Home Depot (HD) 10-K risk factor changes: FY2020 vs FY2019

Our industry is highly competitive, [removed: very] [added: highly] fragmented, and evolving.

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

[removed: In each of the markets we serve, there are] [added: These competitors include] a number of other home improvement retailers; electrical, plumbing and building materials supply houses; and lumber yards.

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

[removed: With respect to our stores, we] [added: We] also compete based on store location and [removed: appearance as well as] [added: appearance,] presentation of [removed: merchandise.][added: merchandise, and ease of shopping experience.]

[removed: Further, online and multichannel retailers] [added: Furthermore, customers] are increasingly [removed: focusing on delivery services, with customers] seeking faster and/or guaranteed delivery times, [removed: as well as] low-price or free [removed: shipping.][added: shipping, and/or convenient pickup options, including curbside pickup.]

Our ability to be competitive on delivery [removed: times] and [removed: delivery] [added: pickup times, options and] costs depends on many factors, including the success of our investments in One Supply [removed: Chain,] [added: Chain] and [added: the One Home Depot experience, and] our failure to successfully manage these factors and offer competitive delivery [added: and pickup] options could negatively impact the demand for our products and our profit margins.

[added: Intense] competitive pressures from one or more of our competitors, such as through aggressive promotional pricing or liquidation events, or our inability to adapt effectively and quickly to a changing competitive landscape, could adversely affect our prices, our margins, or demand for our products and services.

We may not timely identify or effectively respond to consumer needs, expectations or trends, which could adversely affect our relationship with customers, [removed: our reputation,] the demand for our products and services, and our market share.

The success of our business depends in part on our ability to identify and respond promptly to evolving trends in demographics; consumer preferences, expectations and needs; and unexpected weather conditions, public health [removed: issues (including pandemics and quarantines) or natural disasters, while also managing appropriate inventory levels in our stores and distribution or fulfillment centers and maintaining an excellent customer experience.]

Once products are purchased, customers are seeking alternate options for delivery of those products, and they often expect quick, timely, and low-price or free [removed: delivery.][added: delivery and/or convenient pickup options.]

We have our BOSS, BOPIS, BODFS and direct fulfillment delivery options, but we cannot guarantee that these or future programs will be maintained and implemented successfully or that we will be able to meet customer expectations on delivery [added: or pickup] times, options and costs.

Customers are also [added: increasingly] using social media to provide feedback and information about our [removed: Company and] [added: Company, including our] products and [removed: services] [added: services,] in a manner that can be quickly and broadly disseminated.

[removed: Further, we] [added: We] have an aging store base that requires maintenance, investment, and space reallocation initiatives to deliver the shopping experience that our customers desire.

Our investments in our stores may not deliver the relevant shopping experience our customers [removed: expect.][added: expect or fully support an interconnected shopping experience.]

Higher rates of shrink, which we [removed: have recently experienced,] [added: continue to experience,] can require operational changes that may increase costs and impact the customer experience.

Failure to [removed: improve and maintain our stores, utilize our store space effectively, and offer a safe shopping environment; to] provide a compelling online presence; to timely identify or respond to changing consumer preferences, expectations and home improvement needs; to maintain appropriate inventory; to provide quick and low-price or free delivery [removed: alternatives;] [added: alternatives and convenient pickup options;] to differentiate the customer experience for our primary customer groups; and to effectively implement an increasingly localized merchandising assortment could adversely affect our relationship with customers, [removed: our reputation,] the demand for our products and services, and our market share.

The implementation of [removed: our store, interconnected retail, supply chain and technology] initiatives [added: to build One Supply Chain and create the One Home Depot experience] could disrupt our operations in the near term, and these initiatives might not provide the anticipated benefits or might fail.

These [removed: initiatives] [added: investments] are designed to streamline our operations to allow our associates to continue to provide high-quality service to our customers; simplify customer interactions; provide our customers with a more interconnected [removed: retail] [added: shopping] experience; and create the fastest, most efficient delivery network for home improvement products.

[removed: The] [added: Creating the] One Home Depot [removed: initiative will require] [added: experience requires] significant investment in our operations and [added: information technology] systems, as well as the development and execution [added: of new processes, systems and support.]

[removed: The One Supply Chain initiative also involves] significant real estate projects as we expand our distribution network.

If we are unable to effectively manage the volume, [added: timing,] nature and cost of these investments, projects and changes, our business operations and financial results could be materially and adversely affected.

The cost and potential problems, defects of [removed: design] [added: design,] and interruptions associated with the implementation of these initiatives, including those associated with managing third-party service providers, employing new web-based tools and services, implementing new [removed: technology,] [added: technologies,] implementing and restructuring support systems and processes, identifying appropriate facility locations, and addressing impacts on inventory levels, could disrupt or reduce the efficiency of our operations in the near term, lead to product availability issues, and impact [added: our] profitability.

[removed: In addition, our store] [added: Creating the One Home Depot experience] and [removed: interconnected retail initiatives,] [added: building] One Supply [removed: Chain, and new or upgraded information technology systems] [added: Chain] might not provide the anticipated benefits, it might take longer than expected to complete [removed: the] [added: these] initiatives or realize the anticipated benefits, or [removed: the] [added: these] initiatives might fail altogether, each of which could adversely impact our competitive position and our financial condition, results of operations, or cash flows.

Our success depends upon our ability to attract, develop and retain highly qualified associates [added: to provide excellent customer service and to support our strategic initiatives] while also controlling our labor costs.

To meet the needs and expectations of our customers, we must attract, develop and retain a large number of highly qualified [removed: associates while at the same time controlling labor costs.][added: associates.]

Our ability to [removed: control] [added: meet our] labor [added: needs while controlling labor] costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates, unemployment levels, and health and other insurance [removed: costs, as well as] [added: costs;] the impact of legislation or regulations governing labor relations, [added: immigration,] minimum wage, and healthcare [removed: benefits.][added: benefits; changing demographics; and our reputation within the labor market.]

In addition, [added: in order] to [removed: support our strategic initiatives, including] [added: continue to create the] One [added: Home Depot experience and build One] Supply Chain, [removed: and the related technology investments needed to implement our strategic investments,] we must attract and retain a large number of skilled professionals, including technology [removed: professionals.][added: professionals, to implement our ongoing technology and other strategic investments.]

[removed: In addition, we] [added: We also] compete with other retail businesses for many of our associates in hourly positions, and we invest significant resources in training and motivating them to maintain a high level of job satisfaction.

We rely extensively on information technology systems [added: and related personnel] to [added: collect,] analyze, process, store, manage and protect transactions and data.

In managing our business, we also rely heavily on the integrity of, security of, and consistent access to, this operational and financial data for information such as sales, customer data, associate data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, [removed: and] order [removed: fulfillment.][added: fulfillment, customer service, and post-purchase matters.]

For these information technology [removed: systems] [added: systems, applications,] and processes to operate effectively, we or our service providers must maintain and update them.

Our systems and the third-party systems with which we interact are subject to [added: and on occasion have experienced] damage or interruption from a number of causes, including power [added: and other critical infrastructure] outages; computer and telecommunications failures; computer viruses; security [removed: breaches] [added: breaches; internal] or [added: external] data [removed: theft;] [added: theft or misuse;] cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks, and ransomware; [added: responsive containment measures by us that may involve voluntarily taking systems off line; natural disasters and] catastrophic events such as fires, floods, earthquakes, tornadoes, [added: hurricanes,] or [removed: hurricanes;] [added: other extreme weather events; public health concerns, such as pandemics and quarantines;] acts of [removed: war] [added: war, terrorism] or [removed: terrorism;] [added: civil unrest; other systems outages; inadequate or ineffective redundancy;] and design or usage errors [added: or malfeasance] by our associates, contractors or third-party service providers.

Although we and our third-party service providers seek to maintain our respective systems effectively and to successfully address the risk of compromise of the integrity, security and consistent operations of these systems, such efforts [removed: may] [added: are] not [removed: be] [added: always] successful.

In addition, we are currently making, and expect to continue to make, substantial investments in our information technology [removed: systems] [added: systems, infrastructure] and [removed: infrastructure,] [added: personnel,] in certain cases with the assistance of strategic partners and other third-party service providers.

These investments involve replacing existing [added: systems, some of which are older, legacy] systems [added: that are less flexible and efficient,] with successor systems; outsourcing certain technology to third-party service providers; making changes to existing systems, including the migration of applications to the cloud; [added: maintaining] or [added: enhancing legacy systems that are not currently being replaced; or] designing or cost-effectively acquiring new systems with new functionality.

These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or [added: corruption of data, changes in security processes and internal controls, cost overruns, implementation delays or errors, disruption of operations, and the potential inability to meet business and reporting requirements.]

Through our information technology systems, we are able to provide an improved overall shopping and interconnected [removed: retail] experience that empowers our customers to shop and interact with us from a variety of electronic devices and digital platforms.

We use our digital platforms both as sales channels for our products and services and also as methods of providing inspiration, as well as product, project, and other relevant information to our customers to drive [removed: sales, regardless of whether they occur in-store or online.][added: sales.]

We [added: also] have multiple online communities and knowledge centers that allow us to inform, assist and interact with our customers.

Strategic Risks

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

issues (including pandemics and quarantines and related shut-downs, re-openings, or other actions by the government) or natural disasters, while also managing appropriate inventory levels in our stores and distribution or fulfillment centers and maintaining an excellent customer experience.

In addition, a greater concentration of online sales with direct fulfillment or curbside pickup could result in a reduction in the amount of traffic in our stores, which would, in turn, reduce the opportunities for cross-selling of merchandise that such traffic creates and could reduce our overall sales and adversely affect our financial performance.

A positive brand and reputation are critical to our business success, and, if our brand and reputation are damaged, it could negatively impact our relationships with our customers, associates, suppliers and vendors, and, consequently, our business and results of operations.

Our brand and reputation are critical to attracting customers, associates, suppliers and vendors to do business with us.

We must continue to manage and protect our brand and reputation.

Negative incidents can erode trust and confidence quickly, and adverse publicity about us could damage our brand and reputation, undermine our customers’ confidence, reduce demand for our products and services, affect our ability to recruit, engage, motivate and retain associates, attract regulatory scrutiny, and impact our relationships with current and potential suppliers and vendors.

Further, our actual or perceived position or lack of position on social, environmental, political, public policy or other sensitive issues, and any perceived lack of transparency about those matters, could harm our reputation with certain groups.

Negative sentiment about the Company shared over social media could impact our brand and reputation, whether or not it is based in fact.

Building One Supply Chain also involves

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

In addition, our stores are a key element of the One Home Depot experience by serving as the hub of our customers’ interconnected shopping experience.

In the fourth quarter of fiscal 2020, we acquired HD Supply, a leading national distributor of MRO products in the multifamily and hospitality end markets.

In addition, the integration of businesses may create complexity in our financial systems, internal controls, and operations and make them more difficult to manage.

Any failure in the execution of a strategic transaction, our approach to the integration of an acquired asset or business, or achieving expected synergies or other benefits could result in slower growth, higher than expected costs, the recording of an impairment of goodwill or other intangible assets, and other actions which could adversely affect our business, financial condition and results of operations.

Operational Risks

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

Additionally, our ability to successfully execute organizational changes, including management transitions within the Company's senior leadership, and to effectively motivate and retain associates are critical to our business success.

If we are unable to locate, to attract or to retain qualified associates, or manage leadership transition successfully, the quality of service we provide to our customers may decrease and our financial performance may be adversely affected.

Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes could impair, and on occasion have impaired, their effectiveness or expose us to security risks.

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

In recent years, U.S. ports, particularly those located on the West coast, have been impacted by capacity constraints, port congestion and delays, periodic labor disputes, security issues, weather-related events, and natural disasters, which have been further exacerbated by the pandemic.

We face the risk of exploitation of our software providers and our software development and implementation process, including from coding and process vulnerabilities and the installation of so-called back doors that provide unauthorized access to systems and data.

Furthermore, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately produce signs of a compromise, we may be unable to anticipate these techniques or to implement

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

adequate preventative measures and we or our third-party service providers may not discover any security breach, vulnerability or compromise of information for a significant period of time after the security incident occurs.

In addition, data governance failures can adversely affect our reputation and business.

Our business depends on our customers’ willingness to entrust us with their personal information.

Events that adversely affect that trust, including inadequate disclosure to our customers of our uses of their information or failing to keep our information technology systems and our customers’ sensitive information secure from significant attack, theft, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction (including human error or malfeasance) or that of our service providers or other third parties, could adversely affect our brand and reputation.

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

Legal, Financial, Regulatory, Global and Other External Risks

Further, our MRO customers, who have higher spend and longer-term relationships than a typical retail customer, primarily use trade credit to finance their purchases.

As a result, their ability to pay is highly dependent on the economic strength of the industry in their area.

The continuing impacts of the COVID-19 pandemic are highly unpredictable, volatile, and uncertain, and could adversely affect our business operations, demand for our products and services, our costs of doing business, availability of labor, access to inventory, supply chain operations, our ability to predict future performance, our exposure to litigation, and our financial performance, among other things.

The COVID-19 pandemic has created significant public health concerns as well as economic disruption, uncertainty, and volatility, all of which have impacted and may continue to impact our business.

While we have taken numerous steps to mitigate the impact of the pandemic on our results of operations, there can be no assurance that these efforts will be successful.

Similarly, the recovery from the pandemic, including the widespread roll-out of vaccines, introduces additional uncertainty and volatility.

Due to numerous uncertainties and factors beyond our control, we are unable to predict the impact that the pandemic and the recovery will have going forward on our business, results of operations, cash flows, and financial condition.

Intense

To the extent a customer has a negative experience and shares it over social media, it may impact our brand and reputation.

of new processes, systems and support.

Further, accomplishing these initiatives will require a substantial investment in additional information technology personnel and other specialized personnel.

We may face significant competition in the market for these resources and may not be successful in our hiring efforts.

There is no assurance that we will be able to attract or retain highly qualified associates in the future.

corruption of data, changes in security processes, cost overruns, implementation delays, disruption of operations, and the potential inability to meet business and reporting requirements.

also become more complex.

For example, the recent pandemic caused by the novel coronavirus COVID-19 has led to work and travel restrictions within, to, and out of a number of countries and supply chain disruptions and delays.

These restrictions and delays, which may expand depending on the progression of the pandemic, have impacted and may continue to impact suppliers and manufacturers of certain of our products.

This may make it difficult for our suppliers to source and manufacture products in, and to export our products from, affected areas.

As a result, we have faced and may continue to face delays or difficulty sourcing certain products, which could negatively affect our business and financial results.

At this time, there is significant uncertainty relating to the potential effect of COVID-19 on our business and the costs that we may incur as a result.

Infections have become more widespread, which may worsen the supply shortage or restrict third-party manufacturing or other operations.

In response to the COVID-19 pandemic, we have canceled or shifted to virtual experiences for certain supplier and associate events and have shifted certain store support operations to remote or virtual, and we may deem it appropriate or advisable to take further similar actions in the future.

We have shortened our customer-facing hours in all of our stores and temporarily closed our stores in Puerto Rico, and we may need to restrict access to or close certain of, or face labor shortages in, other stores or facilities, which could negatively impact productivity, sales, or operating expenses.

We are taking steps in our stores to manage foot traffic to better protect our customers and associates.

We have also expanded our paid time off policy to help alleviate some of the challenges our associates

may be facing as a result of COVID-19, and we may face additional health insurance and labor-related costs.

The pandemic may also reduce foot traffic in our stores or temporarily reduce demand for our products or services.

In certain jurisdictions, we have had to cease sales of or delay commencement of certain services deemed “non-life-sustaining,” and other jurisdictions may impose similar requirements.

Further, customers’ financial condition may be adversely impacted as a result of the impacts of COVID-19 and efforts taken to prevent its spread, which could result in reduced demand for our products and services.

Any of these occurrences may have a negative impact on our business, financial condition, results of operations, or cash flows.

Any impairment of goodwill or other intangible assets acquired in a strategic transaction may reduce our earnings.

During fiscal 2018 and fiscal 2019, additional guidance related to the Tax Act was issued by the U.S. Department of the Treasury and the IRS.

The

[removed: | • |] [added: -] [Executive [removed: Summary](#s435D3C98EE3A5F2EA895E37D78E0D170) |][added: Summary](#i767754147c274b8fbbfeb5ffedb7558f_49)]

[removed: | • |] [added: -] [Results of Operations and Non-GAAP [removed: Measures](#s7D4B2F92E7E754EE802C0380FC3FC1D9) |][added: Measures](#i767754147c274b8fbbfeb5ffedb7558f_52)]

[removed: | • |] [added: -] [Liquidity and Capital [removed: Resources](#s3B6C7E6F30945F42B8E9232F7C09806D) |][added: Resources](#i767754147c274b8fbbfeb5ffedb7558f_64)]

[removed: | • |] [added: -] [Critical Accounting [removed: Policies](#sA150BDCCF3B25778A580D5C2181EA891) |][added: Policies](#i767754147c274b8fbbfeb5ffedb7558f_67)]

| dollars in millions, except per share data | [added: | |] Fiscal | | | | [added: | |] Fiscal | | | | [added: | |] Fiscal | | |

| [added: 2020 | | | | | |] 2019 | | | | [removed: 2018] | | [added: 2018] | | [removed: 2017] | | | |

| Net sales | [added: | |] $ | [removed: 110,225] [added: 132,110] | | | [added: | |] $ | [removed: 108,203] [added: 110,225] | | | [added: | |] $ | [removed: 100,904] [added: 108,203] | |

| Net earnings | [removed: 11,242] | | [added: 12,866] | | [removed: 11,121] | | | | [removed: 8,630] [added: 11,242] | | | [added: | | | 11,121 | | |]

| Diluted earnings per share | [added: | |] $ | [removed: 10.25] [added: 11.94] | | | [added: | |] $ | [removed: 9.73] [added: 10.25] | | | [added: | |] $ | [removed: 7.29] [added: 9.73] | |

| Net cash provided by operating activities | [added: | |] $ | [removed: 13,723] [added: 18,839] | | | [added: | |] $ | [removed: 13,038] [added: 13,687] | | | [added: | |] $ | [removed: 12,031] [added: 13,165] | |

| Proceeds from long-term debt, net of discounts and premiums | [removed: 3,420] | | [added: 7,933] | | [removed: 3,466] | | | | [removed: 2,991] [added: 3,420] | | | [added: | | | 3,466 | | |]

| Repayments of long-term debt | [removed: 1,070] | | [added: 2,872] | | [removed: 1,209] | | | | [removed: 543] [added: 1,070] | | | [added: | | | 1,209 | | |]

| Repurchases of common stock | [removed: 6,965] | | [added: 791] | | [removed: 9,963] | | | | [removed: 8,000] [added: 6,965] | | | [added: | | | 9,963 | | |]

*Note: Fiscal [removed: 2019] [added: 2020] and fiscal [removed: 2017] [added: 2019] include 52 weeks.

We reported net sales of [removed: $110.2] [added: $132.1] billion in fiscal [removed: 2019.][added: 2020.]

Net earnings were [removed: $11.2] [added: $12.9] billion, or [removed: $10.25] [added: $11.94] per diluted share.

We opened [removed: one net] [added: two] new [removed: store] [added: stores] in Mexico and three [removed: net] new stores in the U.S. during fiscal [removed: 2019,] [added: 2020,] for a total store count of [removed: 2,291] [added: 2,296] at [removed: February 2, 2020.][added: January 31, 2021.]

At the end of fiscal [removed: 2019,] [added: 2020,] a total of [removed: 307] [added: 309] of our stores, or [removed: 13.4%,] [added: 13.5%,] were located in Canada and Mexico.

We generated [removed: $13.7] [added: $18.8] billion of cash flow from operations [removed: during fiscal 2019] and issued [removed: $3.4] [added: $7.9] billion of long-term debt, net of discounts and [removed: premiums.][added: premiums, during fiscal 2020.]

These funds, together with cash on hand, were used to [added: acquire HD Supply for net consideration of $7.8 billion,] pay [removed: $6.0] [added: $6.5] billion of dividends, [removed: fund cash payments] [added: repay an aggregate] of [removed: $7.0] [added: $2.9] billion [removed: for share repurchases, repay $365 million] of [removed: net short-term borrowings,] [added: long-term debt,] fund [removed: $2.7] [added: $2.5] billion in capital expenditures, [removed: and] repay [removed: $1.0 billion] [added: $974 million] of [removed: senior notes that matured] [added: net short-term borrowings, and fund cash payments of $791 million for share repurchases before we suspended share repurchases] in [removed: June 2019.][added: March 2020.]

In February [removed: 2020,] [added: 2021,] we announced a 10% increase in our quarterly cash dividend to [removed: $1.50] [added: $1.65] per share.

Our ROIC was [added: 40.8% for fiscal 2020 and] 45.4% for fiscal 2019.

See the “[Non-GAAP Financial [removed: Measures](#s977A5B5AFB995C7AA50D7F3CB94DEA6F)”] [added: Measures](#i767754147c274b8fbbfeb5ffedb7558f_61)”] section below for our definition and calculation of ROIC, as well as a reconciliation of NOPAT, a non-GAAP financial measure, to net earnings (the most comparable GAAP financial measure).

The [removed: recent] outbreak of the [removed: novel coronavirus COVID-19,] [added: COVID-19 coronavirus,] which was declared a pandemic by the World Health Organization [removed: on] [added: in] March [removed: 11,] 2020, has led to adverse impacts on the U.S. and global economies and [removed: created uncertainty regarding potential impacts] [added: has impacted and continues] to [added: impact] our supply chain, operations, and customer demand.

We continue to actively monitor [removed: the situation] [added: our business] and [added: operations and] may take further actions [removed: that alter our operations] as may be required by federal, state or local authorities or that we determine are in the best interests of our associates, customers, suppliers, vendors and shareholders.

The following table displays the percentage relationship between net sales and major categories in our consolidated statements of [removed: earnings, as well as the percentage change in the associated dollar amounts:][added: earnings:]

| | [added: | |] Fiscal | | | | | | | [added: | | | | |] Fiscal | | | | | | | [added: | | | | |] Fiscal | | | | | | [added: | | |]

| [added: 2020 | | | | | | | | | | | |] 2019 | | | | | | | [removed: 2018] | | | | | [added: 2018] | | [removed: 2017] | | | | | | | [added: | | |]

| dollars in millions | [added: | |] $ | | | | [added: | |] % of Net Sales | | | [added: | | |] $ | | | | [added: | |] % of Net Sales | | | [added: | | |] $ | | | | [added: | |] % of Net Sales | | [added: |]

| Net sales | [added: | |] $ | [removed: 110,225] [added: 132,110] | | | | | | [added: | | | | |] $ | [removed: 108,203] [added: 110,225] | | | | | | [added: | | | | |] $ | [removed: 100,904] [added: 108,203] | | | | | [added: | | |]

| Gross profit | [removed: 37,572] | | [added: 44,853] | | [removed: 34.1] | [added: | | | 34.0 | |] % | | [removed: 37,160] | | [added: 37,572] | | [removed: 34.3] | [added: | | | 34.1 | |] % | | [removed: 34,356] | | [added: 37,160] | | [removed: 34.0] | [added: | | | 34.3 | |] % |

| Operating expenses: | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | |]

| Selling, general and administrative | [added: | | 24,447 | | | | | | 18.5 | | | | | |] 19,740 | | | | [removed: 17.9] | | [added: 17.9] | [removed: 19,513] | | | | [removed: 18.0] | [added: 19,513] | | [removed: 17,864] | | | | [removed: 17.7] [added: 18.0] | | [added: |]

| Depreciation and amortization | [removed: 1,989] | | [added: 2,128] | | [removed: 1.8] | | | [removed: 1,870] | [added: 1.6] | | | [removed: 1.7] | | | [removed: 1,811] [added: 1,989] | | | | [added: | |] 1.8 | | [added: | | | | 1,870 | | | | | | 1.7 | | |]

| Impairment loss | [added: | |] — | | | | [added: | |] — | | | [removed: 247] | | | [added: —] | [removed: 0.2] | | | [added: | |] — | | | | [removed: —] | | [added: 247 | | | | | | 0.2 | | |]

| Total operating expenses | [added: | | 26,575 | | | | | | 20.1 | | | | | |] 21,729 | | | | [removed: 19.7] | | [added: 19.7] | [removed: 21,630] | | | | [removed: 20.0] | [added: 21,630] | | [removed: 19,675] | | | | [removed: 19.5] [added: 20.0] | | [added: |]

| Operating income | [removed: 15,843] | | [added: 18,278] | | [removed: 14.4] | | | [removed: 15,530] | [added: 13.8] | | | [added: | | | 15,843 | | | | | |] 14.4 | | | [removed: 14,681] | | | [added: 15,530] | [removed: 14.5] | | [added: | | | 14.4 | | |]

| Interest and other (income) expense: | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | |]

| Interest and investment income | [removed: (73] | | [removed: )] [added: (47)] | | [removed: (0.1] | [removed: )] | | [removed: (93] | [added: —] | [removed: )] | | [removed: (0.1] | [removed: )] | | [removed: (74] [added: (73)] | | [removed: )] | | [removed: (0.1] | [removed: )] | [added: (0.1) | | | | | | (93) | | | | | | (0.1) | | |]

| Interest expense | [added: | | 1,347 | | | | | | 1.0 | | | | | |] 1,201 | | | | [removed: 1.1] | | [added: 1.1] | [removed: 1,051] | | | | [removed: 1.0] | [added: 1,051] | | [removed: 1,057] | | | | 1.0 | | [added: |]

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| Payments for businesses acquired, net | | | 7,780 | | | | | | — | | | | | | 21 | | |

Total sales per retail square foot were $543.74 in fiscal 2020.

Our inventory turnover ratio was 5.8 times at the end of fiscal 2020, up from 4.9 times last year, driven by a significant increase in customer demand across core merchandising departments.

We resumed share repurchases in the first quarter of fiscal 2021.

The decrease in ROIC from fiscal 2019 primarily reflects our decision to temporarily enhance our liquidity position, including the suspension of share repurchases.

In December 2020, we completed the acquisition of HD Supply, a leading national distributor of MRO products in the multifamily and hospitality end markets.

We believe the acquisition of HD Supply will help position the Company to accelerate sales growth by better serving both existing and new MRO customers.

COVID-19

Even though the Company has taken measures to adapt to operating in this challenging environment, the pandemic could further affect our operations and the

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operations of our suppliers and vendors as a result of additional shut-downs or other governmental orders; restrictions and limitations on travel, logistics and other business activities; potential product and labor shortages; limitations on store or facility operations up to and including closures; and other governmental, business or consumer actions.

As circumstances have evolved, our focus has been and continues to be on two key priorities: the safety and well-being of our associates and customers, and providing our customers and communities with the products and services that they need.

As we adapted to operations in a COVID-19 environment during fiscal 2020, we took a number of actions to promote social and physical distancing.

At the beginning of the pandemic, we implemented a change to store operating hours, and we took measures to limit the number of customers in stores, which included canceling or modifying certain annual merchandising events and rolling out curbside pickup at our stores.

We also shifted store support operations to remote or virtual.

As we have continued to adapt and refine our approach, we have adjusted our response to better manage growing demand in the stores, including adopting a more localized approach on customer limits and expanding store hours while still focusing on promoting a safe shopping environment.

In addition, masks or facial coverings are required for all associates and customers in our U.S. stores and other facilities.

The impact of COVID-19 and the actions we have taken in response to it had varying effects on our results of operations throughout fiscal 2020.

Overall, we saw a significant acceleration in sales with strong performance across our departments as customers have focused on home improvement projects and repairs.

As our customers continued to seek alternative methods for obtaining the products they needed, online sales grew by approximately 86% in fiscal 2020.

The increase in customer demand for certain products together with the impact of COVID-19 on our supply chain has put pressure on our ability to maintain high in-stock levels, particularly for certain high demand products.

We have been able to mitigate some of the impact, however, due to the benefits from our strategic investments and by working cross-functionally and partnering with our suppliers to make real-time adjustments to our product assortments, introducing alternative products, or reducing assortments to the most popular selections in certain product categories.

Given these ongoing demands and the complexity of the current environment, we have focused on taking care of our associates by investing in additional pay and benefits, including expanded paid time off for all hourly associates to use at their discretion and the implementation of a temporary weekly bonus program.

To continue to support our associates, we have transitioned away from these temporary programs and have implemented permanent compensation enhancements for frontline, hourly associates beginning in the third quarter of fiscal 2020, totaling approximately $1 billion of expected incremental expense on an annualized basis.

Collectively, the enhanced pay and benefits implemented in fiscal 2020 resulted in additional expense of approximately $2.0 billion in fiscal 2020.

Although we cannot estimate the future impact of COVID-19 or the recovery from the pandemic, we believe our existing liquidity will be sufficient to continue to run our business effectively.

We also believe that the investments we have made in recent years in our stores, interconnected and digital assets, associates, supply chain, and merchandising organization have allowed us to quickly adapt to shifts in customer needs and behaviors and the fluid circumstances created by the pandemic.

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| Average ticket (2) (3) (4) (6) | | | $74.32 | | | | | | $67.30 | | | | | | $65.74 | | | | | | 10.4 | | % | | | | 2.4 | | % |

| Diluted earnings per share | | | $11.94 | | | | | | $10.25 | | | | | | $9.73 | | | | | | 16.5 | | % | | | | 5.3 | | % |

*(2)Does not include results for the legacy Interline Brands business, now operating as a part of The Home Depot Pro.*

*(5)Sales per retail square foot represents sales divided by the retail store square footage.

*(6)Does not include results for HD Supply, which was acquired in December 2020.*

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The increase in online sales in fiscal 2020 was driven in large part by the impact of COVID-19, with customers continuing to leverage our digital platforms for their shopping needs.

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Total sales per retail square foot were $454.82 in fiscal 2019, and our inventory turnover ratio was 4.9 times at the end of fiscal 2019.

During fiscal 2019, we repurchased $7.0 billion of our common stock through open market transactions and an ASR agreement.

The pandemic has impacted and could further impact our operations and the operations of our suppliers and vendors as a result of quarantines, facility closures, and travel and logistics restrictions.

As a result of COVID-19, we have reduced store operating hours, expanded our paid time off policy for associates, and shifted certain store support operations to remote or virtual, and we may face additional labor-related costs.

We are also taking steps in our stores to manage foot traffic to better protect our customers and associates.

In addition, in certain jurisdictions, we have had to cease sales of or delay commencement of work on certain services deemed “non-life-sustaining.”

While the disruption is currently expected to be temporary, there is

uncertainty regarding its duration.

Therefore, while we expect the pandemic to impact our business, results of operations, financial position, and liquidity, we cannot reasonably estimate the impact at this time.

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| Average ticket (3) (4) (5) | $ | 67.30 | | | $ | 65.74 | | | $ | 63.06 | | | 2.4 | % | | 4.2 | % |

| Diluted earnings per share | $ | 10.25 | | | $ | 9.73 | | | $ | 7.29 | | | 5.3 | % | | 33.5 | % |

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| *(2)* | *Comparable sales for fiscal 2017 do not include results for Interline.* |

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| *(3)* | *The calculations do not include results for Interline.* |

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We use interest rate swap agreements to manage our fixed/floating rate debt [removed: portfolio.][added: portfolio, none of which are for trading or speculative purposes.]

At [removed: February 2, 2020,] [added: January 31, 2021,] after giving consideration to our interest rate swap agreements, floating rate debt principal was [removed: $2.9] [added: $4.7] billion, or approximately [removed: 10%] [added: 13%] of our long-term debt [removed: portfolio.][added: portfolio, and the fair values of our interest rate swap agreements totaled $101 million.]

When LIBOR is discontinued, we may need to [removed: renegotiate] [added: change] the terms of certain of our floating rate notes, interest rate swap agreements, and credit instruments which utilize LIBOR as a [removed: benchmark in determining the interest rate, to replace LIBOR with the new standard that is established.]

Decisions have not been finalized regarding the [removed: future utilization of LIBOR or any particular] replacement [removed: rate.][added: rates.]

The United Kingdom’s Financial Conduct Authority has announced the phased cessation of publication of LIBOR beginning after 2021 and continuing through 2023.

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benchmark in determining the interest rate, to replace LIBOR with the new standard that is established.

We use derivative and nonderivative instruments to hedge a portion of our foreign currency exchange rate risk, none of which are for trading or speculative purposes.

Our foreign currency related derivative and nonderivative instruments outstanding at the end of fiscal 2020 were not material.

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The United Kingdom’s Financial Conduct Authority has announced the intent to phase out the use of LIBOR by the end of 2021.

Revenues from these foreign operations accounted for approximately $8.9 billion of our revenue for fiscal 2019.

Our exposure to foreign currency rate fluctuations is not material to our financial condition or results of operations.

The Home Depot, Inc. is the world’s largest home improvement retailer based on net sales for fiscal [removed: 2019.][added: 2020.]

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

As of the end of fiscal [removed: 2019,] [added: 2020,] we had [removed: 2,291] [added: 2,296] The Home Depot stores located throughout the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico.

The retail landscape has changed rapidly over the past several years, with customer expectations [removed: regarding how, when] [added: constantly evolving] and [removed: where they want] [added: the agility required] to [removed: shop constantly evolving.][added: meet these expectations increasing.]

[removed: As a result, in late 2017, we launched] [added: Our ability to operate successfully and meet the needs of] our [added: customers in the pandemic environment successfully was due in significant part to the] transformational journey [added: we began in 2017] to create the One Home Depot experience, our vision of an interconnected, frictionless shopping experience that enables our customers to seamlessly blend the digital and physical worlds.

[removed: We are now two years into our multi-year, approximately $11 billion] [added: Our multi-year] accelerated investment program to create this [removed: experience.][added: experience is now largely complete.]

[removed: | • | Connect products] [added: Our Products] and [removed: services to customer needs |][added: Services]

We serve two primary customer [removed: groups] [added: groups, consumers (including both DIY] and [added: DIFM customers) and professional customers, and] have developed different approaches to meet their diverse needs:

[removed: | • | *DIY Customers.*] [added: DIY Customers.] These customers are typically [removed: home owners] [added: homeowners] who purchase products and complete their own projects and installations. [removed: Our associates assist these customers both in our stores and through online resources and other media designed to provide product and project knowledge. We also offer a variety of |]

[added: We also offer a variety of] clinics and workshops both to share this knowledge and to build an emotional connection with our DIY customers.

[added: DIFM Customers.] Intersecting our DIY customers and our Pros are our DIFM customers.

These customers are typically [removed: home owners] [added: homeowners] who [removed: engage with] [added: use] Pros to complete their project or [removed: installation, instead of completing the project or installation themselves.][added: installation.]

DIFM customers can purchase [removed: a variety of installation] [added: these] services in our stores, online, or in their homes through in-home consultations.

[removed: Our] [added: Currently, we offer] installation [removed: programs include many] [added: services in a variety of] categories, such as flooring, cabinets and cabinet makeovers, countertops, furnaces and central air systems, and windows.

[removed: We also] [added: In addition to serving our DIFM customer needs, we] believe our focus on [removed: serving] the Pros who perform services for [removed: our DIFM] [added: these] customers [removed: will help] [added: helps] us drive higher product sales.

We [removed: strive] [added: leverage these competitive advantages] to provide an outstanding customer experience by putting customers first and taking care of our associates.

Our goal is to remove complexity and inefficient processes from the stores to allow our associates to focus on our [removed: customers and make working at The Home Depot a better experience.][added: customers.]

At the end of fiscal [removed: 2019,] [added: 2020,] we employed approximately [removed: 415,700] [added: 504,800] associates, of whom approximately [removed: 29,500] [added: 35,700] were salaried, with the remainder compensated on an hourly basis.

[removed: We also] [added: Additionally, we] have a number of programs to recognize stores and individual associates for exceptional customer service.

As a result, we have taken a number of steps to provide our customers with a seamless and frictionless interconnected shopping experience across our stores, online, on the job site, and in their [removed: homes.][added: homes, focusing on continued investments in our website and mobile apps to enhance the digital customer experience.]

[removed: We] [added: Further, we] do not view the [removed: customer] [added: interconnected shopping] experience as a specific transaction; rather, we believe it encompasses an entire [removed: process] [added: journey] from inspiration and know-how, to purchase and fulfillment, [removed: and] to post-purchase care and [removed: support.][added: support, most of which takes place in the digital world.]

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

Customers [removed: desire] [added: 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 [removed: contacts] [added: engagements] across channels.

[added: 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.

[removed: As part of our strategic investments,] [added: In fiscal 2020,] we [removed: have made significant progress with] [added: completed] the implementation of our wayfinding sign and store refresh [removed: package, with over 1,400] [added: package in all] of our U.S. [removed: stores completed by the end of fiscal 2019.][added: stores.]

This package [removed: includes new,] [added: included] more intuitive signage, better lighting, and other store enhancements.

[removed: In fiscal 2019, we] [added: Our store investments] also [removed: continued] [added: include] the [removed: roll out] [added: re-design] of [removed: our re-designed] [added: the] front end area, including reconfigured service desks, [removed: optimized] [added: improved] layouts in all checkout areas, and expanded and enhanced self-checkout [removed: options, as well as the addition of self-service lockers at the front entrance to offer convenient pick up of online orders.][added: options.]

We believe [removed: these] [added: the] investments [added: we have made to date] are driving higher customer satisfaction scores.

[added: 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.

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

In fiscal [removed: 2019,] [added: 2020,] we continued to invest in merchandising resets in our stores to refine assortments, introduce a wide range of innovative new products to our DIY and Pro customers, and improve visual merchandising to drive a better shopping experience.

To help our merchandising organization keep pace with changing customer expectations and [removed: expanding] [added: increasing] desire for innovation, localization and personalization, we are [removed: investing] [added: 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 [removed: us to] [added: us: (1)] build an interconnected shopping experience that is tailored to our customers’ personas, shopping context, and location; [added: (2)] ensure we have the best value in the market; and [added: (3)] optimize our product assortments.

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 [removed: homedepot.com;] [added: homedepot.com, our primary website;] blinds.com, our online site for custom window coverings; and thecompanystore.com, our online site for textiles and décor products.

[removed: As noted above,] [added: To complement our merchandising efforts,] we [removed: provide] [added: offer] a number of [added: services for our customers, including] special programs for our Pro customers to meet their particular [removed: needs,] [added: needs] and [added: installation services] for our DIY and DIFM [removed: customers, we provide a number of installation services.][added: customers.]

We also provide tool and equipment rentals at over [removed: 1,200] [added: 1,300] locations across the U.S. and Canada, providing value and convenience for both our Pro and DIY customers.

[removed: As part of our strategic investment program, we are investing in more space, more tools, and better technology to] [added: To] improve the customer experience and continue to grow this differentiated service [removed: offering.][added: offering, we are continuing to invest in more locations, more tools, and better technology.]

We [removed: recognize that] [added: continue to focus on building best-in-class competitive advantages in] our [removed: customers’ expectations are changing rapidly] [added: information technology] and [removed: that our] supply chain [removed: needs] to be responsive to [removed: their] [added: our customers’] expectations for how, when and where they choose to receive our products and services.

As part of [removed: our] [added: creating the] One Home Depot [removed: initiative,] [added: experience,] we are investing approximately [removed: $1.2] [added: $1] billion in the multi-year development of our One Supply Chain network, [removed: which is designed to continue to improve productivity and connectivity across our supply chain platforms to achieve] [added: with] the [added: goal of achieving the] fastest, most efficient 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 [removed: costs, which results in higher returns for our shareholders.][added: costs.]

In fiscal 2020, this trend was accelerated due to the COVID-19 pandemic, which both spurred significant growth in home improvement demand and drove operational changes required to promote customer and associate safety.

Our investments have been guided by the following strategies:

- Invest using a “customer-back” approach

- Reinforce our position as the product authority in home improvement

- Deliver a best-in-class, interconnected shopping experience

- Extend our low-cost provider position

These strategic investments are designed to extend our current competitive advantages.

We believe our primary competitive advantages are: (1) our culture and associates, (2) our premium real estate, (3) our world-class merchandising organization, (4) our flexible supply chain, and (5) our digital experience.

Taken together, our One Home Depot vision and execution of the related strategies are helping us to meet our two principal business objectives: continue to grow our share of the highly competitive market in which we operate and deliver shareholder value.

We believe that our efforts to build the One Home Depot experience, and the groundwork we laid in these areas over the past decade, position us well to meet our objectives in any environment and have been particularly important in navigating the challenges created by the pandemic.

We achieved record sales in fiscal 2020, while remaining focused on two key priorities: the safety and well-being of our associates and customers and providing our customers and communities with the products and services they need.

We also remained focused on our objective to return value to our shareholders.

We are steadfast in this commitment, while also recognizing that exercising corporate responsibility and being informed by the needs of our other stakeholders, including our customers, associates, supplier partners, and communities, creates value for all stakeholders, including our shareholders.

Our Customers

Our associates assist these customers both in our stores and through online resources

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and other media designed to provide product and project knowledge.

Professional Customers (or “Pros”). These customers are primarily professional renovators/remodelers, general contractors, 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 and facilities.

We have a number of initiatives to drive growth with our Pro customers, including a customized online experience, a dedicated sales force, an extensive delivery network, 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 in the multifamily and hospitality end markets.

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

We recognize the great value our Pro customers 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 Pro customers are yielding increased engagement and will continue to translate into incremental spend.

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

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labor.

To drive accountability with our suppliers, we conduct factory audits and compliance visits.

The duration of trademark registrations varies from country to country.

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

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

As our patent portfolio has been built over time, the remaining terms of the individual patents across our patent portfolio vary.

Although our patents have value, no single patent is essential to our business.

Competition and Seasonality

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

Interconnected Shopping Experience

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.

Many of our interconnected customers are also comfortable with a purely online shopping experience.

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

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

To meet this challenge, we have had to become more agile in our response to the changing competitive environment and customer preferences.

We are investing in our stores, associates, interconnected and digital experience, Pro customer experience, services business, supply chain, and product and innovation to drive value for our customers, our associates, our suppliers, and our shareholders.

We are guided in our investments by a “customer-back” approach, focusing on the customer experience as we invest.

This focus has driven investments aimed at providing an interconnected shopping experience, featuring curated and innovative product choices, personalized for the individual shopper’s needs, which are then delivered in a fast and cost-efficient manner.

To accomplish this, we are executing against five key strategies designed to drive growth in our business:

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| • | Connect associates to customer needs |

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| • | Interconnected experience: connect stores to online, and online to stores |

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| • | Connect product to shelf, site and customer |

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| • | Innovate our business model and value chain |

Taken together, these strategies are helping us to leverage our competitive advantages and create the One Home Depot experience that our customers demand.

To highlight our evolution and the capabilities we have developed for the benefit of our customers along this journey, we also changed our tagline in fiscal 2019 to “How Doers Get More Done™”, with a corresponding marketing campaign designed to show our customers the ways we are making home improvement easier, faster and more convenient for them.

We discuss below many of our efforts and investments in the context of our five key strategies.

Connect Associates to Customer Needs

As noted above, we have been guided by a focus on our customers in our development of the One Home Depot experience, and we leverage our knowledgeable and engaged associates, guided by our culture and values, to address customer needs.

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| • | *Professional Customers (or “Pros”)*. These customers are primarily professional renovators/remodelers, general contractors, 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 facilities, healthcare facilities, government buildings and office buildings. We recognize the great value our Pro customers provide to their clients, and we strive to make the Pros’ job easier and help them grow their business. We believe that investments aimed at deepening our relationships with our Pro customers are yielding increased engagement and will continue to translate into incremental spend. As part of our continued commitment to invest in Pro customer relationships and the significant market opportunity these customers represent, we have created an enhanced Pro customer experience, both online and in-store. |

At the end of 2018, we announced a new consolidated, go-to-market strategy for all of our Pro initiatives, including our MRO business (formerly known as Interline), under “The Home Depot Pro” banner.

The Home Depot Pro serves a number of business customers, including hotels, hospitals, apartment/condominium property managers, educational institutions, government agencies, commercial property managers and housing authorities.

With The Home Depot Pro, Pros have access to a comprehensive offering that includes a combination of our vast store network, a best-in-class dedicated sales force, quality and affordable products from trusted brands, an extensive delivery network, and online business solutions that comprise our Pro ecosystem.

Within this Pro ecosystem, we also provide specialized programs such as an expanded MRO assortment, inventory management solutions, custom product offerings, in-store Pro desk and Pro services, and enhanced credit programs.

We also provide and are continuously working to improve our delivery options for Pros, including pick up in-store, direct to job site delivery, or ship-to home, to allow us to deliver when, where and how our customers demand.

Online, with our B2B website, our Pros receive a personalized experience based on their business, their needs, their industry, and their purchasing behavior.

Pro customers are not one-size-fits-all, and The Home Depot Pro offers the level of value-added services that our diverse Pro customers demand.

Our Pro loyalty program, Pro Xtra, provides Pros with benefits related to useful business services, exclusive product offers, and a purchase monitoring tool to enable receipt lookup and job tracking of purchases across all forms of payment.

We will continue to invest in the Pro customer experience to provide the services, solutions, support, and online tools they need to grow their businesses.

We believe that changing demographics are increasing the demand for our installation services, particularly for our “baby boomer” customers who may have historically been DIY customers but who are now looking for someone to complete a project for them.

We help our customers finance their projects by offering PLCC products through third-party credit providers.

SEC regulations require us to disclose certain information about proceedings arising under federal, state or local environmental regulations if we reasonably believe that such proceedings may result in monetary sanctions [removed: of $100,000 or more.][added: above a stated threshold.]

As previously reported, in January 2017, we became aware of an investigation by the [removed: EPA’s] criminal investigation division [added: of the EPA] into our compliance with lead-safe work practices for certain jobs performed through our installation services business.

Pursuant to SEC regulations, the Company uses a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required.

In December 2020, we entered into a civil consent decree with the U.S. Department of Justice, the EPA, and the States of Utah, Massachusetts and Rhode Island, which requires certain changes to lead-safe work practices in our installation

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

services business and the payment of a penalty of $20.75 million, and filed the decree with the United States District Court for the Northern District of Georgia for approval.

The consent decree resolves the allegations on a nationwide basis, and we anticipate court approval of the consent decree in the first half of fiscal 2021.

In addition, as previously reported in the third quarter of fiscal 2020, we were informed by the United States Attorney for the Northern District of Georgia that the government is declining to pursue criminal charges related to the investigation of our lead-safe work practices.

We are continuing to cooperate and engage in discussions with the EPA and the Department of Justice on these matters.

[removed: FORM 10-K][added: FORM 10-K]

For the fiscal year [removed: ended February 2, 2020][added: ended January 31, 2021]

Commission file [removed: number 1-8207][added: number 1-8207]

[removed: ][added: ]

[removed: THE HOME] [added: THE HOME] DEPOT, INC.

| Delaware | | | | [added: | | | | | | | |] 95-3261426 | | [added: | | | |]

| (State or other jurisdiction incorporation or organization) | | | | [added: | | | | | | | |] (I.R.S. Employer Identification No.) | | [added: | | | |]

| 2455 Paces Ferry Road | | | | | | | [added: | | | | | | | | | | | | | |]

| Atlanta, | [added: | |] Georgia | | | | [added: | | | | | | | |] 30339 | | [added: | | | |]

| (Address of principal executive offices) | | | | | [added: | | | | | | | | | |] (Zip Code) | | [added: | | | |]

Registrant’s telephone number, including area code: [removed: (770) 433-8211][added: (770) 433-8211]

| Securities registered pursuant to Section 12(b) of the Act: | | | | | [added: | | | | | | | | | |]

| Title of each class | | [added: | | | |] Trading Symbol | | [added: | | | |] Name of each exchange on which registered | [added: | |]

| Common Stock, $0.05 Par Value Per Share | | [added: | | | |] HD | | [added: | | | |] New York Stock Exchange | [added: | |]

The aggregate market value of voting common stock held by non-affiliates of the registrant on [removed: August 4, 2019] [added: July 31, 2020] was [removed: $232.3] [added: $285.6] billion.

The number of shares outstanding of the registrant’s common stock as of March [removed: 6, 2020] [added: 5, 2021] was [removed: 1,074,741,592] [added: 1,077,069,383] shares.

Portions of the registrant’s proxy statement for the [removed: 2020] [added: 2021] Annual Meeting of Shareholders are incorporated by reference in Part III of this Form 10-K to the extent described herein.

| [Commonly Used or Defined [removed: Terms](#sF449383F0EA3516E8F0C74FDDC329E35)] [added: Terms](#i767754147c274b8fbbfeb5ffedb7558f_10)] | | [removed: [ii](#sF449383F0EA3516E8F0C74FDDC329E35)] | [added: | | | [ii](#i767754147c274b8fbbfeb5ffedb7558f_10) | | |]

| [Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of [removed: 1995](#s527E56D5A078501B88EBC4D61A0D8FE5)] [added: 1995](#i767754147c274b8fbbfeb5ffedb7558f_13)] | | [removed: [iii](#s527E56D5A078501B88EBC4D61A0D8FE5)] | [added: | | | [iii](#i767754147c274b8fbbfeb5ffedb7558f_13) | | |]

| Item 1. | [removed: [Business](#s4EBD2F2A4E4A567286D09605B88203F1).] | [removed: [1](#s4EBD2F2A4E4A567286D09605B88203F1)] | [added: [Business](#i767754147c274b8fbbfeb5ffedb7558f_19). | | | [1](#i767754147c274b8fbbfeb5ffedb7558f_19) | | |]

| Item 1A. | [added: | |] [Risk [removed: Factors](#s7493E35E249B5BB09ADA3539BB4AE790).] [added: Factors](#i767754147c274b8fbbfeb5ffedb7558f_22).] | [removed: [8](#s7493E35E249B5BB09ADA3539BB4AE790)] | [added: | [10](#i767754147c274b8fbbfeb5ffedb7558f_22) | | |]

| Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#s1FDCB5AF999650B59D12CFBC1645968F).] [added: Comments](#i767754147c274b8fbbfeb5ffedb7558f_25).] | [removed: [16](#s1FDCB5AF999650B59D12CFBC1645968F)] | [added: | [21](#i767754147c274b8fbbfeb5ffedb7558f_25) | | |]

| Item 2. | [removed: [Properties](#sD8E8F12AF243537EA0F828B039EFA7BF).] | [removed: [17](#sD8E8F12AF243537EA0F828B039EFA7BF)] | [added: [Properties](#i767754147c274b8fbbfeb5ffedb7558f_28). | | | [22](#i767754147c274b8fbbfeb5ffedb7558f_28) | | |]

| Item 3. | [added: | |] [Legal [removed: Proceedings](#sDCACCF71C8F257BC96AD3E2C579E2706).] [added: Proceedings](#i767754147c274b8fbbfeb5ffedb7558f_31).] | [removed: [18](#sDCACCF71C8F257BC96AD3E2C579E2706)] | [added: | [23](#i767754147c274b8fbbfeb5ffedb7558f_31) | | |]

| Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#s6AAEA99306C95C0BB34541928D082628).] [added: Disclosures](#i767754147c274b8fbbfeb5ffedb7558f_34).] | [removed: [19](#s6AAEA99306C95C0BB34541928D082628)] | [added: | [24](#i767754147c274b8fbbfeb5ffedb7558f_34) | | |]

| Item 5. | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s588D2C7153415B8AA1DE0E4ECD0C215A).] [added: Securities](#i767754147c274b8fbbfeb5ffedb7558f_40).] | [removed: [19](#s588D2C7153415B8AA1DE0E4ECD0C215A)] | [added: | [24](#i767754147c274b8fbbfeb5ffedb7558f_40) | | |]

| Item 6. | [added: | |] [Selected Financial [removed: Data](#s661E9A2EA3575A249653F527638B4FC0).] [added: Data](#i767754147c274b8fbbfeb5ffedb7558f_43).] | [removed: [20](#s661E9A2EA3575A249653F527638B4FC0)] | [added: | [25](#i767754147c274b8fbbfeb5ffedb7558f_43) | | |]

| Item 7. | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s618F2F9440C05D2A81FC86D67D515841).] [added: Operations](#i767754147c274b8fbbfeb5ffedb7558f_46).] | [removed: [21](#s618F2F9440C05D2A81FC86D67D515841)] | [added: | [26](#i767754147c274b8fbbfeb5ffedb7558f_46) | | |]

| Item 7A. | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s39222693BDB4565C9286CA8747E0C423).] [added: Risk](#i767754147c274b8fbbfeb5ffedb7558f_70).] | [removed: [28](#s39222693BDB4565C9286CA8747E0C423)] | [added: | [34](#i767754147c274b8fbbfeb5ffedb7558f_70) | | |]

| Item 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#sD8C915BB40D35C84BF61D8A513A20894).] [added: Data](#i767754147c274b8fbbfeb5ffedb7558f_73).] | [removed: [29](#sD8C915BB40D35C84BF61D8A513A20894)] | [added: | [36](#i767754147c274b8fbbfeb5ffedb7558f_73) | | |]

| Item 9. | [added: | |] [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#s0B294707D62151E0866959A4BFB192B3).] [added: Disclosure](#i767754147c274b8fbbfeb5ffedb7558f_157).] | [removed: [61](#s0B294707D62151E0866959A4BFB192B3)] | [added: | [69](#i767754147c274b8fbbfeb5ffedb7558f_157) | | |]

| Item 9A. | [added: | |] [Controls and [removed: Procedures](#s068E49E33A4C557488E631897273A44E).] [added: Procedures](#i767754147c274b8fbbfeb5ffedb7558f_160).] | [removed: [61](#s068E49E33A4C557488E631897273A44E)] | [added: | [69](#i767754147c274b8fbbfeb5ffedb7558f_160) | | |]

| Item 9B. | [added: | |] [Other [removed: Information](#sA48C11D1E6395BA28C15821623AB2E9A).] [added: Information](#i767754147c274b8fbbfeb5ffedb7558f_166).] | [removed: [63](#sA48C11D1E6395BA28C15821623AB2E9A)] | [added: | [71](#i767754147c274b8fbbfeb5ffedb7558f_166) | | |]

| [PART [removed: III](#sCC4A41FF16A75301828BF3610F3F5159)] [added: III](#i767754147c274b8fbbfeb5ffedb7558f_169)] | | | [added: | | | | | |]

| Item 10. | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#sFCB00981C2BE5128AA9EFEA5A15B017D).] [added: Governance](#i767754147c274b8fbbfeb5ffedb7558f_172).] | [removed: [63](#sFCB00981C2BE5128AA9EFEA5A15B017D)] | [added: | [71](#i767754147c274b8fbbfeb5ffedb7558f_172) | | |]

| Item 11. | [added: | |] [Executive [removed: Compensation](#s9A5DDC64E1BC5B7CAF3133411F8C9ACB).] [added: Compensation](#i767754147c274b8fbbfeb5ffedb7558f_175).] | [removed: [64](#s9A5DDC64E1BC5B7CAF3133411F8C9ACB)] | [added: | [72](#i767754147c274b8fbbfeb5ffedb7558f_175) | | |]

| Item 12. | [added: | |] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sC92D48EDBD365736B473618B22748B78).] [added: Matters](#i767754147c274b8fbbfeb5ffedb7558f_178).] | [removed: [64](#sC92D48EDBD365736B473618B22748B78)] | [added: | [72](#i767754147c274b8fbbfeb5ffedb7558f_178) | | |]

| Item 13. | [added: | |] [Certain Relationships and Related Transactions, and Director [removed: Independence](#sA17F84BBDC895FBFADA2A87FCDA18E81).] [added: Independence](#i767754147c274b8fbbfeb5ffedb7558f_181).] | [removed: [64](#sA17F84BBDC895FBFADA2A87FCDA18E81)] | [added: | [72](#i767754147c274b8fbbfeb5ffedb7558f_181) | | |]

| Item 14. | [added: | |] [Principal Accounting Fees and [removed: Services](#sDA56D32ADFDA5E6CAF39776FBEDEAA76).] [added: Services](#i767754147c274b8fbbfeb5ffedb7558f_184).] | [removed: [65](#sDA56D32ADFDA5E6CAF39776FBEDEAA76)] | [added: | [72](#i767754147c274b8fbbfeb5ffedb7558f_184) | | |]

| Item 15. | [added: | |] [Exhibits, Financial Statement [removed: Schedules](#sB7CEFFB43EA154E69A51B19EC943362E).] [added: Schedules](#i767754147c274b8fbbfeb5ffedb7558f_190).] | [removed: [65](#sB7CEFFB43EA154E69A51B19EC943362E)] | [added: | [72](#i767754147c274b8fbbfeb5ffedb7558f_190) | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| [PART I](#i767754147c274b8fbbfeb5ffedb7558f_16) | | | | | | | | |

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| [PART II](#i767754147c274b8fbbfeb5ffedb7558f_37) | | | | | | | | |

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| [PART IV](#i767754147c274b8fbbfeb5ffedb7558f_187) | | | | | | | | |

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| [SIGNATURES](#i767754147c274b8fbbfeb5ffedb7558f_196) | | | | | | [78](#i767754147c274b8fbbfeb5ffedb7558f_196) | | |

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| ESG | | | | | | Environmental, social and governance | | |

| HD Supply | | | | | | HD Supply Holdings, Inc. | | |

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

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| [PART I](#sFD24D41E014B523499ABB9405772FC7C) | | |

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| [PART II](#s94235262699D5849BD59D777B0174F0F) | | |

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| [PART IV](#s20CAF9E5EB495A52B1B74C5210DEE10E) | | |

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| [SIGNATURES](#s83986FE5458B52BC817902CF53BEE6C4) | | [70](#s83986FE5458B52BC817902CF53BEE6C4) |

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| ASU No. 2014-09 | | Revenue from Contracts with Customers (Topic 606) |

| FSC | | Forest Stewardship Council |

| Interline | | The legacy Interline Brands business, now operating as a part of The Home Depot Pro |

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

The percentage of our owned versus leased facilities [removed: that were operating] [added: in operation] at the end of fiscal [removed: 2019,] [added: 2020,] along with the total square footage, follows:

| square footage in millions | [added: | |] Owned | | | [added: | | |] Leased | | | [added: | | |] Total Square Footage | | [added: |]

| Warehouses and distribution centers | [removed: 4] | [added: | 5 | |] % | | [removed: 96] | [added: | 95 | |] % | | [removed: 60.0] | | [added: 75.9 | | |]

| Offices and other | [added: | |] 23 | [added: |] % | | [added: | |] 77 | [added: |] % | | [removed: 4.4] | | [added: 5.1 | | |]

[removed: | *(1)* | *Our] [added: *(1)Our] owned stores include those subject to ground leases.* [removed: |]

Our U.S. store locations at the end of fiscal [removed: 2019] [added: 2020] follow:

| U.S. | [added: | |] Stores | | | [added: | | |] U.S. | [added: | |] Stores | | [added: |]

| Alabama | [added: | |] 28 | | | [added: | | |] Montana | [added: | |] 6 | | [added: |]

| Alaska | [added: | |] 7 | | | [added: | | |] Nebraska | [added: | |] 8 | | [added: |]

| Arizona | [added: | |] 56 | | | [added: | | |] Nevada | [added: | |] 21 | | [added: |]

| Arkansas | [added: | |] 14 | | | [added: | | |] New Hampshire | [added: | |] 20 | | [added: |]

| California | [added: | |] 232 | | | [added: | | |] New Jersey | [added: | |] 67 | | [added: |]

| Colorado | [added: | |] 46 | | | [added: | | |] New Mexico | [added: | |] 13 | | [added: |]

| Connecticut | [added: | |] 30 | | | [added: | | |] New York | [removed: 100] | | [added: 101 | | |]

| Delaware | [added: | |] 9 | | | [added: | | |] North Carolina | [added: | |] 40 | | [added: |]

| District of Columbia | [added: | |] 1 | | | [added: | | |] North Dakota | [added: | |] 2 | | [added: |]

| Florida | [added: | |] 155 | | | [added: | | |] Ohio | [added: | |] 70 | | [added: |]

| Georgia | [added: | |] 90 | | | [added: | | |] Oklahoma | [added: | |] 16 | | [added: |]

| Guam | [added: | |] 1 | | | [added: | | |] Oregon | [added: | |] 27 | | [added: |]

| Hawaii | [added: | |] 7 | | | [added: | | |] Pennsylvania | [added: | |] 70 | | [added: |]

| Idaho | [added: | |] 11 | | | [added: | | |] Puerto Rico | [removed: 9] | | [added: 10 | | |]

| Illinois | [added: | |] 76 | | | [added: | | |] Rhode Island | [added: | |] 8 | | [added: |]

| Indiana | [added: | |] 24 | | | [added: | | |] South Carolina | [added: | |] 26 | | [added: |]

| Iowa | [added: | |] 10 | | | [added: | | |] South Dakota | [added: | |] 1 | | [added: |]

| Kansas | [added: | |] 16 | | | [added: | | |] Tennessee | [added: | |] 39 | | [added: |]

| Kentucky | [added: | |] 14 | | | [added: | | |] Texas | [removed: 179] | | [added: 180 | | |]

| Louisiana | [added: | |] 28 | | | [added: | | |] Utah | [added: | |] 22 | | [added: |]

| Maine | [added: | |] 11 | | | [added: | | |] Vermont | [added: | |] 3 | | [added: |]

| Maryland | [added: | |] 41 | | | [added: | | |] Virgin Islands | [added: | |] 2 | | [added: |]

| Massachusetts | [added: | |] 45 | | | [added: | | |] Virginia | [added: | |] 49 | | [added: |]

| Michigan | [added: | |] 70 | | | [added: | | |] Washington | [added: | |] 45 | | [added: |]

| Minnesota | [added: | |] 33 | | | [added: | | |] West Virginia | [added: | |] 6 | | [added: |]

| Mississippi | [added: | |] 14 | | | [added: | | |] Wisconsin | [added: | |] 27 | | [added: |]

| Missouri | [added: | |] 34 | | | [added: | | |] Wyoming | [added: | |] 5 | | [added: |]

| | | | | [added: | | | | |] Total U.S. | [removed: 1,984] | | [added: 1,987 | | |]

Our store locations outside of the U.S. at the end of fiscal [removed: 2019] [added: 2020] follow:

| Canada | [added: | |] Stores | | | [added: | | |] Mexico | [added: | |] Stores | | [added: |]

| Alberta | [added: | |] 27 | | | [added: | | |] Aguascalientes | [added: | |] 2 | | [added: |]

| British Columbia | [added: | |] 26 | | | [added: | | |] Baja California | [added: | |] 6 | | [added: |]

| Manitoba | [added: | |] 6 | | | [added: | | |] Baja California Sur | [added: | |] 2 | | [added: |]

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| Stores (1) | | | 90 | | % | | | | 10 | | % | | | | 238.6 | | |

| Total | | | | | | | | | | | | | | | 319.6 | | |

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[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

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| Stores (1) | 90 | % | | 10 | % | | 238.1 | |

| Total | | | | | | | 302.5 | |

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At March [removed: 6, 2020,] [added: 5, 2021,] there were approximately [removed: 121,000] [added: 116,000] holders of record of our common stock and approximately [removed: 3,043,000] [added: 3,735,000] additional “street name” holders whose shares are held of record by banks, brokers, and other financial institutions.

The graph assumes $100 was invested at the closing price of our common stock on the NYSE and in each index on the last trading day of fiscal [removed: 2014] [added: 2015] and assumes that all dividends were reinvested on the date paid.

[removed: ][added: ]

| | [added: | |] —●— | [added: | |] The Home Depot | [added: | |] —u— | [added: | |] S&P Retail Composite Index | [added: | |] —■— | [added: | |] S&P 500 Index | [added: | |]

| | [added: | |] Fiscal Year Ended | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| | [removed: February 1, 2015] | | [removed: | |] January 31, 2016 | | | | [added: | |] January 29, 2017 | | | | [added: | |] January 28, 2018 | | | | [added: | |] February 3, 2019 | | | | [added: | |] February 2, 2020 | | | [added: | | | January 31, 2021 | | |]

The number and average price of shares purchased in each fiscal month of the fourth quarter of fiscal [removed: 2019] [added: 2020] follow:

| Period | [added: | |] Total Number of Shares [removed: Purchased(1)] [added: Purchased(1) (3)] | | | [added: | | |] Average Price Paid Per Share(1) | | | | [added: | |] Total Number of Shares Purchased as Part of Publicly Announced Program(2) | | | [added: | | |] Dollar Value of Shares that May Yet Be Purchased Under the Program(2) | | |

[removed: | *(2)* | *In] [added: *(2)In] February 2019, our Board of Directors authorized [removed: a] $15.0 billion [added: in] share [removed: repurchase program* *that] [added: repurchases that] replaced the previous authorization. [removed: This program does not have a prescribed expiration date.* |]

During the fourth quarter of fiscal [removed: 2019,] [added: 2020,] we issued [removed: 462] [added: 435] deferred stock units under the Home Depot, Inc. Nonemployee Directors’ Deferred Stock Compensation Plan pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of the SEC’s Regulation D thereunder.

The deferred stock units were credited to the accounts of those non-employee directors who elected to receive all or a portion of board retainers in the form of deferred stock units instead of cash during the fourth quarter of fiscal [removed: 2019.][added: 2020.]

During the fourth quarter of fiscal [removed: 2019,] [added: 2020,] we credited [removed: 9,193] [added: 11,539] deferred stock units to participant accounts under the Restoration Plan pursuant to an exemption from the registration requirements of the Securities Act for involuntary, non-contributory plans.

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[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| The Home Depot | | | $ | 100.00 | | | | | $ | 112.34 | | | | | $ | 172.17 | | | | | $ | 156.60 | | | | | $ | 199.00 | | | | | $ | 241.94 | |

| S&P Retail Composite Index | | | 100.00 | | | | | | 118.55 | | | | | | 172.18 | | | | | | 181.29 | | | | | | 218.65 | | | | | | 309.14 | | |

| S&P 500 Index | | | 100.00 | | | | | | 120.86 | | | | | | 154.33 | | | | | | 148.35 | | | | | | 180.31 | | | | | | 211.39 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| November 2, 2020 – November 29, 2020 | | | 2,278 | | | | | | $ | 273.99 | | | | | — | | | | | | $ | 7,680,368,043 | |

| November 30, 2020 – December 27, 2020 | | | 530 | | | | | | 269.44 | | | | | | — | | | | | | 7,680,368,043 | | |

| December 28, 2020 – January 31, 2021 | | | 1,148 | | | | | | 269.81 | | | | | | — | | | | | | 7,680,368,043 | | |

| Total | | | 3,956 | | | | | | 272.17 | | | | | | — | | | | | | | | |

*(1)These amounts include repurchases pursuant to our Amended and Restated 2005 Omnibus Stock Incentive Plan and our 1997 Omnibus Stock Incentive Plan (collectively, the "Plans").

Under the Plans, participants may surrender shares as payment of applicable tax withholding on the vesting of restricted stock awards.

Participants in the Plans may also exercise stock options by surrendering shares of common stock that the participants already own as payment of the exercise price.

Shares so surrendered by participants in the Plans are repurchased pursuant to the terms of the Plans and applicable award agreement and not pursuant to publicly announced share repurchase programs.*

The authorization does not have a prescribed expiration date.*

*(3)On March 13, 2020, we suspended our share repurchases.

We resumed share repurchases in the first quarter of fiscal 2021.*

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | |

| The Home Depot | $ | 100.00 | | | $ | 122.88 | | | $ | 138.04 | | | $ | 211.56 | | | $ | 192.43 | | | $ | 244.53 | |

| S&P Retail Composite Index | 100.00 | | | | 116.80 | | | | 138.46 | | | | 201.09 | | | | 211.74 | | | | 255.38 | | |

| S&P 500 Index | 100.00 | | | | 99.33 | | | | 120.04 | | | | 153.29 | | | | 147.35 | | | | 179.10 | | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| November 4, 2019 – December 1, 2019 | 594,467 | | (3) | $ | 227.52 | | | 589,932 | | | $ | 11,486,268,617 | |

| December 2, 2019 – December 29, 2019 | 4,488,532 | | | 218.35 | | | | 4,487,586 | | | 10,312,547,946 | | |

| December 30, 2019 – February 2, 2020 | 9,854,407 | | | 226.26 | | | | 9,852,099 | | | 8,277,265,927 | | |

| Total | 14,937,406 | | | 223.93 | | | | 14,929,617 | | | | | |

| | |

| --- | --- |

| *(1)* | *These amounts include repurchases pursuant to our Amended and Restated 2005 Omnibus Stock Incentive Plan and our 1997 Omnibus Stock Incentive Plan (collectively, the “Plans”). Under the Plans, participants may surrender shares as payment of applicable tax withholding on the vesting of restricted stock and deferred share awards. Participants in the Plans may also exercise stock options by surrendering shares of common stock that the participants already own as payment of the exercise price. Shares so surrendered by participants in the Plans are repurchased pursuant to the terms of the Plans and applicable award agreement and not pursuant to publicly announced share repurchase programs.* |

| | |

| --- | --- |

| | |

| --- | --- |

| *(3)* | *This amount includes shares received in the fourth quarter of fiscal 2019 related to the settlement of the ASR agreement entered into in the third quarter of fiscal 2019. See* [*Note 6*](#sA60AB7DEDD3E5B65B59ABD3F14713B6B) *to our consolidated financial statements for further discussion of our ASR agreements.* |

The information required by [removed: this item] [added: Item 301 of Regulation S-K] is incorporated by reference to page F-1 of this report.

Quarterly financial data previously required by item 302 of Regulation S-K has been omitted as we have elected to early adopt the changes to Item 302 contained in SEC Release No. 33-10890.

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

| [Report of Independent Registered Public Accounting [removed: Firm](#s198EC57330805357B3D21E5C0C11B86B)] [added: Firm](#i767754147c274b8fbbfeb5ffedb7558f_76)] | | [removed: [30](#s198EC57330805357B3D21E5C0C11B86B)] | [added: | | | [37](#i767754147c274b8fbbfeb5ffedb7558f_76) | | |]

| [Consolidated Balance [removed: Sheets](#s72F1EE8BD352548D944BE7B265D81E22)] [added: Sheets](#i767754147c274b8fbbfeb5ffedb7558f_79)] | | [removed: [32](#s72F1EE8BD352548D944BE7B265D81E22)] | [added: | | | [39](#i767754147c274b8fbbfeb5ffedb7558f_79) | | |]

| [Consolidated Statements of [removed: Earnings](#s5011DB649B4757FCA8A4970C800E0D9C)] [added: Earnings](#i767754147c274b8fbbfeb5ffedb7558f_85)] | | [removed: [33](#s5011DB649B4757FCA8A4970C800E0D9C)] | [added: | | | [40](#i767754147c274b8fbbfeb5ffedb7558f_85) | | |]

| [Consolidated Statements of Comprehensive [removed: Income](#s54B24E0563A4564AA91E0CDF0EB342F9)] [added: Income](#i767754147c274b8fbbfeb5ffedb7558f_88)] | | [removed: [34](#s54B24E0563A4564AA91E0CDF0EB342F9)] | [added: | | | [41](#i767754147c274b8fbbfeb5ffedb7558f_88) | | |]

| [Consolidated Statements of Stockholders' [removed: Equity](#s52F18A841E8B5A3A9127ABE19F3E0A73)] [added: Equity](#i767754147c274b8fbbfeb5ffedb7558f_91)] | | [removed: [35](#s52F18A841E8B5A3A9127ABE19F3E0A73)] | [added: | | | [42](#i767754147c274b8fbbfeb5ffedb7558f_91) | | |]

| [Consolidated Statements of Cash [removed: Flows](#sC17026BDF5D15E2590BC9397F7905583)] [added: Flows](#i767754147c274b8fbbfeb5ffedb7558f_94)] | | [removed: [36](#sC17026BDF5D15E2590BC9397F7905583)] | [added: | | | [43](#i767754147c274b8fbbfeb5ffedb7558f_94) | | |]

| [Notes to Consolidated Financial [removed: Statements](#s8B239F2DFEF354209F68EAA1D661B666)] [added: Statements](#i767754147c274b8fbbfeb5ffedb7558f_97)] | | [removed: [37](#s8B239F2DFEF354209F68EAA1D661B666)] | [added: | | | [44](#i767754147c274b8fbbfeb5ffedb7558f_97) | | |]

[removed: | [Note 1. Summary of Significant Accounting Policies](#s894D7C42B4635301830BF68D80D81F7D) | | [37](#s894D7C42B4635301830BF68D80D81F7D) |][added: 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES]

[removed: | [Note 2. Net Sales and Segment Reporting](#s9DFB58ABB4A2538B9262CA22ECE1D261) | | [43](#s9DFB58ABB4A2538B9262CA22ECE1D261) |][added: 2.NET SALES AND SEGMENT REPORTING]

[removed: | [Note 3. Property and Leases](#s3C422C83224B5EA48CB85041A9ED8F38) | | [45](#s3C422C83224B5EA48CB85041A9ED8F38) |][added: 3.PROPERTY AND LEASES]

[removed: | [Note 4. Debt and Derivative Instruments](#s03B94F245E855B8399F37220E80A9A72) | | [48](#s03B94F245E855B8399F37220E80A9A72) |][added: 4.DEBT AND DERIVATIVE INSTRUMENTS]

| [Note 5. Income [removed: Taxes](#sC99C9BB9C2C255FA85DCA21A32E95389)] [added: Taxes](#i767754147c274b8fbbfeb5ffedb7558f_124)] | | [removed: [51](#sC99C9BB9C2C255FA85DCA21A32E95389)] | [added: | | | [60](#i767754147c274b8fbbfeb5ffedb7558f_124) | | |]

| [Note 6. Stockholders' [removed: Equity](#sA60AB7DEDD3E5B65B59ABD3F14713B6B)] [added: Equity](#i767754147c274b8fbbfeb5ffedb7558f_130)] | | [removed: [55](#sA60AB7DEDD3E5B65B59ABD3F14713B6B)] | [added: | | | [63](#i767754147c274b8fbbfeb5ffedb7558f_130) | | |]

[removed: | [Note 7. Fair Value Measurements](#sEACD1F1B128755C486FE70197BAA5998) | | [55](#sEACD1F1B128755C486FE70197BAA5998) |][added: 7.FAIR VALUE MEASUREMENTS]

[removed: | [Note 8. Stock-Based Compensation](#s53D243BB00195931B4EEC342720C7F8B) | | [56](#s53D243BB00195931B4EEC342720C7F8B) |][added: 8.STOCK-BASED COMPENSATION]

[removed: | [Note 9. Employee Benefit Plans](#sE158E73F267E5256B17A0F135C3E01BD) | | [59](#sE158E73F267E5256B17A0F135C3E01BD) |][added: 9.EMPLOYEE BENEFIT PLANS]

[removed: | [Note 10. Weighted Average Common Shares](#sC0C4017847BA537ABC19167300E190EF) | | [59](#sC0C4017847BA537ABC19167300E190EF) |][added: 10.WEIGHTED AVERAGE COMMON SHARES]

[removed: | [Note 11. Commitments and Contingencies](#s62C6255EBBDA50BE9C5934A3E9AF7C42) | | [59](#s62C6255EBBDA50BE9C5934A3E9AF7C42) |][added: 11.COMMITMENTS AND CONTINGENCIES]

We have audited the accompanying [removed: Consolidated Balance Sheets] [added: consolidated balance sheets] of The Home Depot, Inc. and [removed: Subsidiaries] [added: subsidiaries] (the Company) as of [removed: February 2, 2020] [added: January 31, 2021] and February [removed: 3, 2019,] [added: 2, 2020,] the related [removed: Consolidated Statements] [added: consolidated statements] of [removed: Earnings, Comprehensive Income, Stockholders’ Equity,] [added: earnings, comprehensive income, stockholders’ equity,] and [removed: Cash Flows] [added: cash flows] for each of the fiscal years in the [removed: three‑year] [added: three-year] period ended [removed: February 2, 2020,] [added: January 31, 2021,] and the related notes (collectively, the [removed: Consolidated Financial Statements).][added: consolidated financial statements).]

In our opinion, the [removed: Consolidated Financial Statements] [added: consolidated financial statements] present fairly, in all material respects, the financial position of the Company as of [removed: February 2, 2020] [added: January 31, 2021] and February [removed: 3, 2019,] [added: 2, 2020,] and the results of its operations and its cash flows for each of the fiscal years in the [removed: three‑year] [added: three-year] period ended [removed: February 2, 2020,] [added: January 31, 2021,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of [removed: February 2, 2020,] [added: January 31, 2021,] based on criteria established in *Internal Control [removed: -] [added: –] Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March [removed: 25, 2020] [added: 24, 2021] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

As discussed in Note 1 to the [removed: Consolidated Financial Statements,] [added: consolidated financial statements,] the Company [removed: has changed] [added: elected to change] its method of accounting for [removed: leases] [added: Leases] as of February 4, 2019 due to the adoption of Accounting Standards Update No. 2016-02, [removed: *Leases] [added: Leases] (Topic [removed: 842)*,] [added: 842),] and related amendments.

The [added: following are the] primary procedures we performed to address this critical audit [removed: matter included the following.][added: matter.]

We involved [removed: actuarial] [added: sampling] professionals with specialized skills and [removed: knowledge,] [added: knowledge] who assisted in:

The [added: following are the] primary procedures we performed to address this critical audit [removed: matter included the following.][added: matter.]

We involved [removed: tax] [added: valuation] professionals with specialized skills and knowledge, who assisted [removed: in:][added: in evaluating:]

| in millions, except per share data | [removed: February 2, 2020] | | [added: January 31, 2021] | | [added: | | | |] February [removed: 3, 2019] [added: 2, 2020] | | |

| Assets | | | | | | | | [added: | | | |]

| Current assets: | | | | | | | | [added: | | | |]

| Cash and cash equivalents | [added: | |] $ | [removed: 2,133] [added: 7,895] | | | [added: | |] $ | [removed: 1,778] [added: 2,133] | |

| Receivables, net | [removed: 2,106] | | [added: 2,992] | | [removed: 1,936] | | | [added: | 2,106 | | |]

| Merchandise inventories | [removed: 14,531] | | [added: 16,627] | | [removed: 13,925] | | | [added: | 14,531 | | |]

| Other current assets | [removed: 1,040] | | [added: 963] | | [removed: 890] | | | [added: | 1,040 | | |]

| Total current assets | [removed: 19,810] | | [added: 28,477] | | [removed: 18,529] | | | [added: | 19,810 | | |]

| Net property and equipment | [added: | | $ | 24,705 | | | | | $ |] 22,770 | | | | [removed: 22,375] | [added: $] | [added: 22,375] | [added: |]

| Operating lease right-of-use assets | [removed: 5,595] | | [added: 5,962] | | [removed: —] | | | [added: | 5,595 | | |]

| Goodwill | [removed: 2,254] | | [added: 7,126] | | [removed: 2,252] | | | [added: | 2,254 | | |]

| Other assets | [removed: 807] | | [added: 4,311] | | [removed: 847] | | | [added: | 807 | | |]

| Total assets | [added: | |] $ | [removed: 51,236] [added: 70,581] | | | [added: | |] $ | [removed: 44,003] [added: 51,236] | |

| Liabilities and Stockholders’ Equity | | | | | | | | [added: | | | |]

| [Note 12. HD Supply Acquisition](#i767754147c274b8fbbfeb5ffedb7558f_1735) | | | | | | [67](#i767754147c274b8fbbfeb5ffedb7558f_1735) | | |

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

*Estimation of store shrink using a sampling approach*

As discussed in Note 1 to the consolidated financial statements, the majority of the Company’s U.S. merchandise inventory balances are stated at lower of cost (first-in, first out) or market as determined by the retail inventory method.

The retail inventory method is based on a number of factors such as markups, markdowns, and inventory losses (or shrink).

Shrink is the difference between the recorded amount of inventory and the physical inventory counted.

The Company calculates shrink based on actual inventory losses identified as a result of physical inventory counts during each fiscal period and estimated inventory losses occurring between physical

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

inventory counts.

Due to changes in operating conditions during fiscal 2020 as a result of the COVID-19 pandemic, the Company used the results from a sample of stores that were able to conduct physical inventory counts as a basis for estimating shrink for those stores at which physical inventory counts were temporarily suspended during the year.

We identified the evaluation of the estimation of store shrink using a sampling approach as a critical audit matter.

Evaluating the Company’s use of sampling and its reliability to produce results substantially the same as those which would be obtained by a count of all U.S. retail stores involved a high degree of auditor judgment.

Additionally, professionals with specialized skills and knowledge assisted the engagement team.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the process of developing and selecting the sampling model to estimate store shrink.

We evaluated the appropriateness of the Company using sampling by comparing shrink results and store characteristics across the population to assess the sample’s reliability to produce results substantially the same as those which would be obtained by a count of all U.S. retail stores.

- Evaluating the Company’s design of a sampling method and key parameters used; and

- Testing the Company’s application of a sampling model by evaluating formulas and calculations.

*Fair value of customer relationships intangible asset*

As discussed in Note 12 to the consolidated financial statements, on December 24, 2020, the Company acquired HD Supply Holdings, Inc. (HDS) in a business combination.

As a result of the transaction, the Company acquired a customer relationships intangible asset associated with the generation of future income from existing customers.

The preliminary, estimated acquisition-date fair value for the customer relationships intangible asset was approximately $2.6 billion.

The Company used an income approach to determine the estimated fair value of the customer relationships intangible asset.

We identified the evaluation of the fair value of the customer relationships intangible asset acquired in the HDS business combination as a critical audit matter.

There was a high degree of subjective auditor judgment related to certain assumptions used in the valuation model.

Significant assumptions included the amount and timing of future cash flows, growth rates, customer attrition rate, and the discount rate applied.

Changes in these assumptions could have a significant impact on the fair value of the customer relationships intangible asset.

Professionals with specialized skill and knowledge were also required to assess significant assumptions and evaluate evidence obtained.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s acquisition-date valuation process, including controls related to the development of the above assumptions.

We evaluated the amount and timing of future cash flows and growth rates used by the Company by comparing projected cash flows to certain publicly available information for comparable companies, industry reports, and historical revenues achieved.

We performed sensitivity analyses over the Company’s assumptions used to determine the preliminary, estimated fair value of the customer relationships intangible asset to assess the impact changes in those assumptions would have on the Company’s determination of fair value.

- Long term growth rates used to project future cash flows by comparing to certain nationwide economic trend data such as GDP, inflation, and relevant industry data;

- Expected customer attrition rate applied by developing an independent attrition rate using historical sales data; and

- Discount rate applied by developing an independent discount rate and comparing inputs to certain publicly available market data for comparable entities.

March 24, 2021

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

[Table](#i767754147c274b8fbbfeb5ffedb7558f_7) [of](#i767754147c274b8fbbfeb5ffedb7558f_7) [Contents](#i767754147c274b8fbbfeb5ffedb7558f_7)

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| [Note 12. Quarterly Financial Data (Unaudited)](#s3AACAC8120A853C1BD0CA07629D6DF23) | | [60](#s3AACAC8120A853C1BD0CA07629D6DF23) |

| [Note 13. Subsequent Events](#s6ce028e23faf4417ac2b4be85ac4c973) | | [60](#s6ce028e23faf4417ac2b4be85ac4c973) |

*Evaluation of the self-insurance liability*

As discussed in Note 1 to the Consolidated Financial Statements, the Company is self-insured for certain losses related to general liability (including product liability), workers’ compensation, employee group medical,

and automobile claims.

The Company recognizes the expected ultimate cost for claims incurred at the balance sheet date as a liability.

The expected ultimate cost for claims incurred is estimated based upon an analysis of historical data and actuarial estimates determined by the Company’s third-party actuary.

We identified the evaluation of certain self-insurance liabilities as a critical audit matter, specifically those liabilities related to general liability (including product liability) and workers’ compensation.

Specialized skills were required to evaluate the actuarial methods and assumptions used in determining certain self-insurance liabilities.

There was a high degree of judgment required to evaluate the Company’s key assumptions such as loss development factors and the selection of ultimate losses among estimates derived using the various actuarial methods.

We tested certain internal controls over the Company’s self-insurance liabilities process including controls over the review of the third-party actuarial report and the actuarial methods and key assumptions used by the actuary in determining certain self-insurance liabilities.

We analyzed the key assumptions underlying the actuarial estimates by evaluating the reported claims and claims payments.

| | |

| --- | --- |

| • | Assessing the actuarial methods used by the Company’s third-party actuary, for consistency with generally accepted actuarial standards and practices; |

| | |

| --- | --- |

| • | Evaluating the key assumptions by comparing to historical data; and |

| | |

| --- | --- |

| • | Developing an independent actuarial range of certain self-insurance liabilities, based on the Company’s underlying historical paid and incurred loss data, and comparing the range to the Company’s estimated liabilities. |

*Evaluation of gross unrecognized income tax benefits*

As discussed in Notes 1 and 5 to the Consolidated Financial Statements, the Company recognizes the effect of income tax positions if those positions are more likely than not of being sustained at the largest amount that is greater than 50% likely of being realized.

The Company’s tax positions are subject to examination by domestic and foreign taxing authorities and the resolution of such examinations may span multiple years.

Since tax law is complex and often subject to interpretations, there is uncertainty that some of the Company’s tax positions will be sustained upon examination.

We identified the evaluation of the Company’s gross unrecognized tax benefits as a critical audit matter.

Complex auditor judgment was required to evaluate the Company’s interpretation of tax law and its identification and determination of the ultimate resolution of its tax positions.

We tested certain internal controls over the Company’s tax process to evaluate gross unrecognized tax benefits, including controls related to (1) interpreting tax law, (2) evaluating which of the Company’s tax positions may not be sustained upon examination, and (3) determination of the more-likely-than-not amount of the positions to be upheld.

| | |

| --- | --- |

| • | Assessing the transfer pricing studies for compliance with applicable laws and regulations; |

| | |

| --- | --- |

| • | Evaluating the Company’s interpretation of tax laws by developing an independent assessment based on our understanding and interpretation of the tax laws; |

| | |

| --- | --- |

| • | Inspecting settlements with applicable taxing authorities, and evaluating the expiration of statutes of limitations; and |

[removed: There have not been any changes in our internal control over financial reporting during the] fiscal quarter ended [removed: February 2, 2020] [added: January 31, 2021] that have materially affected, or are reasonably likely to materially affect, our [removed: internal control over financial reporting.]

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of [removed: February 2, 2020] [added: January 31, 2021] based on the framework in *Internal Control – Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of [removed: February 2, 2020] [added: January 31, 2021] in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The effectiveness of our internal control over financial reporting as of [removed: February 2, 2020] [added: January 31, 2021] has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.