Oregon home builder files for bankruptcy
One of Oregon’s larges home builders, Legend Homes, has filed for Chapter 11 bankruptcy.
Under the name Legend Homes/Matrix Development, the builder filed for bankruptcy protection at the Portland, Ore., United States District Court yesterday, following a drop-off in home sales and a poor return on land investments in the region.
The primary reason for the filing, according to a statement from the company, was to protect the company’s home building operations from margin calls on land holdings by lenders. Margin calls result when properties drop in value, pushing loan ratios beyond the terms of the original loan.
“Because of recent issues related to the national credit crisis, we understand the need of our financial partners to stay viable and also stay within federal mandates. Yet we had to make this necessary move to protect our interests,” said Legend Homes’ president Jim Chapman in a statement.
The company has yet to receive court approval of its bankruptcy plan, but the builder expects to emerge from bankruptcy “by year end.”
Heat wave in East spurs AC, fan sales
As record temperatures scorched much of the Mid-Atlantic region over the last several days, home centers and hardware stores scrambled to keep up with the demand for air conditioning units, fans and related products.
Beginning June 7, much of the Eastern Seaboard faced four straight days of temperatures in the mid- to high-90s, although the National Weather Service said the humidity made it feel more like 105 degrees. Consumers started making a mad dash to stock up on air conditioners and fans as early as June 5, catching some store owners by surprise.
“It was a little early in the season for air conditioners, so we weren’t prepared,” said Glenn Rankin, owner of Rankin’s True Value Hardware in Warrenton, Va. “We got a few in on Friday (June 6), and they went out pretty fast. We didn’t have enough. The first heat wave of the season is always the hardest.”
Home Depot spokeswoman Jean Niemi said there has been high demand for cooling units in New York, Massachusetts, Baltimore, Philadelphia and North Carolina, but that Home Depot stores have been receiving continuous shipments of units to restock their shelves. “It is always a good idea for consumers to call ahead to check availability,” she said.
AHome Depot store in South Attleboro, Mass., sold more than 600 air conditioning units over the weekend and another 300 on Monday to pretty much deplete its stock. “We’ve got another 100 units coming in today, so we are replenishing,” said Trish Heim, the store’s operations manager. “It’s been an absolute frenzy – like when you have a snowstorm and people come in and buy you out of shovels and ice melt.”
Ed Dionne, assistant manager of a Home Depot in Rutland, Vt., said the rush started there June 6, as news reports of the impending heat wave began to surface. “We sold a lot of air conditioners on Friday and Saturday, but Sunday, Monday, Tuesday and yesterday, people couldn’t bear it and were buying anything they could get their hands on,” Dionne said. He said the store was able to replenish with stock from the warehouse as well as stores in other areas that didn’t get hit as hard, adding, “The demand was more of what you would see in July rather than June.”
Lumber Liquidators points to 300 stores by 2012
Lumber Liquidators, the 125-store specialty retailer of hardware flooring, hopes to grow to 300 stores by 2012. Meanwhile, the Toano, Va.-based retailer is testing a new home-installation strategy that relies on a single national installation services provider.
“So far, the test has been very encouraging,” said Jeffrey Griffiths, Lumber Liquidators’ CEO, speaking at Piper Jaffray’s 28th Annual Consumer Conference held Tuesday in New York City. The move would break from the retailer’s practice of creating market-to-market relationships with local installers.
About half of the retailer’s customers do their own installation, he said.
Griffiths’ key message to investors during his presentation dealt with the company’s sales momentum. The company has recorded 25 consecutive quarters of comp-store sales growth and a sales growth from $100.9 million in 2003 to $405.3 million in 2007.
“We’ve been doing well,” he said, describing customer service and low-risk no-frills stores as competitive advantages.
Griffith pointed to opportunity for growth in the fragmented hardwood flooring market, where the national home centers combine to carry about 20 percent of the share, compared to about 7 percent for Lumber Liquidators.
The big boxes do a “great job” in stained oak, bamboo, laminates and other low-end products, Griffith said. “But we feel we can compete strongly against them on the high end product.” A sales staff focused exclusively on flooring provides a key advantage for the specialty retailer, he said, adding: “Buying flooring is not an easy thing to do.”
Lumber Liquidators, which went public in November 2007, has stores in 42 states.