21 ATTACHMENT 12 - Laserfiche WebLink

Ms. Emily Wagner October 2, 2007 Page 2 of 6 site to attract stronger sales from beyond the defined trade area. It should be noted that although we did not discount first year sales for maturity, it has been our experience that even with the presence of sister units, first year sales could be as much as 80% to 90% of mature sales while customers in the trade area learn to shop the new unit. Fourth year sales would be fully mature. Net new sales to The Home Depot would be just over $10 million dollars; however since this smaller format store is relatively new to The Home Depot I am un-clear on whether or not that is sufficient to proceed with the opening of a south Pleasanton unit. Moreover, the actual financials related to the property and this particular transaction is unknown and the financial hurdle required by The Home Depot could vary. As far as the Johnson Drive store and its operating future, it is our opinion that it would be highly unlikely that The Home Depot would close this unit. Despite some awkward ingress/egress associated with this location it is strategically positioned to serve southern San Ramon, all of Dublin, and northern Pleasanton. Moreover with the opening of the Dublin Lowe's, The Home Depot would not want to give up anymore of its market share in this portion of the Tri- Valley. A re-location of the Johnson Drive store to south Pleasanton, particularly to a smaller unit, is also very unlikely, as the Dublin Lowe's would be better positioned to capture southern San Ramon, Dublin, and north Pleasanton, the same areas served by the Johnson Drive store. Assumptions ^ An opening date in late 2008, so that 2009 is the first full year of operation. ^ The store will be 40,000 square feet including the garden center. ^ First year sales are mature sales. ^ Inflation is estimated at 3.0% throughout the forecast. ^ Households will increase as estimated in this,report. ^ Competition will remain unchanged throughout the forecast period. ^ The site will be developed with excellent site characteristics. Trade Area The trade area defined for the Proposed Store encompasses the entire City of Pleasanton, a portion of Livermore, and Sunol. The trade area is limited to the north by the Johnson Drive Home Depot and the Dublin Lowe's. To the east, increasing distance from the site and a shift in shopping orientation to Livermore truncate the trade area in this direction. Declining household densities prevent further trade area extension to the south and west. Attached is a map of the trade area and identified census tracts within the defined area (Exhibit A-1). Methodology We have used a combination of home improvement expenditure potential to estimate market share along with sales penetrations by household to estimate projected sales. The home improvement expenditure potential estimate is created by analyzing the California taxable sales for per capita dollar amounts spent on lumber and building materials and hardware stores and indexing that with consumer buying power data supplied by Claritas Data Services. In this particular case the total expenditure potential including consumers, designers, and contractors in the trade area defined for the proposed store is $154,548,400. Of this total the proportion attributable to areas within Pleasanton total $107,066,500 (refer to Exhibit A-2).