new fulfillment facilities to drive speed and reliability of delivery for our customers and to help us meet our goal of reaching 90% of the U.S.

We are also continuing to expand our fulfillment network, investing in a significant number of new fulfillment facilities to drive speed and reliability of delivery for our customers and to help us ultimately meet our goal of reaching 90% of the U.S.

population with same or next day delivery for extended home improvement product offerings, including big and bulky products.

These facilities include omni-channel fulfillment centers, which deliver product directly to customers, and market delivery operations, which function as local hubs to consolidate freight for dispatch to customers for the final mile of delivery, with a focus on appliances.

We are also adding flatbed distribution centers, which handle large items like lumber that are transported on flatbed trucks.

As of the end of fiscal 2021, we have opened a number of additional fulfillment facilities and will continue to build out our fulfillment network over the next few years.

This network is designed to create a competitive advantage with unique, industry-leading capabilities for home improvement needs.

In fiscal 2022, we realized our goal to control more of our appliance delivery end-to-end and began managing all of our appliance delivery volume through our market delivery operations.

We have also added flatbed distribution centers, which handle large items like lumber and building materials that are transported on flatbed trucks.

As of the end of fiscal 2022, we have opened a number of additional fulfillment facilities, and we will continue to build out our fulfillment network to support our business.

Our network is designed to create a competitive advantage with unique, industry-leading capabilities for home improvement needs for both Pros and consumers.

In addition to our distribution and fulfillment centers, we leverage our stores as a network of convenient customer pickup, return, and delivery fulfillment locations.

Our premium real estate footprint provides a distinct structural and competitive advantage.

For customers who shop online and wish to pick up or return merchandise at, or have merchandise delivered from, our U.S.

stores, we have fully implemented our four interconnected retail programs:

For customers who shop online and wish to pick up or return merchandise at, or have merchandise delivered from, our stores, we have implemented four interconnected retail programs:

BOSS, BOPIS, BODFS, and BORIS.

To meet customer needs due to the pandemic, we rapidly rolled out curbside pickup to complement our BOPIS offerings, in addition to the self-service lockers at the front entrance of many of our stores.

We also provide curbside pickup to complement our BOPIS offerings, in addition to the self-service lockers at the front entrance of many of our stores.

We also offer express car and van delivery service that covers over 80% of the U.S.

As of the end of fiscal 2021, approximately 55% of our U.S.

For fiscal 2022, approximately 50% of our U.S.

online orders were fulfilled through a store.

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Our strategic intent is to have a portfolio of efficient, timely and reliable sources and methods of delivery to choose from, optimizing order fulfillment and delivery based on customer needs, inventory locations and available transportation options.

Fiscal 2022 Form 10-K 5

CORPORATE RESPONSIBILITY AND HUMAN CAPITAL MANAGEMENT

We organize our environmental, social and governance efforts around three pillars:

We view environmental, social and governance matters through the lens of our business, with an understanding that if we support our associates, our customers, our supplier partners, and the communities we serve, we also support our business and create long-term value for our shareholders.

As a result, we believe that ESG is fundamentally embedded in our operations and culture.

We organize our efforts around three pillars:

(1) Focus on Our People, (2) Operate Sustainably, and (3) Strengthen Our Communities.

Highlights of each of these pillars are set forth below.

These pillars are reflective of our commitment to ESG and are fundamentally embedded in our operations and culture.

We believe this approach creates value for all of our stakeholders, including our customers, associates, supplier partners, and the communities we serve, in turn creating long-term value for our shareholders.

For further information on our three pillars and other ESG-related matters, see our annual ESG Report, available on our website at https://corporate.homedepot.com/responsibility.

Focus on Our People

Our culture and our associates provide intangible and hard-to-replicate competitive advantages.

We leverage these competitive advantages to provide an outstanding customer experience by putting customers first and taking care of our associates.

Our culture and our associates provide intangible and hard-to-replicate competitive advantages, which have been key to helping us navigate challenging market conditions.

Our associates are essential to providing the experience and service that our customers demand.

To preserve and protect that customer experience, we focus on cultivating a compelling associate experience, which we believe supports our ability to attract and retain our associates.

This includes investing in competitive wages and benefits while also providing the culture, tools, training and development opportunities that make working at The Home Depot an enjoyable and rewarding experience.

These actions are the foundation of our key tenets of putting customers first and taking care of our associates.

Culture and Values.

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Our commitment to our core values drives our approach to human capital management.

Our culture is based on our servant leadership philosophy represented by the inverted pyramid, which puts primary

importance on our customers and our associates by positioning them at the top, with senior management at the base in a support role.

We bring our culture to life through our core values, which serve as the foundation of our business and the guiding principles behind the decisions we make every day.

Our culture is based on our servant leadership philosophy represented by the inverted pyramid, which puts primary importance on our customers and our associates by positioning them at the top, with senior management at the base in a support role.

We bring our culture to life through our core values, which serve as the foundation of our business and as the guiding principles behind the decisions we make every day.

Our values also guide our efforts to create an environment that will help us attract and retain skilled associates in the competitive marketplace for talent.

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Leaders participate in programs designed to build and strengthen our culture, such as training on leadership skills, cross-functional collaboration, inclusiveness, and associate engagement, and all associates receive annual training on unconscious bias.

Our core values are at the root of all of our human capital management programs.

Our core values are at the root of our human capital management programs.

Our Workforce.

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(1) Includes associates in our sourcing organization located in China, Vietnam, India, Italy, Poland and Turkey.

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Talent Attraction and Development.

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Jobseekers can also apply for roles from anywhere using desktop or mobile devices.

Once a jobseeker has applied for a role, we prioritize self-service by allowing candidates to schedule or reschedule interviews directly from their mobile device.

Lastly, we created a quick hiring process for candidates by leveraging job-matching automation.

Once a jobseeker has applied for a role and has been selected to move forward in the recruiting process, we provide self-service by allowing candidates to schedule or reschedule pre-hire activities directly from their mobile device.

Lastly, we created a quick hiring process for candidates by leveraging job-matching automation that matches candidates to jobs that fit their needs.

We offer all of our associates the opportunity to benefit from robust development opportunities.

Our Home Depot University, or “HDU,” program, is a key part of this development, offering relevant content through multiple platforms, including instructor-led classes, e-learning, mobile learning, and additional online resources.

We invest in ongoing growth and development by integrating our culture and values into our performance management practices, providing coaching through continuous leader support, and empowering our associates to learn new skills at their own pace through mobile applications our associates can access at any time.

We equip our leaders with the tools they need to develop themselves and their teams through several programs designed to help them lead inclusively, empower their teams, and serve as mentors for our associates.

In fiscal 2022, we supported both associate development and engagement by starting the year with a new store leadership structure.

We created new management positions in our stores focused on the customer service experience, increasing the number of managers on the floor at any given time.

This new structure frees up time for other store leaders to devote to associate training and development.

The result is an improved customer and associate experience, while also providing new career paths for associates.

Associate Engagement.

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We create an engaging workplace by continuously listening to and acting on associate feedback.

We provide several pulse check surveys to groups of associates throughout the year that help us determine how emotionally connected those associates are to our customers, the Company, their jobs, fellow associates, and leaders.

In addition, our annual Voice of the Associate survey, which includes all associates,

serves as our primary means of gauging associates’ level of engagement within their roles.

We provide several pulse check surveys to associates throughout the year that help us determine how emotionally connected those associates are to our customers, the Company, their jobs, fellow associates, and leaders.

In addition, our annual Voice of the Associate survey, which includes all associates, serves as our primary means of gauging associates’ level of engagement within their roles.

We use the feedback from these surveys to help improve the overall associate experience.

Through the years, the results from our surveys have consistently indicated that, on average, four out of five associates are emotionally committed and engaged.

We also maintain a digital associate engagement platform that links associates with common interests and fuels connections to co-workers and Company leaders.

Additionally, we have a number of programs to recognize stores and individual associates for exceptional customer service.

Additionally, we have a number of programs to recognize stores and individual associates for exceptional customer service and demonstrating our core values.

Diversity, Equity and Inclusion.

We believe that a diverse, equitable and inclusive workplace is key to our success.

We are committed to our core values, and we strive to foster a diverse, equitable and inclusive environment where our associates are valued and respected.

We work to build a workplace, retail space, and Company that reflect the customers and communities we serve.

In particular, in 2020 we elevated and expanded our Office of Diversity, Equity and Inclusion to enhance our focus on associate diversity, supplier diversity, and our support of community- and education-related programs designed to close the wealth gap and enhance education outcomes across underserved and under-represented communities.

Fiscal 2021 Diversity & Inclusion Data

Guided by our core values and grounded in our culture, we believe that having a diverse, equitable and inclusive Company is key to our success.

We are focused on building a workplace and retail space that reflect the customers and communities we are proud to serve.

We strive to maintain a Company where our associates are valued and respected and feel a sense of belonging in the workplace, so that they can provide the customer experience that supports our business.

Our Office of Diversity, Equity and Inclusion supports our focus on associate diversity, supplier diversity, and engagement with our communities.

Below is the fiscal 2022 diversity data for our U.S.

Associate Population Race/Ethnicity Gender

% Minority % White % Female % Male

% Minority % White % Undisclosed % Female % Male % Undisclosed

Workforce 48% 50% 2% 38% 62% 1%

Managers & Above (1)

39% 60% 1% 35% 65% 0%

Officers 26% 73% 2% 29% 69% 2%

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As a Company, we have identified several priorities designed to guide our efforts to enhance diversity, equity and inclusion.

We believe these associate- and supplier-focused priorities also enhance our customers’ experience:

We believe these associate-, supplier- and community-focused priorities will further enhance our customers’ experience and make a sustainable difference within the workplace, marketplace, and community:

• Associate Engagement

◦ Increase diverse representation throughout our organization

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◦ Promote equal opportunity in recruitment, hiring, training, development and advancement

◦ Strive to close the wealth gap

◦ Advance education for all

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• Supplier Diversity

◦ Increase use of and spend with diverse suppliers

◦ Develop diverse suppliers by providing mentorship and sharing resources

• Community Engagement

◦ Partner with organizations on programs designed to close the wealth gap

◦ Support programs that advance education for all

Compensation and Benefits.

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We continuously make wage investments to ensure our compensation packages reflect the evolving circumstances across our markets, and our profit-sharing program for hourly associates provides semi-annual cash awards for performance against our business plan.

We provided enhanced pay and benefits for our associates in fiscal 2020 to alleviate some of the challenges presented by the COVID-19 pandemic.

In the third quarter of fiscal 2020, we began to transition from these temporary COVID-19 benefits to permanent compensation enhancements for our frontline, hourly associates.

In fiscal 2021, we continued to make additional compensation enhancements.

We transitioned from the enhanced pay and benefits we provided for our associates in fiscal 2020 to alleviate some of the challenges presented by the COVID-19 pandemic to permanent compensation enhancements for our frontline, hourly associates, which we have continued to make since fiscal 2020.

Our associates can take advantage of a range of benefits, including healthcare and wellness programs, vacation and leave of absence benefits including parental leave and paid sick/personal time off, a 401(k) match, our ESPPs, personal finance education and advisory services, assistance programs to help with managing personal and work-life challenges, family support programs, and educational assistance.

Operate Sustainably

We have a long-standing and substantial commitment to sustainable business operations, from the products and services we offer to our customers;

We have a long-standing and substantial commitment to sustainable business operations, understanding that if we make our operations more efficient and sustainable, we can support both our business and the environment.

This philosophy extends from the products and services we offer to our customers;

to our store construction, maintenance and operations;

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to our ethical sourcing program.

As we strive to operate sustainably, we have focused on protecting the climate, reducing our environmental impact, and sourcing responsibly, and we have set specific, measurable goals to drive progress in these areas.

As we strive to operate sustainably, we have focused on efforts that help protect the climate, reduce our environmental impact, and source products responsibly, and we have set goals to drive progress in these areas.

Our 2022 ESG Report, available on our website at https://corporate.homedepot.com/responsibility, includes more information on our goals, as well as specific initiatives we have in place to help achieve these goals.

Below are highlights of our sustainability program.

Below are highlights of our sustainability strategy.

Our Environmental Goals.

We currently have several goals to help combat climate change and reduce our environmental footprint:

We currently have several goals to help address climate impact and reduce our environmental footprint:

Year Announced Goal Goal Date Status

2018 Cleaning Products Chemical Reduction :

Eliminate certain chemicals from cleaning products by the end of fiscal 2022

2022 In Process

Eliminate certain added chemicals from residential household cleaning products sold in-store or online by the end of fiscal 2022

2022 Complete (1)

2018 Science-Based Carbon Emissions Targets :

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2025 In Process

2021 NEW GOAL:

SBTi Emissions Reduction Goals :

By the end of fiscal 2023, set Science Based Targets Initiative (SBTi) goals to reduce Scope 1, 2 and 3 emissions in line with Paris Agreement goals

2023 In Process

2021 NEW GOAL:

2021 100% Renewable Electricity :

Have 100% renewable electricity for all Home Depot facilities worldwide by the end of fiscal 2030

Produce or procure renewable electricity equivalent to the needs for all Home Depot facilities worldwide by the end of fiscal 2030

2030 In Process

These goals follow the completion in 2020 of a number of previously announced goals, including goals related to reducing store electricity use, eliminating certain chemicals from products we sell, and helping customers reduce their greenhouse gas emissions and save on electricity costs and water use.

(1) A de minimis number of suppliers are still in the process of reformulating and transitioning their product assortment.

These goals follow the completion of a number of previously announced goals, including goals related to reducing store electricity use, eliminating certain chemicals from products we sell, and helping customers reduce their greenhouse gas emissions and water use and save on electricity costs.

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Our Environmental Programs and Initiatives.

In order to progress against our goals, we have a large number of environmentally-focused programs and initiatives, including:

In order to progress against our goals, we have a number of environmentally-focused programs and initiatives, including:

• Store Operations and Renewable/Alternative Energy .

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and contracts with off-site wind and solar power providers.

In fiscal 2021, we announced a new goal to produce or procure renewable electricity equivalent to the electricity needs for all Home Depot facilities by the end of fiscal 2030.

We have also increased our focus on saving water, implementing smart irrigation systems capable of reducing irrigation-related water use in more than 500 U.S.

We have continued to work toward our goal to produce or procure renewable electricity equivalent to the electricity needs for all Home Depot facilities by the end of fiscal 2030.

We have also continued our focus on saving water, implementing smart irrigation systems capable of reducing irrigation-related water use in more than 500 U.S.

• Product Offerings.

Through our Eco Options ® program introduced in 2007, we have helped our customers more easily identify products that meet specifications for energy efficiency, water conservation, healthy home, clean air, and sustainable forestry.

Beginning in 2019, we added circular economy, which targets the reduction of waste through recycling and reuse.

Under our Eco Options program, we sell ENERGY STAR ® certified appliances;

Through our Eco Actions TM program, we have helped our customers more easily identify products related to five areas:

carbon emissions, circularity, responsible chemistry, sustainable forestry, and water use.

Under our Eco Actions program, we sell ENERGY STAR ® certified appliances;

WaterSense ® -labeled bath faucets, showerheads, aerators, toilets, and irrigation controllers;

LED light bulbs;

tankless water heaters, and many other products.

tankless water heaters;

and many other products.

These products, through proper use, help our customers save money on their utility bills and reduce their environmental impact.

We have also launched an Eco Actions TM platform to provide customers with resources, such as project tutorials, to take individual action on environmental issues.

Through Eco Actions, we also provide customers with resources, such as project tutorials, to take individual action on environmental issues.

• In-Store Recycling Programs.

We offer recycling programs in the U.S., including in-store recycling programs for compact fluorescent light bulbs, rechargeable batteries, and cardboard, and a lead acid battery exchange program.

We offer customer-facing recycling programs in the U.S., including in-store recycling programs for compact fluorescent light bulbs, rechargeable batteries, and lead acid batteries.

• Chemical Strategy.

We are committed to increasing our assortment of products that meet high environmental standards, and we encourage our suppliers to invest in developing environmentally-innovative products.

Each year, we evaluate our Chemical Strategy, first published in 2017, to ensure our approach and goals are appropriate.

We periodically evaluate our Chemical Strategy to ensure our approach and goals are appropriate.

• Sustainable Packaging.

In addition to our goal related to eliminating EPS and PVC from our private-brand products, we are continually working with suppliers to find ways to make product packaging more recyclable or simply use less materials, such as the reduction of single-use plastics.

In addition to our goal related to eliminating EPS and PVC from our private-brand products, we are continually working with our suppliers to find ways to make product packaging more recyclable or simply use less materials, such as through the reduction of single-use plastics.

• Supply Chain Optimization.

Through our supply chain initiatives such as space sharing and optimization technology, we are working to maximize our use of every mile to make our supply chain more efficient.

We also utilize hydrogen fuel cell technology in our forklifts and have started piloting electric 18-wheelers for deliveries to make our supply chain even more environmentally friendly.

We also utilize hydrogen fuel cell technology in a number of our forklifts to make our supply chain even more environmentally responsible.

• CDP Participation .

We are a long-standing participant in the annual CDP reporting process.

We are a long-standing participant in the annual CDP Climate Change reporting process.

CDP is an independent, international, not-for-profit organization providing a global system for companies and cities to measure, disclose, manage, and share environmental information.

In December 2021, we received a score of “A-” from CDP, reflecting leadership and a high level of action on climate change mitigation, adaptation and transparency.

• SBTi Goals .

In fiscal 2021, we announced a new goal to adopt new Science Based Targets Initiative (SBTi) goals to reduce Scope 1, 2 and 3 emissions in line with Paris Agreement goals by the end of fiscal 2023.

This builds on our current science-based goals to reduce Scope 1 and 2 carbon emissions 2.1% per year, to achieve a 40% reduction by the end of fiscal 2030 and 50% by the end of fiscal 2035.

Over the past several years, our commitment to sustainable operations has resulted in a number of environmental awards and recognitions, including most recently EPA 2021 WaterSense ® Partner of the Year Award for our commitment to offering and promoting water-efficient products;

EPA 2021 SmartWay Excellence Award, which recognized us as an industry leader in improving freight efficiency and environmental performance;

and EPA 2021 Safer Choice Partner of the Year Award, which recognizes achievement in products with safer chemicals that furthers innovative source reduction.

In February 2023, we received a score of “B” from CDP.

We have also announced that we plan to begin participating in CDP’s Forests reporting process.

• Assessment of SBTi Goals .

In fiscal 2021, we announced plans to adopt, by the end of fiscal 2023, new Science Based Targets Initiative (SBTi) goals to reduce Scope 1, 2 and 3 emissions in line with Paris Agreement goals.

Adoption of SBTi goals would build on our current science-based goals to reduce Scope 1 and 2 carbon emissions by 2.1% per year, to achieve a 40% reduction by the end of fiscal 2030 and a 50% reduction by the end of fiscal 2035.

In fiscal 2022, we continued to work on evaluating potential SBTi goals.

Over the past several years, our commitment to sustainable operations has resulted in a number of environmental awards and recognitions.

In 2022, we received the following awards:

an EPA WaterSense ® Partner of the Year Award for our commitment to offering and promoting water-efficient products;

an EPA SmartWay High Performer Award, which recognized us as an industry leader in improving freight efficiency and environmental performance;

an EPA Safer Choice Partner of the Year Award, which recognizes achievement in products with safer chemicals that furthers innovative source reduction;

and an EPA ENERGY STAR ® Partner of the Year Award for our contribution to promoting energy efficiency.

Strengthen our Communities

One of our core values is “Giving Back,” and we support our communities in a number of ways.

The Home Depot Foundation focuses on improving the lives of U.S.

The Home Depot Foundation focuses on improving the homes and lives of U.S.

veterans, assisting communities affected by natural disasters, and training skilled tradespeople to fill the labor gap.

Our Team Depot associate volunteers provide thousands of volunteer hours each year on a wide variety of projects.

The Company and The Home Depot Foundation are partnering with industry leaders on training programs to train the next generation of skilled tradespeople and help them find careers in the home improvement industry through our Path to Pro program, which includes a new career networking site to connect skilled tradespeople to industry Pros.

Our Team Depot associate volunteers also extend

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the mission of the Home Depot Foundation in communities across the country, donating thousands of volunteer hours each year on a wide variety of projects.

We partner with diverse suppliers and organizations to further support our diversity, equity and inclusion efforts.

To further advance diversity, equity and inclusion in our communities, in fiscal 2021 we expanded our supplier diversity program by launching a Tier II supplier diversity program that aims to drive more spending from our direct suppliers to diverse suppliers.

As noted above, our Office of Diversity, Equity and Inclusion partners with community organizations on programs designed to close the wealth gap and enhance education outcomes across underserved and underrepresented communities.

To further advance diversity, equity and inclusion in our communities, we have a supplier diversity program through which we provide supplier development and other resources to our diverse suppliers, and in fiscal 2021 we launched a Tier II supplier diversity program that aims to drive more spending from our direct suppliers to diverse suppliers.

In fiscal 2022, the Company joined the Billion Dollar Roundtable Inc., or BDR, a not-for-profit organization that promotes supplier diversity excellence and best practices.

The BDR consists of U.S.-based corporations that spend $1.0 billion or more annually with minority- and woman-owned suppliers.

We are working to cultivate a supplier base that creates long-lasting growth and mutual business success, while reflecting the diversity of our customers and strengthening the communities in which our customers and associates live.

Please see our 2022 ESG Report for additional information about our efforts to support the communities we serve.

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Item 1. Business