Wholesale sales decline 7 percent at Do it Best
On Sept. 13, Do it Best released its 2007 year-end financials, reporting annual sales of $2.81 billion for the fiscal year that ended June 30—a 7 percent decrease from sales of $3.01 billion the previous year.
At the same time, the co-op reported it will be returning a record-setting $126.2 million rebate to its member-owners, representing a 3.5 percent increase over 2006, while hardlines sales were up almost 4.5 percent over the previous year. President and CEO Bob Taylor gave much of the credit for these positive numbers to Do it Best members.
“This is a cyclical business. We’ve been through cycles before and we’ll go through them again, and our members understand that,” Taylor told HCN in an interview. “I think they’ve done a good job in preparing for that and understanding that other opportunities—whether it be expanding into home decor, looking at installed sales, rental and industrial/commercial—those are opportunities to broaden the base of their business, protect themselves and continue to drive additional volume for their operations.”
Much of the sales decrease was driven by the deflation of lumber and panel pricing, which were off more than 25 percent and 60 percent, respectively, the company reported.
“Certainly on the building side, we were impacted like a lot of others in our industry by what was happening in the housing market and regional economies and other drivers as well,” Taylor said. “But I think even there, if you look at it from a unit sales perspective in the lumber and commodities categories, we actually finished up about a point in unit sales. To go through that and still end up where we did with the profitability we did—and continue to drive growth and be where we are in unit volume—I’m real proud of what our team and our members were able to accomplish.”
Do it Best’s operating overhead, which the company points to as the lowest among hardware co-ops, rose from 1.8 percent to 2 percent of total sales in fiscal 2007. The co-op also reported it will be returning the $126.2 million rebate to its member-owners at the 2007 Do it Best fall market—to be held at the Indiana Convention Center in Indianapolis Oct. 13 to 16. This represents an average 13.13 percent of regular warehouse purchases.
Do it Best
|Down 7 percent|
“By providing our member-owners with innovative programs to increase their performance at retail, and by continuing our relentless focus on improving operational efficiency, we have been able to return a consistently high year-end rebate to help our members reinvest in and grow their independent businesses,” Taylor said.
In fiscal 2007, the co-op continued its retail focus with the Signature Store Design Program, a performance-focused store design format that offers three different models and is flexible to meet the needs of individual stores. Taylor said that there are about 150 Signature Store Design conversions in progress, and he hopes that eventually anywhere between one-third and one-half of Do it Best members will adopt the program.
In addition, Do it Best has continued to expand its store count through RetailSTART, a program that helps member-owners make informed decisions on determining when and where to add new locations.
Do it Best, whose 4,100 members include hardware, lumber and building materials dealers, is the second largest co-op in the industry, operating in the United States and in 47 other countries.
The return of a market
San Diego Two relatively optimistic housing market forecasts factored heavily in an active day of seminars and award presentations at the ProDealer Conference held here last week.
In the conference’s kickoff presentation, Joshua Rosenbaum, director of the UBS Global Industrial Group, explained that only a matter of time stood between the current housing problems and a return to normalcy. “It really is a question of when, not if,” he said.
Of the six key macroeconomic factors — described as “pillars” — of the housing industry, five remain solid: GDP growth, interest rates, unemployment, inflation and non-residential construction spending. Housing starts, the sixth pillar, lags dramatically from 2006.
The question of “when” the return would come was addressed in detail at a later presentation on commodity pricing given by Paul Jannke, senior vp-wood and timber information for RISI. He pointed to research that predicts housing starts will remain weak until late 2008. Pointing to underlying demand created by population growth and household formation, Jannke described the overbuilding of 2003, 2004 and 2005 as a key cause of the dramatic decline in housing starts in 2007. The good news, said Jannke, is that 2009 should see starts jump back to the 1.7 million to 1.8 million level, following a 2008 housing start figure in excess of 1.5 million.
“With the weaknesses forecast in 2007 and 2008, we will have completely made up for the overbuilding” of the previous four years, he said.
If housing starts fall further to the 1 million level, as some expect, the silver lining would be a faster correction and a faster return to housing starts more in line with the underlying demand, he added.
The 11th ProDealer Conference held here at the Loews Coronado Bay Resort wasn’t all about forecasting and finance. A “Custom Builder Panel” on Thursday morning focused on the needs of custom builders and their expectations from pro dealers.
The best way to build a relationship with the custom builder is to do the research and bring solutions to the table, said David Payne, vp-Payne & Payne Builders. Sometimes, the solutions for builders address problems that they didn’t know they had, he said. “The smartest thing for a dealer is to find the time to talk to us to identify our faults, then provide solutions.”
And the panel agreed that when the relationship between the dealer and the builder loses the qualities of a partnership, the relationship is in jeopardy.
In addition, Basketball star Bill Walton, who rose to fame playing for the Boston Celtics and the Portland Trail Blazers, gave some advice on what to do “when the ball bounces the wrong way” during his Sept. 19 talk. He also reminisced about his days at Dixieline Lumber in San Diego, where the 15-year-old freckled redhead unloaded lumber as a part-time job.
Also at the conference, the annual ProDealer of the Year Awards Dinner recognized two companies that represent innovation and success in the LBM market — Kent, Ohio-based Carter Lumber and Fairfax, Calif-based Fairfax Lumber & Hardware, the respective recipients of the ProDealer of the Year and Independent ProDealer of the Year awards.
The 11th Annual ProDealer Conference, sponsored by Home Channel News, kicked off with a City of Hope golf tournament. The first place team, winning with a score of 142, was Bruce Brushwood of Moulding & Millwork, Mark Donovan of Forest City Trading Group, Laura Dwyer of Dupont and Mike Fletcher of Moulding & Millwork.
The ProDealer Conference ran through Sept. 21.
Toro names new member to board of directors
Outdoor products company Toro has named Inge Thulin, vp-international operations for 3M, to its board of directors.
Thulin joined 3M in 1979 and served in various sales and marketing roles at its location in Stockholm, Sweden. He subsequently served as area vp for Europe, Asia and the Middle East and was named executive vp-international operations in 2003.
“As Toro’s revenue from non-U.S. markets continues to rise and we expand our manufacturing, design and distribution capabilities around the world, his perspectives will be invaluable in positioning the company for long-term growth and profitability,” said Michael Hoffman, chairman and CEO of Toro.
Thulin’s appointment brings the Toro board to 11 members.
Toro had sales of $1.8 billion in 2006 and is a leading provider of outdoor beautification products.