Stock cuts 86 locations
Stock Building Supply will close 86 facilities and reduce head count by some 3,000 associates, the Raleigh, N.C.-based division of Wolseley announced today.
Stock will exit 16 markets in six states, its parent company said. The company did not give specific locations.
The restructuring is a result of the declining housing market and followed Wolseley’s “fundamental review” of the business that was announced in September. Citing “unprecedented conditions in the global financial markets,” the U.K.-based corporation indicated that it was unable to find a buyer for Stock. Wolseley said it also considered closing down the entire U.S. building materials division.
The 86 branches represent 25 percent of Stock’s revenue and 28 percent of its head count, according to Wolseley. The closures will leave Stock with 209 locations in 27 states.
In a statement released this morning, Stock president Joe Appelmann said: “These are very painful decisions that affect loyal associates and their families. Without a doubt, we are facing unprecedented times in our industry. There is over capacity in an industry that was geared up to supply 2.3 million new housing starts two years ago; today the number is less than 1 million. The realities of the current market have changed the capacity of our industry and necessitated these actions.”
The specific facility closings will be announced later, along with the associated cost savings, according to the company.
Earlier this month, Wolseley reported annual revenues for Stock were $3.47 billion, down 24.5 percent from $4.59 billion in 2007. This reflects a 21 percent decline in same-store sales. Stock’s $246 million loss for fiscal 2008 compares to a profit of $86 million in fiscal 2007. This year’s loss includes $13 million in restructuring and severance costs. As of July 31, 2008, Stock had 285 branches, compared to 308 locations in 2007.
In an interview with Appelmann that appeared in the Feb. 11 issue of Home Channel News, the president maintained an optimistic view — “This is the ninth housing market downturn since World War II,” he told HCN. “There will be a tenth.”
Appelmann said the new size and footprint of the company is based on markets that will “bring us out of the downturn more quickly than others.”
“This is not just about cutting losses. If that were so, you wouldn’t see our commitment to markets such as Florida where our current losses are hurting us. Florida, for example, has great potential for rebounding, and we will be there to take advantage of the upswing.”
Chip Hornsby, Wolseley’s CEO, echoed these comments in an analyst conference call following today’s announcement. Stock will keep branches open in states like Florida and California regardless of the plunge in housing starts, he said, adding: “When the market does return, we will be well positioned [in these markets] to benefit as soon as possible.”
Sears Holdings to close 12 locations
U.S. retailer Sears Holdings is set to close 12 stores — eight Kmarts and four Sears outlets — in January, according to a report in Reuters.
The stores to be closed are Sears Grand in Columbia, S.C.; a Sears Essentials in St. Petersburg, Fla.; and two other Sears stores in Indianapolis and Florissant, Mo.; and Kmarts in Marietta, Ga.; Phoenix and Mesa, Ariz.; Forest Park, Ohio; Northridge, Calif.; Clarksville, Ind.; Sarasota, Fla.; and Knoxville, Tenn.
Sears Holdings operates more than 3,000 stores.
The closures are “part of our normal course of business of opening and closing stores,” spokeswoman Kimberly Freely said, adding, “It’s not part of a greater issue.”
Walmart establishes new rules for China
Walmart Stores laid down the law for suppliers it does business with in China at a first-of-its-kind meeting Wednesday focused on sustainability that involved more than 1,000 suppliers.
The company, third on the HCN Top 500 Scoreboard with 2007 home channel sales of some $25 billion, announced it would implement a new supplier agreement that requires factories to certify compliance with laws and regulations that will be phased in beginning with suppliers in China in January 2009 and then expanded to suppliers globally by 2011. The company also said by 2009 it will require all direct import suppliers and suppliers of private label and non-branded product to provide the name and location of every factory they use. In addition, Walmart will require the suppliers it buys from directly to source 95 percent of their production from factories that receive the highest ratings on environment and social practices by 2012.
From an energy reduction and resource utilization standpoint, Walmart is applying some of the objectives already established in the United States to its Chinese retail operations. For example, the company plans to design and open a new store prototype that uses 40 percent less energy and reduce energy use at existing stores by 30 percent by 2010. The company also plans to invest in hardware and systems and develop best practices that will enable it to reduce water use by half during the next two years.
The company’s goal is to become the most environmentally responsible retailer in China, a country where it has operated stores for nearly 15 years and now has more than 200 stores. Walmart and its suppliers collectively are the largest exporters of goods manufactured in China, which means the company is uniquely positioned to act as a change agent in a country where lax environmental controls, limited regulations and low wages have long been regarded as key reasons why China rose to become a global manufacturing powerhouse.
“I firmly believe that a company that cheats on overtime and on the age of its labor, that dumps its scraps and chemical in our rivers, that does not pay its taxes or honor its contracts, will ultimately cheat on the quality of its products,” said Walmart president and CEO Lee Scott. “And cheating on the quality of products is the same as cheating on customers. We will not tolerate that at Walmart.”
In prepared remarks, Scott went on to add that Walmart expects suppliers to meet strict social and environmental standards, be open to rigorous audits and to publicly disclosed all appropriate information.
“If a factory does not meet these requirements, they will be expected to put forth a plan to fix any problems. If they still do not improve, they will be banned from making products for Walmart,” Scott said.