Merit Group files Chapter 11
The Merit Group, the nation’s largest distributor of paint sundry products, has filed a voluntary petition for Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of South Carolina. The Spartanburg, S.C.-based firm, parent company of Lancaster and Five Star, has obtained a commitment for a $55 million debtor in possession of financing from its senior lender, Regions Bank, so it can continue operations without interruption during the reorganization process.
The Merit Group’s management team and advisers will focus on a potential sale of the business or a strategic investment in the next 90 days, according to a company announcement.
“For more than 58 years, Merit has served the needs of the paint sundries industry through its commitment to premier service and product diversity. This next step will allow the organization time to evaluate all alternatives to position Merit for future success,” said Mitch Jolley, president and CEO. Jolley recently returned as the chief executive, after having served as Merit’s CEO from 1990 to 2009. He replaced Jay Baker, who held the position since October 2009.
The company has retained Alvarez & Marsal as its financial advisers and Morgan Joseph TriArtisan as its investment banker.
Founded as Lancaster Supply in 1953, Merit Group now operates a nationwide distribution network that serves national, regional and independent paint chains, home improvement centers, hardware stores, lumberyards and drywall yards in the United States, the Caribbean and Central and South America. Its distribution centers are located in South Carolina, Florida, Texas, California, Utah, Kentucky, New Jersey and New York.
Residential construction falls in April
Data released by the Commerce Department this morning showed housing starts at a seasonally adjusted annual rate of 523,000 — down 10.6% compared with the upwardly revised March figure of 574,000.
Single-family starts were at a rate of 394,000, down 5.1% from the revised March figure of 415,000.
Compared with the same month last year, total housing starts fell 23.9%, while single-family starts plunged 30%.
Building permits also showed declines in the Tuesday morning report on residential construction. Permits were at a rate of 551,000 in April, down 4.0% from March and down 12.8% from April 2010.
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Home Depot boosts earnings 12% in first quarter
Atlanta-based Home Depot reported first-quarter earnings of $812 million, up 12.0% from earnings of $725 million in the first quarter last year.
Sales declined 0.2% to $16.8 billion, while comparable-store sales were negative 0.6%. Comp-store sales for stores in the United States were negative 0.7%.
"We continued to improve our business and delivered double-digit earnings growth," said Frank Blake, chairman and CEO. "Our sales declined slightly due to a slow spring selling season, but for the year we expect sales to grow in line with the guidance we previously provided."
Home Depot said it expects fiscal 2011 sales will be up approximately 2.5% from fiscal 2010. Based on its year-to-date performance, the company raised its fiscal 2011 diluted earnings-per-share guidance and now expects diluted earnings per share to be up approximately 11.4% to $2.24 for the year.
Home Depot’s first-quarter report followed by one day Lowe’s first-quarter report, in which Lowe’s said comps were down 3.3% and earnings were down 5.7%.
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