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Home prices continue to plunge

BY HBSDEALER Staff

Numbers released this week by Standard & Poor’s show a 12.7 percent annual decline in housing prices during February. This is the sharpest drop in the two-decade history of the S&P/Case-Shiller index, which measures the value of existing single-family homes in 20 major metro markets across the United States.

“There is no sign of a bottom in the numbers,” said David Blitzer, an S&P analyst. “Prices of single-family homes continue to drop across the nation.”

For the month of February, metro areas in the West — specifically San Francisco, Las Vegas and Los Angeles — experienced the biggest drops in home prices.

In year-over-year figures, Las Vegas and Miami were listed as the weakest markets, with price drops of 22.8 percent and 21.7 percent, respectively. Among the 20 cities tracked by the index, only Charlotte showed a positive return, with a 1.5 percent rise in home prices over the past 12 months.

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EPA orders certain Scotts’ pesticides off shelves

BY HBSDEALER Staff

The Environmental Protection Agency has ordered Home Depot, Lowe’s, Wal-Mart, Ace Hardware and other retailers to stop selling pesticides the group says were mislabeled from Scotts Miracle-Gro.

The retailers were told April 28 to remove Scotts’ weed preventer and related pesticides from their shelves because the products “carried invalid registration numbers,” the EPA said. Federal law states that all pesticides must be submitted to the federal government so risks to people or the environment can be evaluated.

Because of the recall problems, Scotts Miracle-Gro postponed the release of its second-quarter financial report by nearly a week. The Marysville, Ohio-based lawn and garden company said it will release results for the second quarter ended March 31 on May 5 instead of the previously scheduled April 29.

“Over the past week, most of our leadership team was consumed with issues related to the product recalls we announced,” said Scotts Miracle-Gro CEO Jim Hagedorn. “Those events have prevented us from adequately preparing for our earnings release and conference call.”

Scotts said the problem was caused by a former employee who did not follow product registration rules. The company has recalled its Miracle-Gro Shake ’n Feed All Purpose Plant Food plus Weed Preventer, as well as Bonus S Max and Turf Builder Plus 2 Max.

Scotts said that the products represent less than 1 percent of the company’s more than $2.9 billion in annual worldwide sales.

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Research lauds retailer role in disaster recovery

BY HBSDEALER Staff

Any time there’s a natural disaster in this country, the local heroes tend to be ordinary citizens, rescue personnel and … retailers?

According to a study just released by researchers at George Mason University, big-box retailers consistently outperform the federal government when it comes to disaster relief. Companies like Home Depot, Lowe’s and Wal-Mart are first on the scene with truckloads of emergency supplies. In the case of Hurricane Katrina, the retailers had their stores reopened before the Federal Emergency Management Agency (FEMA) arrived on the scene. Other disasters — the wildfires in San Diego and the bridge collapse in Minneapolis — show a similar pattern.

Steven Horwitz, an economics professor from St. Lawrence University, has taken a close look at this phenomenon. “Making Hurricane Response More Effective: Lessons from the Private Sector” argues that big boxes are more adept at handling natural disasters because they’re familiar with local markets, they encourage individual decision making and, at the end of the day, they’re out to make a profit.

“Engaging in disaster relief is in these companies’ long-term self interest,” Horwitz acknowledged in an interview with Home Channel News. “It helps the communities they depend on for their business and creates goodwill among their customers.” But profit isn’t the only motive Horwitz found, nor does it fully explain the leadership and agility that made the retailers so effective.

“Private sector firms take risks every day,” Horwitz said. “Government agencies don’t have that culture of competition that rewards risk taking.” Even rank-and-file employees often find themselves with some degree of autonomy during rescue operations. As Hurricane Katrina was bearing down on the Gulf Coast, Wal-Mart CEO Lee Scott reportedly issued the following edict: “A lot of you are going to have to make decisions above your level. Make the best decision that you can with the information that’s available to you at the time, and above all else, do the right thing.”

At least two Wal-Mart employees took him at his word. One Kenner, La., sales associate used a forklift to knock open a warehouse door to get water for a local retirement home. In Waveland, Miss., a store manager ran a bulldozer through her store to collect undamaged goods, which she piled in the parking lot for local residents. Then she broke into the pharmacy because the local hospital was running out of medication.

During the San Diego wildfires last year, two Home Depot associates turned the parking lot of a store under construction into a makeshift animal shelter for evacuated families. They coordinated food, water and veterinary care for 35 horses, 10 dogs and assorted guinea pigs, hamsters and snakes.

According to Horwitz’s research, which included interviews with local officials and citizens as well as media reports, the first responders after Hurricane Katrina were Wal-Mart, Home Depot and the Coast Guard. The retailers were able to get water, food and other necessities to the hardest hit areas. Home Depot used buses to transport 1,000 employees into the area to help with relief efforts. Wal-Mart provided free merchandise, including prescription drugs, to evacuees at the Houston Astrodome and the Brown Convention Center.

Several days before Hurricane Katrina made its landfall on Aug. 25, 2005, Home Depot had activated its “war room” at its Atlanta headquarters, negotiated donations and logistics with vendors and staged trucks at the perimeter of the hurricane “strike zone.”

Initially, Home Depot sent more than 800 truckloads of bottled water, tarps, chainsaws, bug spray and other “early response” supplies into Louisiana, Mississippi and Alabama. Then the retailer switched from disaster relief to recovery, with roofing tiles, charcoal grills, propane and other products. By the first week in September, seven weeks after Katrina’s landfall, Home Depot had sent nearly 1,000 trucks into the area.

Although FEMA has been roundly criticized for its slow response to Hurricane Katrina, Horwitz’s study avoids finger pointing in favor of a more dispassionate explanation. Government agencies like to play it safe — i.e. avoid risks — by not overreacting. “Suppose FEMA had moved stocks of food into place very early, perhaps even before the storm, only to see them spoil or go unused if the storm missed the area?” Horwitz asked. “The visible waste would be harder to explain than the less visible consequences of waiting to react.”

Horwitz argues that the private sector is better equipped to handle disaster response because it has both the motivation and the means. Retailers like Wal-Mart, Home Depot and Lowe’s already have a nationwide distribution system set up; moving goods is what they do every day.

Retailers have also worked with government agencies — including FEMA — on disaster preparedness education campaigns for consumers. But until they’re given an official status as emergency responders, private sector trucks full of emergency supplies may still get turned back when they try to enter disaster zones.

“[Authorities] have to know that a company like Wal-Mart is authorized to act,” Horwitz said. “These folks have to start talking to each other.”

To read the full article on the big-box role in disaster relief, check out the May 5 issue of Home Channel News. For subscription information, click here.

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