KB Home sees big loss in first quarter
National home builder KB Home saw a wide loss in the first quarter, falling into the red by $268.2 million, compared with earnings of $27.5 million in the same period last year. Total revenues fell 42.9 percent to $794.2 million from $1.39 billion in the same period last year.
“The first quarter of 2008 continued to be challenging,” said Jeffrey Mezger, CEO and president of KB Home, in a conference call with investors. “Many potential buyers either cannot or will not make a purchase commitment today. Some are worried about losing their jobs, others believe prices have further to fall. Many are simply unable to qualify for financing, given the more restrictive lending environment.” Mezger also said competition for buyers is “fierce” in the current housing market.
Despite those bleak sentiments, Mezger went on to say the downward trend was anticipated and marks an acceleration that eventually will bring the market closer to recovery.
KB Home, like most large home builders in recent fiscal quarters, recorded most of its losses from land impairment charges, from selling off land for lower than its purchase price or losing money over land option contract fees. In all, the company took $224 million in impairment and land abandonment charges.
KB Home is headquartered in Los Angeles, with operating divisions in nine states.
Earnings rise at Texas Industries
Mel Brekhus, CEO for the building products company, said results improved for the company’s consumer products segments as well as its other commercial divisions. Favorable weather conditions and improved margins helped boost earnings, he said.
“In fact, operating profit for the aggregate segment during the first nine months of the current fiscal year has increased by 35 percent compared to the same period last year and operating profit for the consumer products segment has increased by 80 percent,” Brekhus said. Shipments of ready-mix concrete rose 16 percent in the quarter, the company said in a statement.
So why such positive results while many building materials providers are feeling the effects of a lagging housing market? One primary reason could be that Texas Industries operations are centered in Texas, and “the Texas economy continues to generate a solid overall level of construction activity,” the company said in a statement. Additionally, the company said while in California demand has declined, imports also have declined and prices have increased in both markets.
The company is currently expanding its manufacturing capacity in California, with a new cmeent plant slated to open in June 2008. An expansion project in Central Texas and a newly opened plant in North Texas also have contributed to company’s expansion efforts.
Sears names new key executives
As part of an ongoing restructuring effort, Sears Holdings has named two new key executives of divisions within its home improvement business.
John Froman, formerly CEO of Namco, a regional chain of large-sized family recreation specialty stores, will serve as head of Sears’ tools and lawn and garden divisions. Prior to his time at Namco, Froman served 19 years at Circuit City Stores, most recently as executive vp and chief operating officer.
“John’s wealth of retail experience and demonstrated success in retail operations, merchandising and strategic planning will help us operate the tools and lawn and garden businesses more efficiently and effectively,” said Bruce Johnson, interim CEO and president of Sears Holdings.
Sears also announced the promotion of Douglas Moore to the position of senior vp and president, appliances. Moore was hired as senior vp-hardlines merchandising at Sears Holdings in June 2007. He spent 17 years at Circuit City Stores, most recently as executive vp and chief merchandising officer. He also served in senior leadership positions within sales, operations and installation at Circuit City.
The new appointments are part of a bid, announced Jan. 24, to reorganize Sears Holdings into separate and more autonomous business units, following weak sales performances and lagging earnings.