Building mega-supplier Home Depot says it will pump $4 billion this year into its operations in a desperate attempt to regain Wall Street stature and lure contractors into its stores.

The action comes after Atlanta-based Home Depot's stock plummeted more than 50% over the past year. Bob Nardelli, chairman, president and chief executive officer brought in to be the company's "officer of change" in 2000, says that he recognizes a "challenging economic environment," but plans to open stores in "under-served markets." He expects sales to grow 9 to 12% by the end of the year.

BOXED? Home Depot thinks tool and equipment rental will grow. (Photo courtesy of Home Depot)

Home Depot also is remodeling its tool-rental program to better serve professional contractors. It currently operates tool-rental centers inside nearly 600 of its 1,550 super-stores. By December, it says it will add 200 more rental outlets and expand the rental inventory with more "contractor-grade" items. The idea is to steal market share from national equipment rental chains, such as United Rentals, Greenwich, Conn., which operates 750 rental outlets in North America and owns 500,000 pieces of equipment.

Small contractors and manufacturers of light construction equipment are expected to benefit the most from Home Depot's move. "Ten years from now, we are going to see a lot of different distribution than today," says equipment analyst Frank Manfredi, Mundelein, Ill. "I think you'll see a lot of smaller stuff being pushed to the ‘big box' outlets like Home Depot."

In addition to freshening up its rental inventory, Home Depot also has established a referral program for contractors with Hertz Equipment Rental Corp., Park Ridge, N.J. When contractors request heavier equipment that Home Depot does not offer, Hertz pays Home Depot a special bonus for referring the clients. Rival chain Lowe's, Wilkesboro, N.C., has a similar deal with NationsRent, Ft. Lauderdale, Fla.