Two home builders report further financial woes
Hovnanian and Beazer Homes — two of the nation’s largest home builders — have reported more negative financial news.
For the quarter ended July 31, Hovnanian reported a loss of $80.5 million, compared with a profit of $74.4 million a year earlier. Sales tumbled 27 percent to $1.1 billion.
The Red Bank, N.J.-based company warned that conditions in most of the regions it operates in remain challenging, suggesting the housing market slump is far from over.
“Buyer psychology has been negatively impacted by a steady stream of news related to falling housing prices, foreclosure rates and mortgage availability,” said CEO Ara Hovnanian. “We expect the current challenging environment to persist through most of 2008.”
Hovnanian’s results included a charge of $108.6 million related to land impairments and write-offs. Even with the negative report, Hovnanian’s shares rose in post-bell trading because the results met Wall Street expectations.
Meanwhile, Atlanta-based Beazer announced Friday that on Sept. 6 it received purported default notices from U.S. Bank National Association, the trustee governing five of Beazer’s outstanding senior notes due between May 2011 and June 2016.
The notices claim Beazer is in default because it has not yet filed its third-quarter report with the Securities and Exchange Commission.
The notices further allege that these defaults will become official “events of default” if not remedied in 60 days. Beazer said the notices of default are invalid.
Beazer announced in August it would delay filing its third-quarter report because of a continuing internal investigation by an audit committee of the company’s board of directors.
Lowe’s execs eye lawn care items, eco-friendly products
Speaking at the Goldman Sachs 14th Annual Global Retailing Conference, held today in New York, Patti Price, Lowe’s general merchandise manager for outdoor living, told investors and analysts what she expects will be trends to watch in the coming months.
“Because of drought [in some regions of the country], customers will be renovating their lawns,” Price predicted. Fall cleanup products and lawn care items are being promoted in Lowe’s stores, she said.
“We’ve had some real success in our holiday programs,” Price said. “We brought in John Deere. The merchants are so focused on moving the business ahead … we’re extremely well positioned for the back half of this year.”
Larry Stone, president and COO for Lowe’s, said new products that have been popular in Lowe’s stores include eco-friendly items and composite building materials.
“Something that’s really evolving, in my opinion, is all these composite products,” Stone said. “[There are] a lot of new products that customers want to use because they’re lower priced and lower maintenance.” Those products include composite siding, shutters and solid core composite flooring, he said.
Additionally, Stone said innovations in locksets, including keyless locks, have shown increased popularity in the home improvement market.
Stone spoke further on Lowe’s overall market position in the middle of a housing downturn, saying the company was “not happy with the negative 2.6 (percent) comps that we recorded” in the second quarter. He also said the company has seen weakness in big-ticket items, installed sales and special order sales.
However, Stone was optimistic about the next few years for the nation’s second largest home improvement retailer, adding, “Lowe’s will be well-positioned, once everything turns around, for further growth in the home improvement industry.”
Dave Heine joins BlueLinx
BlueLinx, one of the industry’s largest building materials distributors, has hired Dave Heine, the former vp-retail development at Do it Best. BlueLinx confirmed that Heine started this week as a senior national account executive, where he will call on Do it Best accounts and other independent dealers.
“I have worked with [Heine] for over 20 years as a customer and always admired his abilities, leadership style and integrity,” said BlueLinx president and chief operating officer George Judd.
Heine, a 28-year veteran of Do it Best, left in July after serving in a number of positions that included vp-lumber and building materials, vp-building products, vp-purchasing for pro and commercial products and manager of the lumber and commodities division.