Home Depot Announces New CEO, Frank Blake To Stay On As Chairman

Samantha SharfForbes Staff

Handyman haven Home Depot HD +0.44% announced Thursday that longtime CEO Frank Blake will step down on November 1. He will be replaced by Craig Menear, the company’s current U.S. retail president.

In his current role Menear oversees the company’s supply chain network, global sourcing and vendor management, as well as its marketing and digital business. Since joining Home Depot in 1997 Menear has served in various high level merchandising roles including, most recently, executive vice president of merchandising.

In a statement announcing the transition Blake noted, “Craig has taken on increasing leadership responsibility over the last several years and has excelled in all his role. As a long-time Home Depot veteran, Craig lives our values and embodies our culture. He’ll do an outstanding job leading our company in the years ahead.”

Blake, who has been chairman and CEO since 2007, will stay on as chairman of the board. Menear will immediately join the board of directors.

Shares of Home Depot ticked down slightly in after hours trading following the news, yet the small downward momentum comes after a trading day where the the stock came within a penny of its $91.81 52-week high. The transition also does not come as a big surprise to those who watch Home Depot closely. Blake, 65, was expected to retire soon and Menear led much of the company’s mot recent earnings call, which took place just two days ago.

Blake is going out on a high note. In the second quarter Home Depot handily beat Wall Street expectations and even raised its full-year earnings guidance. FORBES’ Maggie McGrath wrote Tuesday,

Home Depot reported $23.8 billion in second quarter revenue, a 5.7% increase over the year-ago quarter and a figure that cleared the $23.5 billion Wall Street consensus. Comparable store sales for the quarter increased 5.8% worldwide, and within the U.S. same store sales grew 6.4%. Customer transactions increased 4.2%, while average ticket size grew 1.8% to $58.43.

The company’s net income came in at $2.1 billion, or $1.52 in earnings per share, a figure that beats the analyst consensus by 8 cents per share and marks a 22.6% improvement over the earnings per share reported this time last year.”

This also turned out to be a favorable comparison to rival Lowe’s which reported its second quarter earnings Wednesday, a fact that must be sweet for Blake.

Under Blake’s predecessor, Robert Nardelli, Loew’s share price lapped Home Depot’s. At this time last year Paula Rosenblum, a FORBES contributor, wrote of  Home Depot under Nardelli, “A lot of opportunity was missed. Earnings were adequate, but they were riding on the back of cost-cutting, not sales improvements.” Rosenblum continued,

Today that’s certainly not the case. In fact, at least one analyst at the Smead Value Fund gave Home Depot a slightly stronger buy rating than its rival, although both stocks are expected to perform well as the housing market continues to improve.

This begs the question: What has changed under the leadership of Frank Blake? What is Home Depot doing right? The answers can be found not today, but in the doldrums of the Great Recession, which Mr. Blake’s team took as an opportunity to right a very shaky ship. Changes were steady, yet sweeping, and included marketing, technologies, stores, and human resource allocation.”

Currently, Home Depot shares are up 127% since the start of 2007, the year Blake took the reigns. Shares of Lowe’s are up just 69% over the same period.