Once signs of a sustained recovery become apparent, the analysts believe HD will benefit from the various longer-term initiatives that it is pursuing, including the upgradation of its distribution center network and its investment in customer service.  These analysts believe that the Company has an opportunity to augment gross margins by 30-40 basis points over the next few years and ultimately free up more than $1 billion of working capital by improving the effectiveness of its supply chain and regional distribution centers.

The analysts believe that the crisis in the housing industry, continued increase in mortgage defaults, high unemployment and ongoing pressure on pro customers will continue to impact consumer spending on big-ticket discretionary items and construction.  However, this will be offset by consumer spending on small ticket items, such as basic repair & maintenance categories

Over the past few quarters, HD maintained profitability despite substantial sales declines, largely due to stringent cost controls and remerchandising efforts.