HIRI conference speakers say housing recovery will have to wait
Washington, D.C. The Home Improvement Research Institute (HIRI) held its spring conference in Washington, D.C., April 3, and most panel experts agreed that the housing market will continue its decline through the rest of the year before showing some modest signs of recovery in 2009.
“The housing market has not hit bottom yet,” said James Gillula, managing director of U.S. Government Consulting, Global Insight, whose presentation examined the state of the housing market and its implications for home improvement sales. “Clearly we’re looking at historic lows in total housing starts. The housing decline will be an even larger drag on the economy in 2008 than in 2007.”
Deborah Weinswig, managing director of retailing/broadlines for Citi Investment Research, said 2008 will remain challenging, as home inventory remains high, housing prices continue to be pressured, credit availability remains uncertain and overall concerns about the economy continue to inhibit spending in the home improvement sector.
“I don’t know if we will ever get back to the kind of spending we saw in home improvement products during the housing bubble,” said Weinswig, who follows Home Depot, Lowe’s and other home improvement retailers. “Instead of a consumer going out and buying a new washer or dryer, they’re going to try to fix the one they have. Instead of buying a whole new kitchen, they’ll resurface the cabinets.”
Kermit Baker, director of the remodeling futures program at the Joint Center for Housing Studies at Harvard University, spoke about the fragmentation of the remodeling industry — with the top 50 players representing just 5.2 percent of the total market. He said remodelers can do better in these difficult economic times by becoming specialized in a certain area of home improvement. “It’s very difficult for remodeling contractors to go toe-to-toe with suppliers,” he said. “You look like a bigger player if you’re servicing a niche.”
Attendee Karen Wilson, corporate marketing officer for Hyde Tools, said over the next several months she will take the information from the conference and apply it to product development, marketing, strategic planning and in sales presentations to buyers. “HIRI has a lot of aggregated and useful data for anyone in the home improvement industry,” she said. “You never know when a driving trend will become important in your segment.”
Home Depot settles lawsuit with shareholders
According to Home Depot’s annual report filed late last week, the company has settled a lawsuit filed by shareholders over compensation issues stemming from the resignation of former CEO Robert Nardelli in January 2007.
Home Depot will settle the suits for $14.5 million in attorneys fees and reimbursements of expenses, according to the document. The retailer also agreed to “maintain or adopt certain corporate governance practices,” ostensibly to avoid such issues in the future. The settlement agreement was reached March 28.
In January 2007, the company announced it would give Nardelli a $210 million severance package, angering some shareholders. Shareholders involved in the suit alleged, “breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment in connection with the company’s return-to-vendor, stock option, and compensation practices.”
The agreement is pending the approval of the Superior Court of Fulton County, Ga.
In related news, Home Depot also discussed an ongoing lawsuit by current and former hourly employees who say they were forced to work off the clock, did not receive work breaks or “otherwise … were not paid for work performed.” The class action spans from the middle of 2001 to the middle of 2007. The company said it “is vigorously defending itself against these actions.”
Allied Building Products gains FSC certification
Allied Building Products has been granted Forest Stewardship Council (FSC) certification for 27 of its locations through the Rainforest Alliance’s SmartWood program, according to a company announcement. The East Rutherford, N.J.-based building materials distributor, which operates more than 180 branches nationwide, will sell FSC-certified products in the following markets: Anchorage, Ala.; Phoenix Ariz.; Anaheim, Berkeley and Norco, Calif.; Denver; New Haven, Conn.; Vero Beach, Fla.; Honolulu; Arlington Heights, Ill.; Fraser, Grand Rapids and Ypsilanti, Mich.; Annapolis, Md.; Brooklyn Center, Minn.; Bismarck and Fargo, N.D.; East Rutherford and Elizabeth, N.J.; Astoria and Hicksville, N.Y.; Toledo, Ohio; Levittown, Pa.; Cranston, R.I.; Provo, Utah; Richmond, Va.; and Edmunds, Wash.
Among the FSC-certified products offered will be lumber, panels (plywood and OSB), moldings, and doors and windows in select markets.
Asubsidiary of Oldcastle, the North American arm of CRH, Allied Building Products operates in 29 states, selling to the residential and commercial markets. It specializes in roofing, siding, waterproofing, windows and interior/exterior building materials.