Top 350 Scoreboard: Surviving the storm
For most pro dealers on the Top 350 list this year, 2009 was another 12 months of waiting: for housing starts to turn around, for remodeling projects to kick into gear, for the economy to finally recover. While few sat idly, waiting for business to walk through the door, many dealers were still forced to downsize staff (again) in 2009, shutter units or simply close shop. The belt cinching might have been tightest at the top of the list, where the largest players naturally had the largest overheads. One of their most expensive costs—staffing—took a big hit last year: ProBuild (1,889 layoffs), Stock Building Supply (6,000), 84 Lumber (5,089), BMHC (4,500) and Builders FirstSource (600).
TOP 350 BY THE NUMBERS
$35.4 billion: total 2009 sales of top 350 pro dealers21.2%: decline from 2008 sales$101.2 million: average sales of Top 350$37.4 million: median sales of Top 350275: number of companies on the list with declining sales288: average number of employees per company21.3: average number of employees per location$351,162: average sales per employee
All told, total sales of the Top 350 pro dealers in 2009 added up to $35.4 billion, a 21.2% drop from $45.0 billion posted by the Top 350 last year. Decreases in revenues affected 78.6% of the dealers on the Top 350 list. Another 13.4% were flat.
Most dealers surveyed by Home Channel News for the list said simply, “the economy,” when asked about their declines. (Although Metropolitan Lumber and Hardware, which operates four units in downtown NYC, had no explanation for its 7.4% sales rise. “Go ask the customers why they shop here,” the owner suggested.) Other lumberyards that posted negative numbers offered, “lumber [price] deflation” or “slow housing starts.”
REVERSAL OF FORTUNE
In the 2005 edition of the Top 350 Scoreboard, our cover story described how a red-hot market for new homes became “white-hot.” It was only five years ago, but that was a different world—and this graphic makes the point clear. In 2005, there were four companies out of 350 that were listed with year-over-year sales declines. In our current list, there are 275.
In the final wash, it was all these reasons, and more. Fewer homes were started in 2009 than in any other year since World War II, clocking below 500,000 for the first time since recordkeeping began in 1959. Building permits, as tracked by the U.S. Census Bureau, totaled an estimated 583,000, marking the first time in recorded history permits have fallen below 900,000. More than half—57 out of 100—of the nation’s largest metropolitan areas posted a record low number of permits last year.
The Harvard Joint Center for Housing Studies 2010 annual report points out that household growth from 2010 to 2020 by immigrants alone is estimated at 12.5 million to 14.8 million. Average housing completion to support that population ranges from 1.7 million to 1.9 million annually. Add in 80.8 million echo-boomers—who will hopefully move out of their parents’ house someday—and the pent-up demand for housing will undoubtedly break through for those who remain in the LBM game.
Remodeling, too, is on the upswing. While 2009 was the year of “phased remodeling,” according to the National Association of the Remodeling Industry, the Harvard Joint Center’s Remodeling Future’s program recently predicted a 5% growth in remodeling activity in 2010.
RIDING OUT THE DECADE
The first decade of the 21st century will be remembered as a wild ride by those who participated in the massive swings. unfortunately, many would like to forget the way it ended, with single-family starts at an all-time low and Top 350 sales the lowest in 10 years.
While the Harvard’s remodeling forecast was based on two shaky premises—gains in housing prices and a stabilization in the employment outlook—reports from the nation’s big-box retailers seem to bolster its prediction. Both Home Depot and Lowe’s have told investors this year that they’re seeing a rise in kitchen and bath remodeling, flooring replacement and other big-ticket projects.
Whether they cater to new-home builders, remodelers or both—most, but not all—of the industry’s Top 350 will look back on 2009 as a year to forget. For some pro dealers, 2009 was a year of opportunity, a time to make acquisitions, grab market share or move large quantities of discounted merchandise. Read their stories on page 29.
The research for HCN’s Top 350 Pro Dealer Scoreboard began with HCN’s sister company, Chain Store Guide, a Tampa, Fla.-based research firm, under the direction of senior editor Arthur Rosenberg.
Companies selected for inclusion on the Top 350 Scoreboard are building materials dealers with a significant lumber business and a customer base primarily serving builders, remodelers and contractors.
Information collected by CSG was edited, proofed and fact-checked by a team led by Rosenberg. Some of the Top 350 companies did not provide complete data to HCN. For those companies, HCN estimated sales and other data, working primarily from public filings where available; from comparisons with similar, nearby companies; and from each company’s past performance.
Great Fall Marketing Opportunities for 2010
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Make sure your 2011 sales are growing. Reach retailers now to impact next year’s results. Click here for information, or contact Jim Reynolds, National Sales Manager at [email protected], or 212-756-5138.
ABC-Bradco Supply a done deal
ABC Supply has finalized its purchase of Bradco Supply Co., adding 129 locations in 30 states to its company. This acquisition makes ABC Supply the LBM industry’s largest pro dealer by sales, with annual revenues of more than $4 billion and 479 locations in 44 states and the District of Columbia.
Both ABC Supply, based in Beloit, Wis., and Bradco, headquartered in Avenel, N.J., are distributors of roofing, siding, windows and other exterior building products
“We are working hard to ensure a smooth transition for our associates and customers alike,” said David Luck, ABC Supply’s president and CEO. “We are looking forward to sharing ABC Supply’s residential strength with Bradco and having Bradco share its commercial strength with ABC Supply. We believe that the combined company gives us a more balanced product and service offering for our customers.”