The Home Depot, Inc. (HD) Earnings Call Transcript & Summary

Good morning, and welcome to The Home Depot's 2021 Annual Shareholders Meeting. At this time, I would like to turn the conference over to Craig Menear, CEO and Chairman of the Board of Directors of The Home Depot. Please go ahead.

Thank you, and good morning. On behalf of our Board of Directors and our entire team of associates, I'd like to welcome you to the 2021 Annual Shareholders Meeting. Thank you for joining us today. As you know, we are again conducting our annual meeting virtually via the Internet due to the continuing concerns presented by the COVID-19 pandemic. We appreciate your participation in our virtual meeting as we work to protect your health and the health of our shareholders, associates and directors. On that note, I'd like to take a moment to thank our associates and supplier partners who have worked tirelessly to serve our customers, communities and each other during these unprecedented challenges of the past year. Thank you for living our values every day. Before we start the meeting, I'd like to make a few introductions. It is my pleasure to introduce our Board of Directors who have joined us telephonically for the meeting. They are: Gerard Arpey, Ari Bousbib, Jeff Boyd, Frank Brown, Al Carey, Helena Foulkes, Linda Gooden, Wayne Hewett, Manny Kadre, Stephanie Linnartz and our Lead Director, Greg Brenneman. I'd also like to recognize Jackie Daylor and Dan Aldridge of KPMG, the company's independent auditors, who have also joined us telephonically. Finally, I'd like to introduce 3 members of my senior leadership team who are on the line with me: Richard McPhail, Executive Vice President and Chief Financial Officer; Teresa Wynn Roseborough, Executive Vice President, General Counsel and Corporate Secretary; and Isabel Janci, our Vice President of Investor Relations and Treasurer. I now officially call the 2021 Home Depot Annual Meeting of Shareholders to order. Teresa is serving as the Secretary of the meeting and Broadridge Investor Communication Solutions is our Inspector of Elections. I'll now turn it over to Teresa to outline our process for today's meeting.

Thank you, Craig, and good morning, everyone. Today's meeting is scheduled for 1 hour. We will begin the meeting with the formal business portion. This consists of the election of directors named in the proxy statement, ratification of the appointment of the independent auditors, and presentation of the company and shareholder proposals. Each shareholder proponent will have 3 minutes to present their proposal. After we complete the formal portion of the meeting, Craig and Richard will provide a brief business overview. We will then open the floor for questions from our shareholders and we'll use the time remaining in the hour to answer questions submitted by shareholders either in advance of or during the meeting. Shareholders who have logged into the web portal for the meeting using their control number may submit questions over the portal. Please refer to the meeting rules of conduct posted on the web portal for additional guidance regarding the procedures to the meeting and the question-and-answer session. Please note that this meeting is being recorded. A playback of the meeting will be available on our Investor Relations web page within 24 hours after the meeting. No one attending via the webcast or telephone is permitted to use any device to record the meeting. As of March 22, 2021, which is the record date for the meeting, there were approximately 1.08 billion shares of the company's common stock entitled to vote. A majority of these shares is needed for a quorum. Over 84% of these shares are represented today, and therefore, we have a quorum. In just a moment, Craig will declare the polls open for voting. At that time, any shareholders who logged into the meeting using their control number and who have not already voted and would like to vote today can do so electronically by clicking the voting button on your screen. If you've already voted, you do not have to vote again. Craig, back to you.

Thank you, Teresa. I now declare the polls open for voting. There are 6 proposals to be considered at this meeting, all of which were described in detail in the proxy statement provided to shareholders. The first item of business is the election of directors, which is Item 1 on your ballot. The Board has nominated the individuals named in the proxy statement to serve for a 1-year term through the 2022 Annual Meeting. Your Board recommends that you vote for each of these directors. The next item is the ratification of the appointment of KPMG as the independent auditors of the company for fiscal 2021, which is Item 2 on your ballot. Your Board recommends that you vote for this proposal. The next item is the advisory vote on executive compensation known as Say-on-Pay, which is Item 3 on your ballot. Specifically, you are being asked to approve the compensation of the company's named executive officers as disclosed in the proxy statement for this meeting. Your Board recommends that you vote for this proposal. We will now turn to shareholder proposals. As a reminder, each proponent will have 3 minutes to present their proposal. And per our meeting rules of conduct, please limit your comments to the subject matter of the proposal being presented. The next item for consideration is the shareholder proposal regarding the amendment of our shareholder written consent right, which is Item 4 on your ballot. Operator, will you please open the line of Ms. Tenzing Tashishar so she can present the proposal? Ma'am, your line is now open, and you have 3 minutes to present your proposal. Please go ahead.

Hello. My name is Tenzing Tashishar. And I'm here to present proposal #4 on behalf of Mr. John Chevedden, who is not available today. Shareholders request that our Board of Directors take the necessary steps to enable 10% of shares to request a record date to initiate written consent. It currently takes a signature backing of 25% of shares to take such a small step as to request a date from management or written consent. The purpose of this proposal is to improve management accountability to shareholders. If you have voted against this proposal, please consider changing your vote before the polls close within minutes. This proposal topic just won majority support at BorgWarner on April 28. Our current version of written consent, like the BorgWarner written consent is useless and would not be used by any group of shareholders in their right mind. Why would a group owning 25% of our stock seek to do so little as to get a date on a calendar for management when a smaller group of shareholders with less effort can compel management to hold a special shareholder meeting on the topic of their choosing? Door #1 is a date on a calendar for management; and door #2 takes less effort and compels management to hold a special shareholder meeting. Thus, door #2, a special shareholder meeting is the clear choice and our current written consent is thus useless. Clearly, shareholders when made of the uselessness of our current right to act by written consent would not approve it, yet, management claims that shareholders did approve it. This shows how management abused shareholder engagement by withholding key information on written consent in order for management to claim it got shareholder approval. It is important to note out that shareholder engagement by management is not transparent, has no independent oversight and depends 100% on whatever honor system management has in reporting the outcome of such shareholder engagement. Management now suspiciously claims that it is more in favor of shareholder meetings at a time that shareholder meetings are losing their impact with the onslaught of online shareholder meetings. For instance, the Kohl's annual meeting a week ago was 9 minutes. Please vote yes before the polls close within minutes for proposal #4 to improve shareholder written consent. Thank you.

Thank you. Our response to this proposal is set forth in our proxy statement. Your Board recommends that you vote against this proposal. We now move on to the next proposal. The next item for consideration is the shareholder proposal regarding the preparation of a political contributions congruency analysis, which is Item 5 on your ballot. Operator, will you please open the line of representative Park Cannon so she can present the proposal? Representative Cannon, your line is now open and you have 3 minutes to present your proposal. Please go ahead.

Good morning, Mr. Chairman, Board of Directors and shareholders. I am Park Cannon, a health care provider and State Representative of Downtown Atlanta, with 2 of the state's busiest Home Depot locations within the district. I am presenting this proposal on behalf of Tara Health Foundation, which is dedicated to improving the health and well-being of women and girls. This proposal received 33% in support last year. It asks Home Depot to make a regular practice of examining its political contribution to ensure that they are congruent with the company's values and policies. Events in recent months have made it very clear why this makes sense for Home Depot. After the January 6 attack on the capital, corporate donations to the politicians in the United States Congress who challenged the election results came under nationwide scrutiny. That scrutiny has now broadened to include ties to state-level politicians who support voter-suppression legislation. Home Depot remained silent while Georgia passed Senate Bill 202 with the outrageous provision of making it illegal to give a bottle of water to a citizen standing in line to vote, even if they are your family or friend. In the 2020 election cycle, Home Depot gave 67 separate contributions totaling $215,000 to members of Congress who challenged the election results and therefore perpetuated the big lie. Many companies declared a halt or a suspension of their donations in response to the events of January 6, but not Home Depot. Today, your shareholders and stakeholders want to know why. We want to know if this misuse of corporate funds will continue to disenfranchise its customers. Home Depot has also supported 14 sponsors of Georgia's voter-suppression law in recent election cycles. Members of the Georgia Chamber of Commerce, Delta Airlines and Coca-Cola have expressed regret for not having spoken out more forcefully against the suppression bill, but Home Depot has remained silent. The proxy ballot states that Home Depot seeks to support candidates who "Champion pro-business, pro-retail physicians that stimulate economic growth." And that you weigh such things as service on key committees, endorsement and the location of a Home Depot facility in the candidate's district. The events of this year have shown that these factors are simply not enough. These criteria make it too easy for Home Depot to contribute to candidates and organization whose records and positions conflict with other values that this company strives to embody, such as cultivating diversity, equity and inclusion; modeling environmental responsibility; looking after the health and well-being of employees; supporting local communities in need; and respecting democratic institutions. These patterns do not need to continue. Mr. Menear, I urge you and the Board to think about the company's ability to impact public policy for the good of all, beyond our narrow business interest. Make the company a true champion of environmental and social sustainability or we will keep knocking at your door. Fellow shareholders, please vote yes for Item #5 if you have not already cast your vote. Join us in demanding integrity, consistency and accountability. Thank you for your attention.

Thank you. Our response to this proposal is in our proxy statement. Your Board recommends that you vote against this proposal. The last item for consideration is the shareholder proposal regarding the preparation of a report on prison labor in our supply chain, which is Item 6 on your ballot. Operator, will you please open the line for Ms. Tashishar, so that she can present the proposal? Ma'am, your line is now open and you have 3 minutes to present your proposal. Please go ahead.

Good morning. My name is Tenzing Tashishar from NorthStar Asset Management in Boston, representing clients that own 32,756 shares of the Home Depot common stock. I am presenting proposal #6 regarding a report on prison labor in the supply chain. As a customer-facing company, brand name and reputation are crucial to Home Depot's success and its ability to provide return to shareholders. We believe that shareholders need assurances that no instances of underpaid, forced or exploits of labor exists in the company's entire supply chain, including in the United States. Prison labor is allowed in the United States by the 13th amendment which abolished slavery except as a punishment for crime. As a result, people who are incarcerated routinely work, sometimes without pay, and in some states, the work is forced. A recent news article explained that in some prison systems, prison labor is being marketed to the private sector as a chance to repatriate the jobs with a "cost-effective labor pool" and native language skills. The article also noted that "prison labor is so cheap, federal and state governments can sell prison-made goods and services to private companies at rock-bottom prices, creating a labor market incentive for mass incarceration." While the company has indicated confidence in its processes and the recent revisions to its policies, as shareholders, we believe that further investigation is warranted due to how pervasive but opaque the correctional industry system has become. For example, through our research, our firm uncovered multiple products made through prison labor or including components made by incarcerated workers that could be sold in Home Depot stores. Incarcerated workers manufacture seating and wiring harnesses for certain lawnmower brands, wiring and cable harnesses for certain home appliances and electronics equipment, and hardwood flooring, all our brand names sold in Home Depot stores. We believe that a review of policies related to prison labor and forced labor in the entire Home Depot supply chain, including related to U.S. facilities, could preemptively identify these situations, allowing our company to remedy the problem proactively. We urge shareholders to vote for proposal #6. Thank you.

Thank you. Our response to this proposal is set forth in our proxy statement. Your Board recommends that you vote against this proposal. If you have not already voted, you can do so now following the instructions on your screen. I will pause for a moment so anyone voting can complete their ballots. The polls will be closed shortly. [Voting]

The polls are now closed. I'll now ask Teresa to review the preliminary voting results.

Thank you, Craig. The preliminary voting results for the company proposals are as follows: All of the director nominees named in the proxy statement have been elected by a majority of the votes cast. Approximately 96% of the votes cast have voted in favor of the ratification of the appointment of KPMG, and approximately 94% of the votes cast have voted in favor of the compensation of the company's named executive officers. For the shareholder proposals: Approximately 46% of the votes cast have voted in favor of the shareholder proposal regarding amendments to our shareholder written consent right. Approximately 38% of the votes cast have voted in favor of the shareholder proposal regarding political contributions congruency analysis. And approximately 13% of the votes cast have voted in favor of the shareholder proposal regarding a report on prison labor in our supply chain. Based on the preliminary vote count, all of the nominees for the Board of Directors have been elected, the appointment of KPMG as the company's independent auditors for fiscal 2021 has been ratified and a majority of votes cast approved our executive compensation. None of the shareholder proposals have been approved. Please note that votes cast at this meeting will be verified and tabulated by our Inspector of Elections and final results of the vote will be available in a Form 8-K which we'll file no later than May 27. Back to you, Craig.

Thank you. This concludes the formal business, and I declare the meeting adjourned. Now we'll move to an overview of our business, after which, we'll have a question-and-answer session. Teresa, would you introduce our business overview?

Thanks, Craig. Before Craig and Richard begin, I want to remind everyone that today's presentation includes forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, the factors identified in our filings with the Securities and Exchange Commission, which are available on the company's Investor Relations website. With that, Craig, let me turn the program back over to you.

I want to thank you all again for joining us today as I share some highlights and key learnings from a year I'm certain none of us will ever forget. It was a year of great hardship and adversity for so many, and our thoughts and prayers are with the millions of people who have been directly impacted by the pandemic. For The Home Depot, we were guided by our culture and values. And one of the easiest decisions that we made early on was to take care of and invest in our associates. At the beginning of fiscal 2020, I would have never thought it possible for the business to grow over $21 billion in a single year. For context, it took us 19 years as a company to achieve the first $20 billion in total sales, and we outgrew that in this past year alone. This was enabled by the investments we've made in the business as well as the team's exceptional execution and cross-functional alignment. Despite one of the most difficult operating environments we have ever faced, we also continue to make progress on our 3-year strategic initiatives, and those are now largely complete. Key components of our One Home Depot strategy, such as the opening of various supply chain facilities, technology investments and enhancements to the digital experience remain on track. We believe that since we started our strategic investment in 2018, we have captured meaningful share in our market. And while imperfect to measure, our estimate is that share gains is as high as $10 billion of incremental sales annually since 2017. We have more conviction than ever that we have been investing in the right areas of the business, and we'll continue to invest to extend our competitive advantages and enable market share growth in any environment. Lastly, we acquired HD Supply, a national leader of distribution, maintenance, repair and operations products in the multifamily and hospitality end markets. The MRO customer is an important Pro customer for us, and we believe this acquisition positions The Home Depot as a leader in this $55 billion fragmented market. It is times like these that I've never been more thankful for the culture that our founders instilled in our business over 40 years ago. Our values provided the lens through which we evaluated decisions and anchored to them in a time of crisis that was critical to our success. At the end of the day, it is our people and culture that make us unique. Our ability to manage unprecedented demand in the business while navigating a global pandemic and supporting our communities through multiple natural disasters and moments of crisis is a direct result of our associates' extraordinary efforts. As a result, our focus on in support of our associates was never in question. During fiscal 2020, we invested a total of approximately $2 billion on enhanced compensation and benefits for our associates, including expanded time off for all hourly associates to use at their discretion, the implementation of a temporary weekly bonus program and double pay for overtime work during a portion of the year. We also offer benefits such as free unlimited emotional and mental health counseling, free medical advice and extended dependent care benefits. Additionally, associates received record Success Sharing payments, our profit-sharing program for our hourly associates. And as we announced in the third quarter of fiscal 2020 earnings call, we have transitioned from temporary COVID benefits to permanent compensation enhancements for our frontline hourly associates. COVID-19 and its impacts have forced us to change the way we live, work and interact with one another, and there are some key learnings. First is the investments that we have made in the business over the past decade were the right ones. And the second is that those investments enabled agility and flexibility to execute on critical business decisions in a challenging and dynamic operating environment. Investments in technology and infrastructure helped us to extend our in-store BOPIS, or Buy Online, Pick-up In Store offering to curbside in a matter of days, and convert a newly opened market delivery center facility to a direct fulfillment center in order to reduce online delivery lead times and improve the customer experience. The continued mechanization of our upstream supply chain helped us to better flow product to our stores, while investments in tools for our store associates and MET teams helped to get that product to our shelves for our customers more quickly and efficiently. Our ability to remain nimble, coupled with our world-class associates and strong partnerships with suppliers enabled us to meet outsized demand week after week. As we move forward, we are focused on continuing to leverage the momentum of our strategic investments to further enhance the interconnected shopping experience. Our focus supports our primary objectives to deliver the best shopping experience in home improvement, extend our position as a low-cost provider with a relentless focus on productivity and to be the most efficient investor of capital in home improvement. We believe that our scale, combined with our low-cost position and continued focus on the customer will help us win in a highly competitive marketplace and deliver long-term value creation for our customers, supplier partners and shareholders. I am incredibly proud of everything we accomplished during this unprecedented year, and I want to close by thanking our associates for the way they have lifted our values by serving our customers, communities and each other during these challenging times. I want to also thank you for your support of The Home Depot and for joining us today. And with that, I'll turn it over to Richard.

Thank you, Craig. Good morning, and let me also thank you for your participation in the meeting today. I'm going to discuss consolidated results from fiscal 2020. Our results for the year clearly indicate that, for many customers, the home has never been more important. During fiscal 2020, sales were a record $132.1 billion, an increase of 19.9% compared to fiscal 2019. Our fiscal 2020 net earnings were $12.9 billion, and our earnings per diluted share increased 16.5% to $11.94 per share. As we mentioned earlier this week when we announced our results of the first quarter of fiscal 2021, we continue to see strong demand as our customers continue to work on a multitude of home improvement projects, and our Pros tell us they are busy with growing backlogs. This helped drive total sales in the quarter of $37.5 billion, a 32.7% increase from last year. Our first quarter of fiscal 2021 net earnings were $4.1 billion, and diluted earnings per share for the quarter were $3.86, an increase of 85.6% compared to the first quarter of 2020. Our company continues to generate strong cash flow, and we have a disciplined and balanced approach when allocating our cash. In fiscal 2020, we generated approximately $19 billion of cash from the business and issued approximately $8 billion of long-term debt. We used this cash to invest approximately $2.5 billion back into our business in the form of capital expenditures. We also invested approximately $8 billion in the acquisition of HD Supply to enhance our capabilities and drive accelerated sales growth in a highly fragmented MRO space. During the year, we paid approximately $6.5 billion of dividends to our shareholders. In March 2020, we suspended our share repurchases as part of several steps we took to further enhance our strong liquidity position. Prior to that suspension, we repurchased approximately $800 million of outstanding stock in fiscal 2020. We resumed share repurchases in the first quarter of fiscal 2021. Part of creating value for our shareholders is paying a dividend. We remain committed to growing our dividend as earnings grow. In February, we announced that our Board approved a 10% increase in our quarterly dividend to $1.65 per share which equates to an annual dividend of $6.60 per share. As we look back at 2020, despite the many challenges, we have come out a stronger and more agile company. We are pleased that our business performance and our commitment to return value to our shareholders continues to yield strong returns. As you can see on this chart, our total shareholder return over the last 5 years was approximately 172%. Thank you again for your time today. And with that, let me turn it back over to Teresa before we start the Q&A.

Thank you, Richard. At this time, we'll take questions from our shareholders. If you have a question, please type it in the space on your screen. [Operator Instructions] As a reminder, we will not answer questions that are personal in nature or otherwise unsuitable for the meeting. If you have a customer service issue you would like to discuss, we encourage you to reach out to our customer care department. The contact information for customer care is in our rules of conduct posted on the web portal for the meeting. We will now use the time remaining to answer as many of your questions as we can. I'll turn it over to Isabel, who will be reading the questions.

Thank you, Teresa. We've received a number of similar questions. In the interest of time and to answer as many questions as possible, we'll group the similar questions together. To any shareholders who submitted questions related to product or service issues, we will follow up with you after today's meeting if you provided contact information when you logged in. We will now begin the question-and-answer session.

The first question is, why do you contribute to politicians and how do you decide which ones to contribute to?

So our associate-led PAC supports candidates on both sides of the aisle with transparency. And we camp in pro-business, pro-retail positions that create jobs and economic growth. Details around this process can be found in our political activity and government relations policy under the Corporate Governance section of the Investor Relations website. And in addition to that, our annual report discloses our contributions to both political and trade groups.

Our next question is, why did you weigh in on the Georgia voting laws that were passed recently?

We decided that the most appropriate approach for us to take was to underscore our belief that all elections should be accessible, fair and secure. And we certainly support broad voter participation. And we'll continue to work to assure that our associates, both in Georgia and across the country, have the information and the resources they need to exercise their right to vote. So actions that we took, for example, would include, we promoted a voter participation program in the last election through our internal get out the vote initiative. We confirmed that 15,500 voter registrations amongst our associates took place. We match more than 1,800 of our associates with local opportunities to volunteer at polling places across the country. That included 600 technology associates in Atlanta to support the complex technology issues and cyber-related issues in the election. And we also donated 9,200 plexiglass dividers across Georgia to help meet polling station safety requirements.

The next question is, what is The Home Depot's philosophy around diversity, equity and inclusion? Is it helpful to prioritize DEI?

So we believe that today, just like when our company was founded, that diversity and inclusion in the workplace brings different perspectives and new ideas to the company and actually yields ingenuity and success. In addition, one of our core values is respect for all people. The company has a multitude of efforts underway to support diversity amongst our associates, leadership and suppliers. including our HR talent planning process that takes place twice a year, Board selection process, a supplier diversity program and employee resource groups. And again, many of these efforts are described in our proxy statement and in our responsibility report.

Why did several Board members also sit on the Boards of other companies? Shouldn't they be focused on Home Depot?

So our Nominating and Corporate Governance Committee carefully considers the director's commitment before renominating them to ensure that they can devote the necessary time to Home Depot. And I would tell you that our Board actually puts in a significant amount of time on Home Depot. Our corporate governance guidelines also addresses these concerns and imposes limits on the number of outside Board service that our directors can have. We actually updated our guidelines in 2019 to reduce the number of outside public boards that our directors can serve on. And candidly, I believe that our directors' service on other boards actually brings added insight and experience to The Home Depot, so I value that.

And why do you have so many Board members?

Again, our Nominating and Corporate Governance Committee rightly assesses the needs of our business, and as a result, the composition of our Board. And if you'll note over the past several years, we've added several new directors to ensure that the Board has the broad skill set necessary to support the company needs. And I really would encourage you to look at the proxy statement for more information about our directors, their skills and qualifications. And with the number of committees that we have, I think the board size is appropriate.

Why isn't your Board more diverse?

Our commitment to diversity is strong, and we believe that it's important that our Board reflects diversity of age, gender, race and ethnicity. Again, I'd encourage you to read our proxy statement for more detail about our Board's diversity. We have added a number of new disclosures and more transparency around the diversity and skill sets that our directors bring to the Board. Additionally, we routinely look at the composition of the Board, taking into account not only diversity but the relevant skills and experience on the Board, and we make adjustments as needed. We also -- we strive for a balance between knowledge and understanding of the business that comes with longer-term service on our Board, coupled with fresh ideas and perspectives that come with new members that are added to our Board. And I think, over the past several years, we've been able to adjust that mix and our average board service is relatively low, but we have a nice mix of both tenured experience for our Board members who understand our business deeply, and then we've brought new skill sets on to the Board as well.

Why do you have a combined CEO and Chairman of the Board?

So we believe that a combined Chairman and Chief Executive Officer, coupled with an independent Lead Director and an independent Board committee provides the best overall leadership structure for The Home Depot. Our Chair and CEO is chosen directly by the Board of Directors, and the Board reaffirms the election of the CEO and Chair annually. Our Lead Director is also elected annually by the independent Board of Directors. And this structure, together with our robust governance practices, accomplishes not only a strong independent oversight of management while ensuring clear strategic alignment throughout the company. And again, I'd reference the fact that I am super pleased with the amount of time and dedication that our Board puts into The Home Depot.

Why is CEO pay so high compared to the average associate wage?

So we pay competitive rates to associates at all levels of the company. When we look at our compensation of all levels, it's based on skills, responsibilities, performance and market rates required to attract the right people into The Home Depot. Our hourly position is a great starting point within The Home Depot, and we are really proud of the employment that we have provided and the career development that we've had for millions of frontline associates over the years. In fact, 90% of our store leadership started as hourly associates on the floor of our stores. We have incredible, incredible success stories within Home Depot. And if I could just name a few. So I start with Ann-Marie Campbell, our Executive Vice President in charge of store operations, who has had -- taken on expanded responsibility and now runs Canada and Mexico. Ann-Marie started as a part-time cashier when she immigrated from Jamaica, an incredible success story. Our Northern Division President, Crystal Hanlon, started also as a part-time cashier with our company. Haydn Chilcott, our Division President on the West Coast, started as an associate on the floor of our store, as did our newly appointed Southern Division President, Kelly Mayhall. The stories go on and on. And one of the things that we're super proud of at Home Depot is the opportunities for career development that we provide to our associates in this company. It's incredible.

Will the company join other retailers and set minimum wage at $15 an hour?

Look, we've always taken an approach that we pay competitive market wages and assess these regularly on a market-by-market basis. And taking care of our associates is one of our core values. We do that in a number of ways, and we look at the total package that Home Depot brings to our associates, from pay, benefits, our Success Sharing, again, the training and career development opportunities that we put forth. So we look at it as a holistic approach with our associates. We also believe that our culture is a huge differentiator for our associates. We feel great about our associate engagement and our retention. We do something called Voice of Associate surveys throughout the year, and I can tell you that the surveys that we just completed, the morale is great, the emotional connection to The Home Depot is very, very strong. And so this is something that we work on a regular basis, and we want to make sure that Home Depot is an absolutely terrific place for our associates to work.

What did you do for associates as the pandemic created a more challenging working environment?

Well, the first thing we did is we invested an incremental $2 billion in enhanced compensation and benefits for our frontline associates to really try to help alleviate some of the challenges brought on by the COVID-19 pandemic. We also paid out Success Sharing bonuses in a record level to our frontline hourly associates. In addition to all the things that I mentioned in my prepared remarks, we also took safety of our associates and our customers incredibly seriously. We limited the number of customers in our stores for months to be able to promote social distancing. We restricted customer-facing hours by almost 25% to ensure that we had enough time to clean the stores and to restock ourselves. We canceled what would have been normal course big spring selling events that generally drive high traffic into our stores because we knew, if we did that, we wouldn't be able to appropriately promote social distancing. And we continue to provide, even today, personal protection equipment for our associates if they desire it.

How much longer will you require masks to be worn in your stores?

Our top priority has been and remains the health and safety of our associates and our customers. As we have done all along, we continue to follow the CDC guidelines. And following their recent announcements, you may have seen that we've changed our policy that both customers and associates who are fully vaccinated are no longer required to wear masks or facial coverings in The Home Depot stores, except where that is mandated by state and local ordinances.

Our next is a comment and a question. As a shareholder of The Home Depot, we are pleased with the steps management has taken to develop a chemical management policy and prioritize chemicals of concern for phaseout. We commend the company's leadership in phasing out neonics several years ago, a key culprit in bee population declines. Pesticide risk is a growing concern for investors for a couple of important reasons. The prolific use of the herbicide glyphosate and the class of pesticides known as neonics are impacting human and environmental health. And consumer demand for safe and environmentally friendly products continues to accelerate. We are concerned that The Home Depot has not taken decisive action steps to phase out glyphosate and its product offerings. Your peer, Costco has. We are concerned about the potential risks our company faces due to this inaction. The EPA has determined that the active ingredient in Roundup glyphosate threatens more than 90% of all endangered species, including wild pollinators. Can you comment on if and when glyphosate will be prioritized for phaseout under your chemical management strategy? Thank you.

Look, we understand that there are some concerns about certain Roundup products. Home Depot continues to take its guidance from the EPA, which routinely reviews the science concerning the products here in question. We do offer several alternatives to Roundup, including organic products. And I would highly encourage folks to go to the garden section of our stores or go to homedepot.com to see a variety of products that we offer and really support allowing the customers to make their own choices.

Will Home Depot stop selling and/or treating plants with neonicotinoids?

We actually met our target to phase out the use of nictoids in our non-citrus plants in 2019. Certain states require citrus trees that are shipped across state lines to be treated. All of these products, we make sure that they are labeled as such in our stores, and they do represent a very small portion of our live goods sales, yet those type of products are still demanded by our customers. You can find more details on this and all of our other environmental topics in our latest responsibility report.

Lowe's outcomped you in 2020. What is Home Depot's strategy to outperform going forward?

So first, I'd say we don't comment on our competitors. But we are very pleased with our performance in 2020. When we look at our strategy, our strategy is to make sure that through the investments we've made, we're trying to grow faster than the market on a consistent basis in any type of environment, period. And so when we think about measuring share, share is actually measured in dollars, not in comp. We grew sales dollars by almost $22 billion in 2020 and gained market share, more growth than anyone else in our industry.

Why can't I use my military discount online? And why do you only provide a discount for active members of the military?

Look, currently, today, we don't have a discount online. We honor and support our veterans in a number of ways, through discounts in our stores, but more importantly, through The Home Depot Foundation. And we have committed $500 million towards veteran causes by 2025. And in fact, since 2011, when we really began focusing on the needs of our veterans, we have improved more than 50,000 veteran homes and facilities. And like I said, we're committed to $0.5 billion by 2025 to make sure that we're doing our part to take care of our veterans.

Is The Home Depot considering a stock split?

This is not something we're considering at this time.

Why are staffing levels so low in stores?

I can only assume that, that question is being asked because there was an issue. So let me first apologize if you experienced poor staffing levels in our stores. When you think about last year, for example, we started off the year very strong in 2020 as there was an early break in spring, then the pandemic hit. And candidly, we weren't sure how that was going to play out or whether or not we were even going to be able to stay open. And we went from a very strong position to kind of a double-digit negative growth. And then in a matter of weeks, as things began to -- people got more understanding of the pandemic, sales took off in a huge way. And as you saw us report last year, we had 3 consecutive quarters of virtually 25% comps, actually one of the most consistent levels of performance. We immediately started to hire up to take care of that kind of demand, which we haven't seen before. And then this year, I can tell you, as Richard called out, 32-plus percent comps in the first quarter, that was not something we were anticipating. But this year, we continue to hire, and we've even hired more people than we hired during the ramp-up of last year. So again, I apologize for any poor experience that any of our customers may have had in our stores as a result of lack of labor. But believe me, this is a huge focus for The Home Depot. We are hiring like crazy. And we'll continue to try to make sure that we provide the best customer experience possible.

As building material costs continue to increase and people come out of lockdown and spend more time outside, are we concerned that the business will contract?

So we didn't provide guidance in 2021 because there is still a very high degree of uncertainty as to how things will play out in 2021 as the economy begins to open up and people get back towards kind of, I guess, normal activity, if you will. One of the things that clearly has happened is we have seen significant increases in the lumber commodity, building material prices, right? That has largely driven in lumber by the constraints of capacity in mills. It's not a material issue. We can get -- there's plenty of logs, but the mills are really hitting capacity. And that has been a result of significant demand, not only on the remodel side, but really on the homebuilding side that we don't participate in. There is a post-World War II shortage of housing in this country. There was about 2 months of supply against the historical average of 6. And so we're doing everything we possibly can to continue to supply our stores with the lumber and building material products that we need. We have continued, as we called out on our earnings call this week, continued to see strong demand in the business. We can't predict where that goes in the future, but what I'll tell you is that the learnings from 2020 is that it is really important for us to remain flexible and agile and to be able to adapt and adjust to whatever gets thrown our way, and we will absolutely do that as we go forward.

Could you elaborate more on your goal to build One Supply Chain mentioned in your 10-K? What types of investments are you pursuing? And what does the end state look like?

Sure. We called out in December of 2017 that our goal was to be able to serve our customers no matter how they wanted to engage with us. And that engagement was in an interconnected manner, and it included accelerated delivery. And so we said at that point, over a 5-year period of time, we would invest roughly $1.2 billion in our supply chain to be able to meet the customer where the customer wanted to be met from a delivery standpoint. And we wanted to be in a position to be able to deliver any type of product that The Home Depot sells to 90% of the population in same-day, next-day capability. And so if you think about the products that Home Depot sells, it's a wide variety of products. Everything from small items that can go parcel shipped or can be delivered by a car from a store to full pallets of building materials that go on a flatbed direct to a job site or a customer's home. And that's the goals and objectives that we have out there. We have opened multiple types of facilities. And so you think about direct fulfillment centers, these are big facilities that largely ship parcel goods from them direct to customers' homes. We have opened flatbed distribution centers to get those pallets of building material type products to customers' homes and job sites. The goal there is to actually take the pressure off delivery from our stores to free up our store associates to better serve our customers in-store and to be able to have more capacity for delivery of those big and bulky items going forward. And then we have market delivery centers, which those -- think about having the most commonly delivered items in a particular market, as well as some big and bulky positioned close-in so that we can achieve that same-day, next-day capability. And then we're opening what we call MDOs, Market Delivery Operations facilities. And these are really last mile delivery facilities, where the market delivery centers as well as our suppliers bring product into those facilities. We then put them on last mile delivery trucks and take them directly to a customer. And all of these facilities working together really will allow us to achieve the objective that we're trying to set out of really 90% of the U.S. population being able to get our product same-day, next-day capable in any type of product we sell.

Do you anticipate expanding further internationally?

Never say never, but this is not a focus of The Home Depot. We are -- we clearly have a terrific business in Mexico. We have a fantastic business in Canada. There is so much opportunity in North America that, that is not a near-term focus for The Home Depot.

And our final question is what is Home Depot doing for communities? And how do we decide what organizations to support?

So let me go back to one of the big commitments that we're making is $0.5 billion for veteran causes by 2025. And we are an employer of over 35,000 veterans. We know there's a great need there. And so that's an area that we're putting a lot of effort and energy behind. In addition to that, we know that there is a skilled trades shortage in the country. And these are great jobs that can provide terrific opportunity for folks to earn a wonderful living. And we've committed $50 million to train the next generation of skilled trades folks. We're doing that by working with not only the U.S. Military as our soldiers exit the military and transition back into the public -- or private life, but we're also doing that with at-risk use. And so we want to make sure that youth understand that there's an opportunity to really step into the skilled trades and earn a great living. We also offer aid and support to our communities, particularly that have been impacted by natural disasters. And last year alone, we supported communities in need with $4 million worth of donations. The pandemic was certainly something that we haven't experienced before. And we made a decision to prioritize really shipments to -- of essential supplies to both hospitals and first responders. We've attributed more than $50 million of COVID-related community support. We redirected all of our N95 masks to be donated to hospital and health care workers and first responders around the country. I would encourage folks to -- if you want to see more about our community efforts, please look at our responsibility report.

Unfortunately, that is all the time we have today. If we were unable to answer your question, we encourage you to reach out to our Investor Relations department. Thank you for your attendance and participation.

This concludes the 2021 Annual Meeting of Shareholders of The Home Depot. Thank you for joining.