CEO Exit Unlikely to Shake Home Depot's Marketing

Retailer Aims for Continuity as Robert Nardelli Departs

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COLUMBUS, Ohio ( -- The departure of Home Depot CEO Robert Nardelli isn't likely to disrupt the company's marketing -- in fact, his exit may stabilize it.
Under Robert Nardelli's reign as CEO, Home Depot's advertising budget grew 107% to $1.1 billion annually.
Under Robert Nardelli's reign as CEO, Home Depot's advertising budget grew 107% to $1.1 billion annually.
Tumultuous period
During his six-year tenure at the home-improvement retailer, Mr. Nardelli oversaw one of the most tumultuous, yet expansive, periods within the chain's marketing department. No fewer than three top marketing executives left, including marketing guru John Costello and longtime Home Depot veteran Tom Taylor.

Many retail watchers blamed the hard-charging Mr. Nardelli, a former General Electric Co. executive, for the revolving door. But in mid-October that tumult appeared to have come to an end when the search for Mr. Taylor's replacement was called off and Mr. Nardelli named former General Motors executive Roger Adams chief marketing officer, a promotion from his title of senior VP-marketing.

Still, under Mr. Nardelli's reign, advertising spending grew 107% to $1.1 billion in 2005, up from $531 million in 2000, giving the chain the third-largest advertising budget in the retail industry. The retailer's roster of agencies includes Richards Group, Dallas, for creative and Interpublic Group of Cos.' Initiative in Atlanta for media buying.

Upped TV spend 25%
During the critical holiday shopping season, Home Depot launched an aggressive holiday campaign, doubling floor space devoted to holiday decor and upping its TV outlay by 25%.

With Mr. Nardelli's departure, Mr. Adams will now report to Frank Blake, Home Depot's vice chairman of the board of directors and exec VP since 2002. Mr. Blake is also a former GE executive.

Whether Mr. Blake shares the same vision for marketing as Mr. Nardelli remains to be seen, but continuity appears to be the aim of the board, which explained its appointment of Mr. Blake as an expression of its "confidence in the company's current business model, long-term strategy and future growth potential."

Calls and e-mails to Home Depot seeking comment on the impact of Mr. Nardelli's departure on the marketing department were not returned by press time.

Saturation dilemma
Since July, Mr. Adams has worked to create a full partnership between marketing and merchandise, aiming to end the historically merchant-driven culture at a retailer that for its first 25 years was focused almost exclusively on opening new stores and entering new markets.

With Home Depot hitting the dreaded saturation point with 2,127 stores and $81.5 billion in sales, the chain has been working on expanding private-label offerings and creating new product categories, including this holiday season's aggressive Christmas decor push.

Despite the efforts to grow new lines of business, Home Depot's same-store sales have been hit hard. In mid-November, the chain reported that third-quarter same-store sales in the retail segment dropped by 5.1%. The poor results came after a second-quarter same-store sales drop of 0.2%.

Mr. Nardelli's departure comes as Home Depot's stock price and growth has lagged that of its more nimble rival Lowe's. Some analysts have blamed the lagging stock price on the distractions created by Mr. Nardelli's leadership style and his hefty pay package. But with Mr. Nardelli's $210 million severance package coming under fire, the stock-price distractions may not end with his departure.
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