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Urban Outfitters launches lawn and garden retailer

BY HBSDEALER Staff

Urban Outfitters Inc., a lifestyle consumer products company best known for clothing retailers such as Anthropologie, Free People and Urban Outfitters, has launched a lawn and garden format called “Terrain,” opening its first store last month in the Philadelphia area.

The Philadelphia location, called Terrain at Styer’s, sells plants, indoor and outdoor furniture, pottery and antiques, and also offers a landscape design service. It replaces a local nursery called Styer’s located near Chadds Ford, one of Philadelpia’s wealthiest suburbs. Urban Outfitters acquired Styer’s in February; information about the store can be viewed at ?terrainathome.com.

“The reason we did it is it’s an $85 billion market, dominated by Home Depot and Lowe’s, who do about 35 percent of the volume,” Urban Outfitter’s CFO John Kyees said recently at a Lehman Brothers retail conference. “The rest of the market is entirely fragmented, with a bunch of mom and pops.”

Kyees said Terrain will be targeted at the wealthy baby boomer customer. “They are hitting an age when they’re spending more in their retirement years than they were when they were working,” he said. “We think that the potential is probably 50 stores doing $20 million a store.”

Urban Outfitters Inc. is a specialty retailer and wholesaler with 122 Urban Outfitters retail stores in the United States, Canada and Europe; 106 Anthropologie retail stores in the United States; and 14 Free People stores. The company’s wholesale division sells its product to approximately 1,500 specialty stores, department stores and catalogs.

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LP gains stake in Brazilian OSB producer

BY HBSDEALER Staff

Nashville, Tenn.-based Louisiana-Pacific announced it has completed the first phase of the purchase of a 75 percent stake in Masisa OSB Industria e Comercio.

The oriented strand board company has an annual production capacity of 375 million square feet.

The deal is expected to close in the third quarter of 2008, “following a transition period that will allow the two companies to work cooperatively to facilitate LP assuming full operating control of the OSB assets,” according to a statement.

“We are very pleased with this purchase,” said Rick Olszewski, executive vp-sales and LP’s specialty products businesses, and president of LP South America. “Our due diligence process confirmed our confidence in the quality of these assets and their potential to serve a growing demand for affordable housing in Brazil and other parts of South America.”

Also in South America, LP currently operates mills in Panguipulli, Chile, and in Lautaro, Chile.

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BMHC may cut 2,000 jobs

BY HBSDEALER Staff

Shedding more light on its plans to consolidate operations, Building Materials Holding Corp. (BMHC) filed a document yesterday with the Securities and Exchange Commission that announced its intention to shut down an undisclosed number of underperforming units. These locations were divided into two groups: those identified for possible consolidation, representing aggregate sales of $435 million and operating income of $11 million in 2007; and units slated for potential shutdown, which brought in $120 million in sales last year but incurred operating losses of $12 million. The two groups employ 1,300 and 700 people, respectively.

No locations were given for the targeted closings and consolidations.

According to the SEC filing, BMHC is still evaluating its operations to resize the company. On Monday, the San Francisco-based pro dealer announced it was integrating its two business units, BMC West and SelectBuild, into one organization with combined back office functions. The company expects to realize $20 million to $25 million in savings from its streamlining efforts.

BMHC has also decided to realign its 13 regions into 7 regions. Missing from the list is the Mid-Atlantic, where SelectBuild entered the market through an acquisition in 2003 and provided framing services to home builders in Delaware, Maryland and Virginia. BMHC could not be reached for comment on its plans for the Mid-Atlantic region.

On a quarterly earnings conference call with analysts yesterday, company chairman and CEO Robert Mellor said the closures and consolidations will begin this week and probably finish within six months. “We’ve taken teams and put them in place [where] we’re winding down our business,” Mellor said. The industry’s 4th largest pro dealer reduced its work force by 20 percent during the last quarter of 2007, when it laid off 2,700 employees at SelectBuild and 300 people at BMC West, according to Mellor.

In addition, BMHC has announced plans to close two of its BMC West locations, in Merced and Bakersfield, Calif. The company will retain its existing sales force and continue to serve those markets from its BMC West units in Fresno and Modesto.

In a prepared statement, the company blamed the declining housing starts in California’s Central Valley as the reason for the consolidation.

The San Francisco-based dealer also announced it was closing its SelectBuild unit in Tucson as part of a company-wide integration of its two business units, BMC West and SelectBuild, into one organization. A number of underperforming units will be closed over the next six months as part of this consolidation, the company said, although the exact number and locations were not revealed.

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