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Document And Entity Information
6 Months Ended
Jul. 31, 2011
Aug. 25, 2011
Document And Entity Information
Document Type 10-Q
Amendment Flag false
Document Period End Date Jul 31, 2011
Document Fiscal Year Focus 2011
Document Fiscal Period Focus Q2
Entity Registrant Name HOME DEPOT INC
Entity Central Index Key 0000354950
Current Fiscal Year End Date --01-29
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 1,564,291,782
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Consolidated Statements Of Earnings (USD  $)
In Millions, except Per Share data
3 Months Ended 6 Months Ended
Jul. 31, 2011
Aug. 01, 2010
Jul. 31, 2011
Aug. 01, 2010
Consolidated Statements Of Earnings
NET SALES  $ 20,232  $ 19,410  $ 37,055  $ 36,273
Cost of Sales 13,356 12,828 24,351 23,897
GROSS PROFIT 6,876 6,582 12,704 12,376
Operating Expenses:
Selling, General and Administrative 4,186 4,127 8,195 8,205
Depreciation and Amortization 396 406 793 817
Total Operating Expenses 4,582 4,533 8,988 9,022
OPERATING INCOME 2,294 2,049 3,716 3,354
Interest and Other (Income) Expense:
Interest and Investment Income (3) (3) (5) (7)
Interest Expense 149 151 290 293
Other 51
Interest and Other, net 146 148 285 337
EARNINGS BEFORE PROVISION FOR INCOME TAXES 2,148 1,901 3,431 3,017
Provision for Income Taxes 785 709 1,256 1,100
NET EARNINGS  $ 1,363  $ 1,192  $ 2,175  $ 1,917
Weighted Average Common Shares 1,568 1,653 1,585 1,666
BASIC EARNINGS PER SHARE  $ 0.87  $ 0.72  $ 1.37  $ 1.15
Diluted Weighted Average Common Shares 1,577 1,663 1,595 1,676
DILUTED EARNINGS PER SHARE  $ 0.86  $ 0.72  $ 1.36  $ 1.14
Dividends Declared Per Share  $ 0.25  $ 0.23625  $ 0.5  $ 0.4725
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Consolidated Balance Sheets (USD  $)
In Millions
Jul. 31, 2011
Jan. 30, 2011
Current Assets:
Cash and Cash Equivalents  $ 2,551  $ 545
Receivables, net 1,332 1,085
Merchandise Inventories 10,756 10,625
Other Current Assets 1,218 1,224
Total Current Assets 15,857 13,479
Property and Equipment, at cost 38,897 38,385
Less Accumulated Depreciation and Amortization 14,099 13,325
Net Property and Equipment 24,798 25,060
Goodwill 1,177 1,187
Other Assets 445 399
Total Assets 42,277 40,125
Current Liabilities:
Accounts Payable 5,890 4,717
Accrued Salaries and Related Expenses 1,262 1,290
Sales Taxes Payable 509 368
Deferred Revenue 1,178 1,177
Income Taxes Payable 306 13
Current Installments of Long-Term Debt 44 1,042
Other Accrued Expenses 1,758 1,515
Total Current Liabilities 10,947 10,122
Long-Term Debt, excluding current installments 10,731 8,707
Other Long-Term Liabilities 2,136 2,135
Deferred Income Taxes 230 272
Total Liabilities 24,044 21,236
STOCKHOLDERS' EQUITY
Common Stock, par value  $0.05; authorized: 10 billion shares; issued: 1.728 billion shares at July 31, 2011 and 1.722 billion shares at January 30, 2011; outstanding: 1.569 billion shares at July 31, 2011 and 1.623 billion shares at January 30, 2011 86 86
Paid-In Capital 6,665 6,556
Retained Earnings 16,372 14,995
Accumulated Other Comprehensive Income 603 445
Treasury Stock, at cost, 159 million shares at July 31, 2011 and 99 million shares at January 30, 2011 (5,493) (3,193)
Total Stockholders' Equity 18,233 18,889
Total Liabilities and Stockholders' Equity  $ 42,277  $ 40,125
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Consolidated Balance Sheets (Parenthetical) (USD  $)
Jul. 31, 2011
Jan. 30, 2011
Consolidated Balance Sheets
Common Stock, par value  $ 0.05  $ 0.05
Common Stock, authorized 10,000,000,000 10,000,000,000
Common Stock, issued 1,728,000,000 1,722,000,000
Common Stock, outstanding 1,569,000,000 1,623,000,000
Treasury Stock, shares 159,000,000 99,000,000
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Consolidated Statements Of Cash Flows (USD  $)
In Millions
6 Months Ended
Jul. 31, 2011
Aug. 01, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings  $ 2,175  $ 1,917
Reconciliation of Net Earnings to Net Cash Provided by Operating Activities:
Depreciation and Amortization 849 866
Stock-Based Compensation Expense 108 112
Changes in Assets and Liabilities:
Receivables, net (238) (246)
Merchandise Inventories (65) (526)
Other Current Assets (40) (47)
Accounts Payable and Accrued Expenses 1,419 1,193
Deferred Revenue (4) (13)
Income Taxes Payable 308 161
Deferred Income Taxes 4 (78)
Other (29) 24
Net Cash Provided by Operating Activities 4,487 3,363
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital Expenditures (469) (407)
Proceeds from Sales of Property and Equipment 27 44
Net Cash Used in Investing Activities (442) (363)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Long-Term Borrowings, net of discount 1,994
Repayments of Long-Term Debt (1,014) (17)
Repurchases of Common Stock (2,251) (1,209)
Proceeds from Sales of Common Stock 83 52
Cash Dividends Paid to Stockholders (798) (793)
Other Financing Activities (54) (63)
Net Cash Used in Financing Activities (2,040) (2,030)
Change in Cash and Cash Equivalents 2,005 970
Effect of Exchange Rate Changes on Cash and Cash Equivalents 1 4
Cash and Cash Equivalents at Beginning of Period 545 1,421
Cash and Cash Equivalents at End of Period  $ 2,551  $ 2,395
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Consolidated Statements Of Comprehensive Income (USD  $)
In Millions
3 Months Ended 6 Months Ended
Jul. 31, 2011
Aug. 01, 2010
Jul. 31, 2011
Aug. 01, 2010
Consolidated Statements Of Comprehensive Income
Net Earnings  $ 1,363  $ 1,192  $ 2,175  $ 1,917
Other Comprehensive Income:
Foreign Currency Translation Adjustments (12) (39) 174 112
Cash Flow Hedges 2 [1] (75) [1] (1) [1] (82) [1]
Other (15)
Total Other Comprehensive Income (10) (114) 158 30
Comprehensive Income  $ 1,353  $ 1,078  $ 2,333  $ 1,947
[1] This component of comprehensive income is reported net of income taxes.
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Summary Of Significant Accounting Policies
6 Months Ended
Jul. 31, 2011
Summary Of Significant Accounting Policies
Summary Of Significant Accounting Policies

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended January 30, 2011, as filed with the Securities and Exchange Commission.

 

Business

The Home Depot, Inc. and subsidiaries (the "Company") operate The Home Depot stores, which are full-service, warehouse-style stores averaging approximately 105,000 square feet in size. The stores stock approximately 30,000 to 40,000 different kinds of building materials, home improvement supplies and lawn and garden products that are sold to do-it-yourself customers, do-it-for-me customers and professional customers.

 

 

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Long-Term Debt
6 Months Ended
Jul. 31, 2011
Long-Term Debt
Long-Term Debt

2. LONG-TERM DEBT

In March 2011, the Company issued  $1.0 billion of 4.40% Senior Notes due April 1, 2021 at a discount of  $2 million and  $1.0 billion of 5.95% Senior Notes due April 1, 2041 at a discount of  $4 million (together, the "March 2011 issuance"). Interest on these Senior Notes is due semi-annually on April 1 and October 1 of each year, beginning October 1, 2011. The net proceeds of the March 2011 issuance were used to repurchase  $1.0 billion of the Company's common stock through an Accelerated Share Repurchase ("ASR") agreement and the balance of the net proceeds were used to repay the Company's 5.20% Senior Notes that matured March 1, 2011 in the aggregate principal amount of  $1.0 billion. The  $6 million discount associated with the March 2011 issuance is being amortized over the term of the Senior Notes using the effective interest rate method. Issuance costs were approximately  $15 million and are being amortized over the term of the Senior Notes.

The Senior Notes may be redeemed by the Company at any time, in whole or in part, at the redemption price plus accrued interest up to the redemption date. The redemption price is equal to the greater of (1) 100% of the principal amount of the Senior Notes to be redeemed, or (2) the sum of the present values of the remaining scheduled payments of principal and interest to maturity. Additionally, if a Change in Control Triggering Event occurs, as defined by the terms of the March 2011 issuance, holders of the March 2011 issuance have the right to require the Company to redeem those notes at 101% of the aggregate principal amount of the notes plus accrued interest up to the redemption date. The Company is generally not limited under the indenture governing the Senior Notes in its ability to incur additional indebtedness or required to maintain financial ratios or specified levels of net worth or liquidity. Further, while the indenture governing the Senior Notes contains various restrictive covenants, none is expected to impact the Company's liquidity or capital resources.

In May 2010, the Company entered into a forward starting interest rate swap agreement with a notional amount of  $500 million, which was accounted for as a cash flow hedge, to hedge interest rate fluctuations in anticipation of the March 2011 issuance. Upon the March 2011 issuance, the Company settled this forward starting interest rate swap agreement for an immaterial amount.

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Accelerated Share Repurchase
6 Months Ended
Jul. 31, 2011
Accelerated Share Repurchase
Accelerated Share Repurchase

3.  ACCELERATED SHARE REPURCHASE

In March 2011, the Company entered into an ASR agreement with a third-party financial institution to repurchase  $1.0 billion of the Company's common stock. Under the agreement, the Company paid  $1.0 billion to the financial institution, using a portion of the proceeds from the March 2011 issuance, and received an initial delivery of approximately 21 million shares in the first quarter of fiscal 2011. The transaction was completed in the second quarter of fiscal 2011, with the Company receiving an additional 6 million shares. The  $1.0 billion of shares repurchased are included in Treasury Stock in the accompanying Consolidated Balance Sheets as of July 31, 2011. The final number of shares delivered upon settlement of the agreement was determined with reference to the average price of the Company's common stock over the term of the ASR agreement.

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Debt Guarantee Extension
6 Months Ended
Jul. 31, 2011
Debt Guarantee Extension
Debt Guarantee Extension

4.  DEBT GUARANTEE EXTENSION

In connection with the sale of HD Supply, Inc. ("HD Supply") on August 30, 2007, the Company guaranteed a  $1.0 billion senior secured amortizing term loan of HD Supply. The Company is responsible for up to  $1.0 billion and any unpaid interest in the event of nonpayment by HD Supply. As reported in the quarterly report on Form 10-Q of HD Supply for the period ended May 1, 2011, the outstanding balance of this term loan as of May 1, 2011 was  $935 million. The guaranteed loan is collateralized by certain assets of HD Supply. The original expiration date of the guarantee was August 30, 2012. On March 19, 2010, the Company amended the guarantee to extend the expiration date to April 1, 2014. The fair value of the guarantee at August 30, 2007 was  $16 million and was recorded as a liability of the Company in Other Long-Term Liabilities. The extension of the guarantee increased the fair value of the guarantee to  $67 million, resulting in a  $51 million charge to Interest and Other, net, for the first quarter and first six months of fiscal 2010.

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Fair Value Measurements
6 Months Ended
Jul. 31, 2011
Fair Value Measurements
Fair Value Measurements

5.  FAIR VALUE MEASUREMENTS

The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:

 

     Level 1 – Observable inputs that reflect quoted prices in active markets
     Level 2 – Inputs other than quoted prices in active markets that are either directly or indirectly observable
     Level 3 – Unobservable inputs in which little or no market data exists, therefore requiring the Company to develop its own assumptions

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The assets and liabilities of the Company that are measured at fair value on a recurring basis as of July 31, 2011 and January 30, 2011 were as follows (amounts in millions):

 

000,000 000,000 000,000 000,000 000,000 000,000
     Fair Value at July 31, 2011 Using    Fair Value at January 30, 2011 Using
         Level 1            Level 2            Level 3            Level 1            Level 2            Level 3    

Derivative agreements - assets

    $–       $85     $–       $–       $47     $–  

Derivative agreements - liabilities

     –      (56)      –        –      (40)      –  
  

 

  

 

  

 

  

 

  

 

  

 

Total

    $–       $29     $–       $–       $7     $–  
  

 

  

 

  

 

  

 

  

 

  

 

The Company uses derivative financial instruments from time to time in the management of its interest rate exposure on long-term debt and its exposure on foreign currency fluctuations. The fair value of the Company's derivative financial instruments was measured using level 2 inputs.

 

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The assets and liabilities of the Company that were measured at fair value on a nonrecurring basis during the six months ended July 31, 2011 and August 1, 2010 were as follows (amounts in millions):

 

Lease obligation costs were related to certain store closings and the exit of certain businesses in fiscal 2009 and 2008. These charges were measured on a nonrecurring basis using fair value measurements with unobservable inputs (level 3).

The guarantee of the HD Supply loan was measured on a nonrecurring basis using fair value measurements with unobservable inputs (level 3), as further discussed in Note 4.

Long-lived assets were analyzed for impairment on a nonrecurring basis using fair value measurements with unobservable inputs (level 3). Impairment charges related to long-lived assets in the first six months of fiscal 2011 and 2010 were not material.

The Company completed an assessment on the recoverability of Goodwill for one of its reporting units in the first six months of fiscal 2011. The fair value of the Company's reporting unit was based on the potential selling price of the reporting unit. The impairment charge related to this Goodwill assessment was not material.

The aggregate fair value of the Company's Senior Notes, based on quoted market prices, was  $11.2 billion and  $9.8 billion at July 31, 2011 and January 30, 2011, respectively, compared to a carrying value of  $10.3 billion and  $9.3 billion at July 31, 2011 and January 30, 2011, respectively.

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Basic And Diluted Weighted Average Common Shares
6 Months Ended
Jul. 31, 2011
Basic And Diluted Weighted Average Common Shares
Basic And Diluted Weighted Average Common Shares

6.  BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES

The reconciliation of basic to diluted weighted average common shares for the three and six months ended July 31, 2011 and August 1, 2010 was as follows (amounts in millions):

 

     Three Months Ended      Six Months Ended  
     July 31,
2011
     August 1,
2010
     July 31,
2011
     August 1,
2010
 

Weighted average common shares

     1,568         1,653         1,585         1,666   

Effect of potentially dilutive securities:

           

Stock plans

     9         10         10         10   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares

     1,577         1,663         1,595         1,676   
  

 

 

    

 

 

    

 

 

    

 

 

 

Stock plans consist of shares granted under the Company's employee stock plans. Options to purchase 30 million and 42 million shares of common stock for the three months ended July 31, 2011 and August 1, 2010, respectively, and options to purchase 26 million and 40 million shares of common stock for the six months ended July 31, 2011 and August 1, 2010, respectively, were excluded from the computation of Diluted Earnings per Share because their effect would have been anti-dilutive.

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Summary Of Significant Accounting Policies (Policy)
6 Months Ended
Jul. 31, 2011
Summary Of Significant Accounting Policies
Basis Of Presentation

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by generally accepted accounting principles ("GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended January 30, 2011, as filed with the Securities and Exchange Commission.

Business

Business

The Home Depot, Inc. and subsidiaries (the "Company") operate The Home Depot stores, which are full-service, warehouse-style stores averaging approximately 105,000 square feet in size. The stores stock approximately 30,000 to 40,000 different kinds of building materials, home improvement supplies and lawn and garden products that are sold to do-it-yourself customers, do-it-for-me customers and professional customers.

Valuation Reserves
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Fair Value Measurements (Tables)
6 Months Ended
Jul. 31, 2011
Fair Value Measurements
Assets And Liabilities Measured At Fair Value On A Recurring Basis
000,000 000,000 000,000 000,000 000,000 000,000
     Fair Value at July 31, 2011 Using    Fair Value at January 30, 2011 Using
         Level 1            Level 2            Level 3            Level 1            Level 2            Level 3    

Derivative agreements - assets

    $–       $85     $–       $–       $47     $–  

Derivative agreements - liabilities

     –      (56)      –        –      (40)      –  
  

 

  

 

  

 

  

 

  

 

  

 

Total

    $–       $29     $–       $–       $7     $–  
  

 

  

 

  

 

  

 

  

 

  

 

Assets And Liabilities Measured At Fair Value On A Nonrecurring Basis
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Basic And Diluted Weighted Average Common Shares (Tables)
6 Months Ended
Jul. 31, 2011
Basic And Diluted Weighted Average Common Shares
Reconciliation Of Basic To Diluted Weighted Average Common Shares
     Three Months Ended      Six Months Ended  
     July 31,
2011
     August 1,
2010
     July 31,
2011
     August 1,
2010
 

Weighted average common shares

     1,568         1,653         1,585         1,666   

Effect of potentially dilutive securities:

           

Stock plans

     9         10         10         10   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted average common shares

     1,577         1,663         1,595         1,676   
  

 

 

    

 

 

    

 

 

    

 

 

 
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Summary Of Significant Accounting Policies (Details)
Jul. 31, 2011
Summary Of Significant Accounting Policies
Approximate average square footage of warehouse-style stores 105,000
Approximate lower limit of different types of inventory held at stores 30,000
Approximate upper limit of different types of inventory held at stores 40,000
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Long-Term Debt (Details) (USD  $)
1 Months Ended 6 Months Ended
Mar. 31, 2011
Jul. 31, 2011
Aug. 01, 2010
May 31, 2010
Debt instrument, unamortized discount  $ 6,000,000
Repurchase of common stock 1,000,000,000 2,251,000,000 1,209,000,000
Debt issuance costs 15,000,000
Percentage of principal amount of Senior Notes that redemption price consists of 100.00%
Percentage of principal amount of notes in addition to accrued interest 101.00%
Notional amount of interest rate swap agreement 500,000,000
4.40% Senior Notes [Member]
Senior notes 1,000,000,000
Interest rate of debt instrument 4.40%
Maturity date of debt Apr 1, 2021
Debt instrument, unamortized discount 2,000,000
5.95% Senior Notes [Member]
Senior notes 1,000,000,000
Interest rate of debt instrument 5.95%
Maturity date of debt Apr 1, 2041
Debt instrument, unamortized discount 4,000,000
5.20% Senior Notes [Member]
Aggregate principal amount repaid  $ 1,000,000,000
Interest rate of debt instrument 5.20%
Maturity date of debt Mar 1, 2011
March Two Thousand and Eleven Issuance [Member]
Frequency of periodic interest payment semi-annually on April 1 and October 1
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Accelerated Share Repurchase (Details) (USD  $)
Share data in Millions
1 Months Ended 6 Months Ended 1 Months Ended 3 Months Ended
Mar. 31, 2011
Jul. 31, 2011
Aug. 01, 2010
Mar. 31, 2011
Accelerated Share Repurchase Agreement [Member]
Jul. 31, 2011
Accelerated Share Repurchase Agreement [Member]
May 01, 2011
Accelerated Share Repurchase Agreement [Member]
Accelerated share repurchase agreement  $ 1,000,000,000
Cash paid for repurchase of common stock  $ 1,000,000,000  $ 2,251,000,000  $ 1,209,000,000  $ 1,000,000,000
Number of shares of common stock repurchased pursuant to accelerated share repurchase agreement 21
Additional shares received pursuant to accelerated share repurchase agreement 6
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Debt Guarantee Extension (Details) (USD  $)
In Millions
6 Months Ended 3 Months Ended 6 Months Ended
Jul. 31, 2011
May 01, 2011
Aug. 30, 2007
May 02, 2010
Interest and Other, net [Member]
Aug. 01, 2010
Interest and Other, net [Member]
Jul. 31, 2011
Scenario, Previously Reported [Member]
Debt guarantee  $ 935  $ 1,000
Expiration date of guarantee on loan April 1, 2014 August 30, 2012
Fair value of the guarantee 67 16
Charge to Interest and Other, net  $ 51  $ 51
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Fair Value Measurements (Narrative) (Details) (USD  $)
In Billions
Jul. 31, 2011
Jan. 30, 2011
Carrying value of senior notes  $ 10.3  $ 9.3
Fair Value, Inputs, Level 1 [Member]
Fair value of senior notes  $ 11.2  $ 9.8
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Fair Value Measurements (Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) (USD  $)
In Millions
Jul. 31, 2011
Jan. 30, 2011
Fair Value, Inputs, Level 1 [Member]
Derivative agreements - assets    
Derivative agreements - liabilities    
Total    
Fair Value, Inputs, Level 2 [Member]
Derivative agreements - assets 85 47
Derivative agreements - liabilities (56) (40)
Total 29 7
Fair Value, Inputs, Level 3 [Member]
Derivative agreements - assets    
Derivative agreements - liabilities    
Total    
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Fair Value Measurements (Assets And Liabilities Measured At Fair Value On A Nonrecurring Basis) (Details) (USD  $)
In Millions
Jul. 31, 2011
Aug. 30, 2007
Jul. 31, 2011
Fair Value, Inputs, Level 3 [Member]
Aug. 01, 2010
Fair Value, Inputs, Level 3 [Member]
Jul. 31, 2011
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Gains (Losses) [Member]
Aug. 01, 2010
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Gains (Losses) [Member]
Lease obligation costs, net  $ (139)  $ (177)
Lease obligation costs, net 7 (8)
Guarantee of HD Supply loan (51)
Guarantee of HD Supply loan (67) (16) (67)
Total  $ 7  $ (59)
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Basic And Diluted Weighted Average Common Shares (Narrative) (Details)
In Millions
3 Months Ended 6 Months Ended
Jul. 31, 2011
Aug. 01, 2010
Jul. 31, 2011
Aug. 01, 2010
Basic And Diluted Weighted Average Common Shares
Options to purchase common stock excluded from computation of Diluted Earnings per Share 30 42 26 40
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Basic and Diluted Weighted Average Common Shares (Reconciliation Of Basic To Diluted Weighted Average Common Shares) (Details)
In Millions
3 Months Ended 6 Months Ended
Jul. 31, 2011
Aug. 01, 2010
Jul. 31, 2011
Aug. 01, 2010
Basic And Diluted Weighted Average Common Shares
Weighted average common shares 1,568 1,653 1,585 1,666
Effect of potentially dilutive securities: Stock plans 9 10 10 10
Diluted weighted average common shares 1,577 1,663 1,595 1,676
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