Business OverviewFrank Blake

Chairman & CEO

2008Investor & Analyst Conference

2

Private Residential Investment

Private Residential Investment as a % of GDP

60 yr average: 4.8%

Q108: 3.8%

Investment Declined $270+ Billion in Past 2 YearsInvestment Declined $270+ Billion in Past 2 YearsSource: Bureau of Economic Analysis (BEA)

2%

3%

4%

5%

6%

7%

8%

1950

1954

1958

1962

1966

1970

1974

1978

1982

1986

1990

1994

1998

2002

2006

3

Subprime & Alt-A

Source: Inside Mortgage Finance, The Lindsey Group

Subprime & Alt-A as Percent of Total Non-Home Equity Loan Mortgage Originations

Worst Part of the Mortgage Market is Behind UsWorst Part of the Mortgage Market is Behind Us

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2001 2002 2003 2004 2005 2006 Q1 07 Q2 07 Q3 07 Q4 07

Alt-A

Subprime

Q1 08

4

Mortgage Equity Withdrawals

Source: Federal Reserve, Moody’s

Active Mortgage Equity Extraction (Quarterly)

$90B Decline in Quarterly Equity Extraction in Past 2 Years$90B Decline in Quarterly Equity Extraction in Past 2 Years

Includes home cash out refinancing and home equity withdrawal and does not include capital gains on sales

$144B

$54B

$ Billion

$0

$50

$100

$150

Q10

2

Q30

2

Q10

3

Q30

3

Q10

4

Q30

4

Q10

5

Q30

5

Q10

6

Q30

6

Q10

7

Q30

7

5

Vacancies

Source: Census

Vacant Housing Units as a Share of Total US Housing Stock

Will Take Time to Work Through ExcessesWill Take Time to Work Through Excesses

10%

11%

12%

13%

14%

15%

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Q1

08

6

Long-term Fundamentals

2002 2008F

U.S. Owner households 73.4 77.1

U.S. Households 108.0 113.1

2012F

80.0

119.2

Source: Moody’s, and Harvard Joint Center for Housing Studies

Strong, Long-term Fundamentals Strong, Long-term Fundamentals

+5.1% +3.8%

+4.8% +5.4%

Percentage of Occupied Housing >35 Years Old

Millions

67.5%

70.0%

72.5%

75.0%

77.5%

80.0%

'82 '86 '90 '94 '98 '02 '06

7

Creating Shareholder Value

MaximizeReturn on

Capital

LongerTerm

ShortTerm

Exercise Disciplined

Capital Allocation

Build Sustained

Competitive Advantages

Increase Return on Existing Assets

FocusOn the Core

Business

8

Focus on the Core

Sell HD Supply

Close Landscape Supply

Close Floor Stores

Refocus Home Services [In Progress]

9

Exercise Disciplined Capital Allocation

Rationalize new store pipeline

Close under-performing stores

Recapitalization Plan [In Progress]

10

Increase Return on Existing Assets: Focused Investments

$180M Aprons on the Floor InitiativeReduced Voluntary Hourly Attrition by 14% Enhanced TrainingAdded ~3,000 Master Trade Specialists

Significant increase in maintenance spendImplemented Store Standards

Enhancing supply chain: Operating 3 RDCsTarget: 8 RDCs by year-endImproving in-stock

Implementing Merchandising Transformation Employing a Portfolio ApproachStrengthening local execution

Using analytics to better understand customersBid room volume increased 200+ percent

11

Customer Service

Every Day Value Proposition

Assortment

Real Estate

Brand

Customer Insight

Supply Chain

International Development

Build Sustained Competitive Advantages

“Passionate associates providing solutions, product authority, and knowledge to simplify home improvement, maintenance and repair”

12

2008 Outlook

2008 will be another difficult year

- Sales guidance down 4%-5%

- Earnings per share guidance down 19%-24%

Will continue to invest in our key priorities

Will continue to allocate capital in the most efficient manner

13

Sales Growth

Earnings Growth

EPS Growth

~3-5%

>Sales

DoubleDigit

Match or Exceed Market GrowthFocus on Our StoresSlowing New Store Growth

Leverage through Supply Chain and Operational Efficiencies

Exceed Earnings Growth through Disciplined Capital Allocation

Future Outlook (Normalized Environment)