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Getting smarter in tough times

BY Ken Clark

Not all advice is created equal.

There is generic advice. (“Do the right thing.”)

There is deflected advice. (“Ask your mother.”)

There is conflicting advice. (“Take risks, but be careful.”)

And then, there’s practical, constructive advice.

Now more than ever, that last kind of advice can be worth its weight in gold.

And that’s the reason we put together a special section: “Get Smart: Business tools of the Trade,” which begins on page 49. The editors of Home Channel News talked to retailers, pro dealers and home center operators (and assorted others) about strategies, tactics and keys to success. The results are in, and our “Get Smart” section features real-world ideas from people engaged in guiding their companies through what CEOs call “the current market headwinds.”

In other words, we’ve dedicated a dozen pages to practical, constructive advice—a collection of business tools for the trade, from the trade.

At the Pinnacle Technology Conference in Boston last month, Johan van Tilburg, the president and CEO of Tindell’s Building Materials in Knoxville, Tenn., sounded the bell for strategic thinking when he advised his colleagues in the industry to look at everything they are doing. “Ask yourself, ‘does it really add value,’ or are you doing it just for the sake of doing it. If it doesn’t add value, quit doing it.”

He and other panelists went on to point to efficiency-building tactics, from health care to head count; from technology to target marketing.

While there are dozens of real life business ideas in the pages of this issue, there will be thousands of real life business ideas on display at the National Hardware Show in Las Vegas May 6 to 8.

One of the maxims in our editorial office holds that new products are the lifeblood of the home improvement industry. The Las Vegas show will have them in spades. Another of our maxims: companies that engage in the industry tend to succeed in it. That means, what happens in Vegas—from a business-building standpoint—will not stay in Vegas.

The economy will certainly be a key topic of discussion on the show floor at the show (Our cover story begins on page 17). But as companies sit down and figure out their next steps, one long-term macroeconomic fact must not be forgotten and can’t be stressed too often: for every downside of a cyclical business, there’s an upside.

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Home Depot to close 15 stores

BY HBSDEALER Staff

Home Depot will close 15 underperforming stores, the company has announced, and remove 50 future openings from the new store pipeline. The closings will include layoffs of about 1,300 employees.

The closings, at locations in the Midwest and Northeast, will generate approximately $547 million in pre-tax charges in the company’s first quarter. The company will release first-quarter results on May 20.

The stores to be closed are as follows:

• Store no. 2015 in East Fort Wayne, Ind.

• Store no. 2032 in Marion, Ind.

• Store no. 2310 in Frankfort, Ky.

• Store no. 379 Opelousas, La.

• Store no. 2819 Cottage Grove, Minn.

• Store no. 6901 East Brunswick, N.J.

• Store no. 6904 Saddle Brook, N.J.

• Store no. 6171 Rome, N.Y.

• Store no. 3702 Bismarck, N.D.

• Store no. 3874 Findlay, Ohio

• Store no. 3865 Lima, Ohio

• Store no. 4552 Brattleboro, Vt.

• Store no. 4932 Beaver Dam, Wis.

• Store no. 4933 Fond du Lac, Wis.

• Store no. 4913 Milwaukee, Wis.

Home Depot said in a statement it still intends to build 55 new stores this fiscal year, including 36 new stores in the United States.

As for other stores in the works, the company said it has “determined that it will no longer pursue the opening of approximately 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years. Accordingly, the company will record a charge of approximately $400 million related to capitalized development costs and ongoing obligations associated with those future store locations.”

“This is a continuation of our disciplined approach to capital allocation that we outlined last year,” said Frank Blake, Home Depot chairman and CEO, in a statement. “We will invest in our core retail business, in this case our existing stores, which drive our most profitable sales. Our capital efficiency model will also provide improved returns for our shareholders through dividends and share repurchase.”

Home Depot added that investments in existing retail stores will continue to include “maintenance, merchandising resets and other initiatives to improve all elements of the customer’s shopping experience.”

The company reiterated that its total capital spending for the current fiscal year is projected to be approximately $2.3 billion, down from $3.6 billion last year.

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Sherwin-Williams earnings fall in the first quarter

BY HBSDEALER Staff

Sherwin-Williams saw earnings fall in the first quarter of 2008, but the worldwide paint and coatings giant is still seeing strength in international sales.

Earnings fell 30.3 percent in the first quarter to $77.9 million from $111.8 million in the same period last year. Net sales grew just over 1 percent to $1.78 billion from $1.76 billion in the same period last year.

The stronger net sales were in large part due to strong Global Group sales, as was the case last quarter. Favorable currency rates and eight acquisitions since last year’s first quarter helped aid international sales, according to the paint company.

In the company’s retail Paint Stores Group, net sales were $1.031 billion in the quarter, 1.9 percent lower than in last year’s first quarter. Sales were weak due to “soft architectural paint sales and weak sales in non-paint categories partially offset by improved industrial maintenance product sales.”

Same-store sales decreased 6.5 percent compared with last year, and earnings decreased 31.9 percent. Earnings were weaker because of increased product and freight costs, the company noted.

The company’s Consumer Group, which includes paint products like Dutch Boy, saw sales decrease 4.8 percent in the quarter to $286.9 million. The sales decline was due primarily “to soft DIY demand at most of the segment’s retail customers.” Earnings in the Consumer Group were down 23.7 percent due to higher raw material costs, as well as a lower volume of movement at the company’s distribution centers.

The Global Group’s net sales increased 14.8 percent to $461.9 million due to market share gains, selling price increases, favorable currency translation and acquisitions. Earnings for the Global Group increased 21.7 percent to $7.7 million.

“Paint demand in the domestic new residential, residential repaint, DIY and commercial markets was weaker during the first quarter than we had anticipated at the start of the year,” said Christopher Connor, chairman and CEO of Sherwin-Williams. “We continue to be pleased with the strong sales improvements of the foreign business units in our Global Group and the continued growth they have been achieving in the architectural, industrial maintenance, OEM and automotive finishes product lines.”

Connor also noted that the Paint Stores Group opened 17 new stores in the first quarter and closed 23 “redundant stores.”

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