At True Value, a top merchant departs suddenly
ORLANDO, FLA. —In mid-March, True Value senior vp and chief merchandising officer Steve Mahurin was in his element, presenting ideas on strategy and product to co-op members attending the spring market. At the end of the month, he was gone—working for Office Depot as vp-merchandising.
The sudden turn of events and the loss of one of the co-op’s brightest stars took True Value members by surprise and led to some disappointment in the ranks.
In a memo to co-op members circulated March 24, True Value CEO Lyle Heidemann described Mahurin as a leader who, in his four years with True Value, improved the company‘s merchandising performance and helped develop the new Destination True Value retail format. The search is on for a replacement.
Mahurin joined True Value in March 2004, after 13 years with Home Depot and almost immediately started a line review process. His team began working its way through each product category, trimming about $34 million worth of underperforming skus by the end of 2005. Mahurin also shored up the global sourcing department, patching in private labels where necessary and creating hundreds of what became known as Certified True Blue (CTB) product assortments.
As news of Mahurin’s departure made its way through the Chicago-based co-op, several members contacted by Home Channel News expressed shock and disappointment. One such owner is Steve Fusek of Fusek’s Hardware in Indianapolis. “He’ll be tough to replace, he’s one in a million,” Fusek said. “He showed the company the light.”
Perry Hahn, owner of Hahn True Value in Hartford, Wis., also lauded Mahurin for stepping up during a trying time for the co-op. “He was a shot in the arm for True Value when we really needed it after our financial difficulties,” Hahn said. “He put programs in place that someone else can move forward with.”
“I believe he was the first real buyer this company ever had that really put the manufacturers’ feet to the fire for our stores,” said Russ Woodmansee, owner of Florence True Value Hardware in Florence, Ariz. “Steve put True Value stores in line with the big boxes on cost. He had the back bone to stand up for our buying power with the suppliers.”
Bryan Ableidinger, owner of Parkrose Hardware in Portland, Ore., praised Mahurin for listening to co-op members and asking for their input before making major product decisions. “Steve stirred up the way we thought about product,” he said. “He was a great partner with the store owners.”
In his last performance as the top merchant for True Value, Mahurin delivered a presentation at the spring market in Orlando, Fla., about two weeks before his departure. His message was similar to those he delivered in the previous four years, describing opportunities for margin and key trends to watch.
His March 14 presentation was one of the highlights of the spring market. In it, he urged members to make the most of this spring season by capitalizing on trends in plumbing, electrical, seasonal, power tools, outdoor living and decorative hardware. He introduced 13 new CTBs on display at the market and touted the “Greener Options” program, which now offers more than 2,000 eco-friendly products in the warehouse and includes an in-store signage kit.
Mahurin emphasized that raw materials price increases—coupled with the devaluation of the dollar compared to such currencies as the Euro and Chinese Yuan—have raised wholesale pricing, making it imperative that members adjust their retails accordingly.
“You have to maintain your price changes on a weekly basis if you plan on maintaining your profitability,” he said. “In a rising market, it’s much more difficult. If you drag your feet even for an extra week you could be losing some significant gross margin dollars.”
Other highlights from the Orlando market included Heidemann urging co-op members to remain engaged in retail basics during a down economy. The key, he suggested, is to be aggressive in advertising, marketing and merchandising.
“This is not the time to stop keeping the store in stock,” Heidemann said. “We need to be ready when the consumer comes through the door that first nice spring weekend, or that customer is going to go somewhere else to shop.”
Recapping 2007, Heidemann said that sales were basically flat, with core hardware comparable-store sales up 1.6 percent and net margin up 1.2 percent after a one-time adjustment. The patronage dividend was up $4 million (or 7.7 percent) and equity increased almost 30 percent—from $102.7 to $132.7
“All in all, not a bad year, but we clearly had some disappointments,” he said. “First, although our core hardware comparable stores were up 1.6 percent, we did not achieve our sales plan. Secondly, we did not achieve our fill rate goal of 96 percent.”
True Value has reduced its sales forecast for 2008 but is still predicting an increase. Heidemann said the co-op has seen a slight softening of sales overall in January and February but that it’s very regional, adding that unusual weather patterns have helped boost sales in northern tier stores.
Stores were also encouraged to revisit their advertising plans and take advantage of additional TV and radio spots, online ads and public relations opportunities.
“In this tough economy, your competitors are going to be even more aggressive than usual as everyone competes for greater share of reduced consumer spending,” said Carol Went worth, vp-marketing. “Take a critical look at your plan, and make sure it’s doing what you need it to do.”
Brad Gebbie, owner of Lyndonville Hardware in Lyndonville, Vt., appreciated the co-op’s efforts to remain positive, despite the economic downturn. “You can make good inroads by making sure you have the merchandise people need,” he said. “In a down economy, it’s a perfect time for people to remodel, and we can benefit from that.”
In late March, Heidemann, too, expressed optimism that the co-op will continue to thrive while seeking a replacement for Mahurin. During the search, the company’s merchandising executives will report directly to Heidemann.
“We thank Steve for his invaluable contributions to the co-op, most notably his integral role in the development and rollout of our new retail format, Destination True Value, and his relentless focus on increasing our retailers’ profitability,” said Heidemann. “We wish him the best, both personally and professionally, as he embarks on the next phase of his career.”
Meanwhile, Heidemann and True Value are entering a new phase of their own: the post-Mahurin era.
Bed Bath & Beyond declines in fourth quarter
Specialty retailer Bed Bath & Beyond posted weaker fourth-quarter earnings, due in part to an extra week in last year’s fourth quarter. The company saw earnings of $172.9 million, down 16 percent from $205.8 million in the same period last year.
Net sales for the fourth quarter were $1.93 billion, down 3 percent from last year’s fourth quarter. Comparable-store sales for the fiscal fourth quarter of 2007 decreased by 0.4 percent.
For the fiscal year, which again was one week shorter than the previous fiscal year, the company saw earnings decline 5.3 percent to $562.8 million from $594.2 million a year ago.
Net sales for the year were $7.049 billion, an increase of 6.5 percent from last year. Year-over-year, comparable-store sales increased by 1 percent. The company opened 22 new stores in the fourth quarter, including its first location in Canada.
The retailer said it expects comparable-store sales to be relatively flat or negative in 2008. Bed Bath & Beyond also warned investors it expects a per-share percentage decline in 2008 earnings from the low double-digits to mid-teens.
Bed Bath & Beyond operates a total of 971 stores nationwide.
Canfor reduces production
Vancouver, B.C.-based Canfor is reducing its production volume to reflect market realities. The company pointed to “falling demand and poor pricing for softwood lumber with no indications of a market recovery in the near future.”
Canfor will be reducing workweeks at a number of its operations. In addition, Canfor’s Prince George Sawmill will move from three shifts to two and its Clear Lake finger joint operation from two shifts to one. This move will reduce Canfor’s annualized lumber production by approximately 600 million board feet.