Revenues up 3.4% at BlueLinx Holdings
Despite intense price volatility during the past six months, Atlanta-based BlueLinx Holdings recorded a revenue gain in its quarter ended Oct. 2.
In an environment where prices for certain structural wood products dropped as much as 20% in three months, the distributor posted revenues of $464.7 million, up 3.4% compared with the same quarter last year. Still, the company incurred a net loss of $14.9 million, compared with a net loss of $13.5 million in last year’s quarter.
President and CEO George Judd said the volatile market made operating conditions difficult. “The price volatility seen in the last six months is some of the worst I have seen in my 25 years in this industry,” he said in a prepared statement. “This volatility in the wood markets had a negative impact on our margins during the quarter as our inventories returned to current market values. Despite this challenging environment, we increased sales by 3.4%, while controlling our operating costs and generated approximately $33 million in cash from operations during the third quarter.”
Gross profit for the third quarter totaled $49.9 million, down 9.7% from $55.3 million in the prior-year period. Gross margins decreased to 10.7% from the 12.3% generated in the year-earlier period. The decline in gross margin was largely driven by a sharp decline in underlying wood-based product prices during the quarter.
“Our overall performance for the third quarter was impacted by a lack of improvement in actual housing starts and continued deterioration of wood-based product prices,” Judd said. “Total housing starts for the quarter fell 0.8% from year-earlier levels, while prices for key grades of structural wood products dropped 20% on average from the end of the second quarter.”
Lowe’s raises offer to drywall victims
Lowe’s has substantially raised its offer to customers who claim they bought defective drywall at its stores in Georgia after coming under criticism for its previous offer, according to a report by the Sarasota Herald-Tribune and Pro Publica.
In Lowe’s latest offer, filed on Oct. 28, affected homeowners are now eligible for up to $100,000 in cash, instead of gifts cards in the amounts of $50, $250 or $2,000, with a maximum payout of $4,500 in combined cash and gift cards. The previous settlement had been offered as part of a class action lawsuit that is being negotiated in a Georgia state court.
The earlier settlement set aside $6.5 million for victims and $2.1 million for the attorneys who negotiated the agreement. This resulted in an outcry from public interest attorneys and consumer advocates, who also criticized the payout as being too low. The cost of removing and replacing tainted drywall and corroded electrical wiring can cost $100,000, according to the U.S. Consumer Product Safety Commission.
The newly amended settlement was negotiated by a separate team of attorneys on behalf of a Florida corrections officer. Lowe’s has set aside an additional $2.25 million for the homeowners in this case. The original attorneys will still get $2.1 million in fees. The new attorneys will receive a separate fee based on how many $100,000 claims Lowe’s eventually pays.
The North Carolina retailer has stated that it does not believe the drywall it sold was defective because Lowe’s vendors assured the company that they never sold it any Chinese drywall. Lowe’s entered into the original agreement “as part of our commitment to serving our customers,” according to a company statement.
Sentence for former Depot buyer
A former Home Depot product category merchant was sentenced to more than two years in prison for participating in what has been described as a $1.5 million fraud scheme in the retailer’s flooring department.
According to an article in the Atlanta Journal Constitution, Ronald Douglass Matheny II, 43, of Chattanooga, Tenn., was sentenced to two years and three months after he pleaded guilty to conspiracy to commit mail fraud and wire fraud, and additional charges.
In April, two of the three figures involved were sentenced. James Robinson, a former divisional merchandise manager for hard flooring at Home Depot received a sentence of 63 months in prison. Ronald Johnston, the company’s global product merchant for rugs, was sentenced to 46 months in prison. Both men were also ordered to pay $1.8 million.
In June, former buyer Anthony Tesvich was sentenced to six and a half years.