Two-step distribution is riding a housing recovery for both LBM and hardware.
Sales gains and growth were the major themes of the HCN Top 300 Retailer and Top 200 Pro Dealer Scoreboards released earlier this year.
So it’s only logical that the HCN Top 100 Distributor Scoreboard shares in that growth, fueled by rising prices on certain products and a long awaited — though staggering and somewhat unreliable — housing market recovery.
Rising tides lift all boats. And research from the Top 100 Distributor survey shows sales gains up and down the board.
Among companies of the Top 100 that released their sales to the public, or shared them with HCN, sales rose a cumulative 9.4%.
A handful of distributors delivered 20% revenue increases — Allied Midwest Merchants, OrePac Building Products, Cedar Creek and Boise Cascade.
Topping the distribution revenue list, again, was Oak Brook, Ill.-based Ace Hardware, with fiscal year 2012 revenues of $3.709 billion, an increase of 3.6% from the previous year.
Of 35 companies sharing sales figures, 31 reported sales gains of more than 1%. And only one company reported a decline. (The full list of Top 100 Distributors ranked by sales is available online at homechannelnews.com.)
In St. Louis, national LBM distributor Huttig Building Products saw sales increase 8.7% in 2012. A strong year by any stretch, but CEO Jon Vrabely says people often ask why sales don’t mirror the 28% increase in housing starts that were recorded in 2012. The answer: All starts are not created economically equal.
Builders, many of whom have cut extensively since starts surpassed 2 million in 2005, are engaged in competition to control spending.
“Houses are smaller and product decisions are going lower-cost,” said Vrabely. “That said, if we hit 900,000 this year, that’s a heck of a lot better than 780,000 last year. It’s going to be a nice improvement.”
Particularly strong is the Pacific Northwest. In the sand states of Arizona, California and Florida, the situation is improving steadily but inconsistently. The situation in general, he said, “is choppy.”
On the operational side, two-step distributors face a real challenge in the form of labor. “What we do is not rocket science,” Vrabely said. “But hiring labor that is truly interested in finding a home in distribution and learning the business — even at the commercial driver level — that’s a challenge.”
Some of the distributors pointed to adjustments to their product mix. OrePac added Therma-Tru Doors. Building Material Distributors of Galt, Calif., acquired Master Fasteners International in 2012. Weyerhaeuser Distribution reported the adoption of composite decking and interior moldings.
And at Wolf, in addition to CEO Tom Wolf announcing a bid for the governor of Pennsylvania, the company campaigned for its new Wolf-branded cabinets, trim and decking.
Across the board, fasteners and lumber were the most distributed product category.
The sales growth seen among the nation’s distributors occurred with a relatively constant number of DCs and marginally higher head counts, according to the Top 100 survey, completed by about a third of the Top 100 field.
The number of employees reported by survey responders increased only 2.7%, yet the revenues increased 9.1%.
* indicates HCN estimate
(FCTG) indicates division of Forest City Trading Group