Atlanta Business Chronicle sits down with Home Depot CEO Craig MenearCFO Carol Tomé and CEO Craig Menear spend time with co-founder Arthur Blank at the 2016 annual Home Depot meeting (Photo by Maria Saporta)
By Maria Saporta
As published in the Atlanta Business Chronicle on June 1, 2018
In early 2014, three people were in the running to succeed Frank Blake as CEO of The Home Depot Inc. — Craig Menear, who eventually got the nod; Chief Financial Officer Carol Tomé; and Marvin Ellison, then Home Depot’s executive vice president of U.S. Stores.
Knowing he wasn’t going to get the top job, Ellison left Home Depot in October 2014 to become CEO of J.C. Penney Co. Inc. (NYSE: JCP). As fate would have it, it was announced May 22 that Ellison will become CEO of Home Depot’s arch rival, Lowe’s Companies Inc. (NYSE: LOW)
The very next day, Menear sat down for an interview with Atlanta Business Chronicle. If he’s worried about Ellison as a competitor, he didn’t show it.
“Like any alumnus of Home Depot, we wish him well,” the soft-spoken Menear said of Ellison. “Lowe’s, over the years, they have been a great competitor. The way I look at competition, I look at it like sports. If you want your team to get better, you want to play against the best. You want good competitors because they make you better. It’s a good thing for us.”
Asked whether Ellison might have an advantage because he is familiar with Home Depot’s playbook, Menear again wasn’t concerned.
“He’s been gone for four years, and there has been lots of change over those four years,” Menear said. “I have tons of respect for him. I haven’t had a chance to talk to him yet.”
On the other end of the spectrum is Tomé, who didn’t jump ship when Menear was chosen to be CEO and has worked by his side over the last four years.
“Absolutely I wanted Carol to stay [with Home Depot]. No question about it,” Menear said. “Carol and I have had a great relationship for many years. I have the utmost respect for Carol. She’s done an awesome job for the company. We have a really good team.”
For Menear, the Home Depot team achieves growth by focusing on the customer. That’s why he is working to create the One Home Depot — creating a seamless experience between its online offerings and its physical stores.
The company hit a major milestone at the end of 2017 — reaching $100.9 billion in sales, a trajectory that Menear intends to nurture.
“We’ve had a pretty good run,” said Menear, who said the retail environment is changing rapidly with the blending of the digital and physical worlds. “We need to stay ahead of the customer and create a One Home Depot experience.”
The company will be investing $11.1 billion over the next three years in its operations, with about half being invested on the physical stores, improving the shopping experience with lighting, refreshing bathrooms, enhancing the front of the stores, improving the technology for registers and having lockers where online customers can easily pick up merchandise.
Like his predecessor Frank Blake, Menear has embraced the company’s founders — Bernie Marcus, Arthur Blank and Ken Langone — as well as the company’s core values where the customer is on the top and the executive team on the bottom.
Menear said he stays in regular contact with the founders — making a point to have lunch every few months with Marcus, connecting with Blank on community initiatives, and talking on the phone regularly with Langone.
“What’s neat is having had the continued relationship with them over the years,” Menear said. “We are very, very fortunate to have all of our founders still around. Not everybody has those opportunities.”
For example, when the Home Depot board met last summer, Blank hosted the board dinner at the Mercedes-Benz Stadium before it had opened to the public.
Between the founders and Blake, there was a six-year stint (December 2000 to January 2007) when Robert Nardelli was CEO and the relationship with Blank and Marcus was estranged as was the commitment to the company’s culture.
Without mentioning Nardelli by name, Menear reaffirmed his respect for the founders.
“A lot of people have worked really hard to get to where we are as an organization,” he said. “I really believe that our culture is the biggest gift we have received from our founders. You can replicate lots of things but it’s really hard to replicate culture.”
Menear was drawn to the culture when he joined the company in 1997, working in the Southwest division.
“The first week I was with the company, I knew that the culture and the business was a place I wanted to be,” Menear said. “We talk about having orange blood at the company. It didn’t take long for me to realize that I was home.”
Menear grew up in Flint, Mich. His father, who worked at General Motors for 41 years, was handy around the house. Menear said he and his father often worked together on home improvement projects. That could explain why Menear was drawn to Home Depot.
“When I joined the company, we were opening a new store every 48 hours,” Menear said of the company’s phenomenal growth. “We changed that in 2007. You have to credit Frank Blake for making that change.”
Today, Home Depot opens three to five stores a year, with most of those located in Mexico because the U.S. market has become saturated with Home Depot (NYSE: HD) stores.
“It’s great when you have roughly 90 percent of the U.S. population living within 10 miles of a Home Depot,” Menear said. “Back to 2007, we made the very difficult call to change from new store footage to productivity and efficiency.”
Home Depot has been able to grow, not by adding stores, but investing in the overall “interconnected” retail experience. Last December, Home Depot executives met with the investment community to share their strategy.
“Our goal is that by 2020, we have $120 billion in sales,” Menear said of Home Depot, which ranks 23rd among the nation’s Fortune 500 companies.
So why has Home Depot’s stock price not performed better? It hit a high of $207.23 a share on Jan. 26 earlier this year, and now is trading around $187 a share.
“You have to take a long-term approach. Short-term — you can’t worry about that,” Menear said. “The market over the long haul will respond appropriately.”
Menear also sees great potential for growth. In addition to Lowe’s, Menear said Home Depot competes with Walmart, Costco, hardware stores and other retail categories.
“We play in a $600 billion market,” he said. “We have less than 20 percent share.”
So what does Menear like to do when he’s not working?
“Any day in the water is a good day,” he said. “We are a little land-locked here in Atlanta.”
That is one of the few criticisms Menear shares about his adopted home.
Even traffic is not as bad as he thought it would be. That’s even true around Home Depot’s headquarters in Cobb County, which is fairly close to the new Atlanta Braves stadium in SunTrust Park.
“I think traffic has actually gotten better in this area,” Menear said. “As we continue to grow, we have to keep investing in that infrastructure so it doesn’t become a negative. Obviously planning works.”
Menear believes the region needs to invest in mass transit, partly to handle new population growth.
When asked about the possibility of Amazon HQ2 coming to Atlanta, Menear said it is important not to offer the company incentives that would not be available to other companies. He touted Georgia’s ranking as No. 1 state for business, and he said it was important for the state to not discriminate against any group, such as passing religious liberty legislation. But he stopped short of making any political statements during this election year.
“We love Atlanta,” Menear said. “There are many parts of Atlanta that remind us of home with the trees. Home is Michigan. When you think of all that’s here — sports teams, entertainment, restaurants. It’s a great city. I like the overall feel and the vibe. The people are great here. We love Atlanta.”
The “we” is Menear and his wife Dawn, who have been married for 32 years.
“We went to school together in grade school,” Menear said. “She lived five houses down the street from me when we were 10 years old. We started going out in junior high. I couldn’t do this without her.”
They have two grown daughters, who Menear described as millennials who both live in Atlanta but are out of the house.
“We are incredibly fortunate,” said Menear, who has gotten involved with the Atlanta Committee for Progress as well as other civic initiatives, including the Westside and Salvation Army. “We feel incredibly lucky.”
At 60, Menear is hoping to finish out his career at Home Depot.
“I do think this would be the last job I’ll have,” Menear said. Then he quickly added, “as long as the board will have me.”