Home Depot Inc. (HD) U.S. Retail President Craig Menear will succeed Frank Blake as chief executive officer in about two months, giving the chain a new leader as it navigates a slowing housing rebound.
The move will be effective Nov. 1, the Atlanta-based company said yesterday in a statement. Blake, 65, has been CEO since 2007 and will remain chairman. Menear, who’s been with the chain since 1997, will join him on the board immediately.
Home Depot, the largest home-improvement chain, has boosted profit for five straight years as the recovering U.S. housing market encouraged homeowners to spend more on renovations. The chain, which earlier this week posted second-quarter earnings that topped analysts’ estimates, now will look to continue that streak as higher interest rates and sluggish wage gains threaten to cool that growth.
“It won’t be a difficult transition,” said Jaime Katz, an analyst for Morningstar Inc. in Chicago. “Because of the knowledge he’s accumulated with his time at the firm, he’s well positioned to take over the role. They’re going with someone who has grown up with the business.”
The shares fell 0.1 percent to $91.03 at the close in New York. Home Depot has gained 11 percent this year.
Menear has 34 years of experience in retail, including stints at Ikea Group. Before being named president in February, Menear, 57, served as executive vice president of merchandising. The promotion was part of a succession plan for Blake, a person with knowledge of the situation said at that time.
Blake took over as CEO from Robert Nardelli, who had been criticized as receiving excessive pay during a period when the company’s stock had fallen and it lost market share to Lowe’s Cos. (LOW) Blake steered the company through the U.S. housing crash and financial crisis by slowing the growth of new stores and focusing instead on boosting sales from existing locations.
After the struggles under Nardelli, Home Depot could have been surpassed by Lowe’s as the largest chain in the category, Katz said. Blake returned the focus to the customer by dedicating more workers to the sales floor and increasing store employees’ compensation, she said.
“He brought that customer-focused culture back to the business,” Katz said. “That had largely gone away.”
Blake will oversee the company’s planning for 2015, which is usually completed by the end of October, the company said. Then he’ll hand the reins over to Menear. As chairman, he will maintain an office at the company’s headquarters. There isn’t a timeline for how long he’ll stay on the board.
Home Depot’s shares more than doubled from Dec. 29, 2006, the last trading day before Blake became CEO, through the close of regular trading yesterday.
While many CEOs are ousted after struggling to turn around companies, Blake isn’t alone in leaving on a high note. Ford Motor Co. CEO Alan Mulally presided over an almost 8 percent stock gain in the three months before announcing his retirement on May 1. When Dan Akerson left the helm of General Motors Co. to care for his ailing wife in 2013, the shares had climbed 42 percent that year.
Home Depot’s stock reached an all-time high earlier this week when the retailer said second-quarter net income rose 14 percent to $2.05 billion, helped by purchases of big-ticket items such as appliances.
Home Depot either topped or met analysts’ estimates on earnings per share every quarter for six straight years. That streak ended this year after cold weather and the late arrival of spring slowed sales. The chain rebounded by starting another run last quarter.
To contact the reporter on this story: Matt Townsend in New York at email@example.com