LUMBERYARDS

For Wolf, the evolution continues

BY Ken Clark

York, Pa.-based Wolf — formerly known as Wolf Distributing Co. — has been through more than its fair share of game-changing transformations since Adam Wolf founded the company in 1843. One of the biggest was the brainchild of Adam’s son, who literally bet the house — and the canal-and-barge-centric business — on the future of what was then a newfangled communication system called the railroad. 


The company’s current chairman and CEO, Tom Wolf, lives in the same house his great-great-grandfather built by the tracks (in a town called Mount Wolf). But that doesn’t mean Wolf is set in tradition. The head of the $200 million company is spearheading its latest transformation — from a two-step distribution model to something he calls “a breed apart.”


In his “New Declaration for Independents,” Wolf wrote that the two-step model served Wolf well over the years, but it forced them to serve two masters: manufacturers and dealers. The new Wolf serves only one, he said: the dealer.


Home Channel News talked to Wolf about the company’s new strategy.


Home Channel News: Is there a recognized term for your new business model? Can we call it a “modified two-stepper?”


Tom Wolf: We’re referring to ourselves as more of a sourcing company.


HCN: Can you elaborate on that?


Wolf: The contrast we draw is between a two-step distribution model where you take products that are manufactured by a branded company and then go to the dealer market and sell those same products to those customers. And the issue there really is that you have two sets of customers. We want to be in a position to cater unambiguously to our dealer customers. So if they say they need this and we agree with that need, then we can go out and source that from a company that’s willing to make it. We’re big enough to be able to interest manufacturers to do that. So we want to take that unique size capability — the capability that comes because of our size — and translate that into a real responsiveness to the needs of our dealer customers.


HCN: How radical is this approach?


Wolf: The model has been around a long time; it just hasn’t been — at least I haven’t seen it — within our industry. If you look at basically what Dell Computers does, Dell doesn’t really manufacture, they source things from all over the world. I think some of the big retail firms [like] Costco obviously [do] that. So, we’re basically taking our scale, our size, and translating that into an ability to source products that we see that our customers actually want. 


HCN: Is this going to require a change in the skill set of your people top to bottom?


Wolf: We’ve added people. And we will accent probably different skill sets. We actually have been doing private label for some time now. We have a private label in hardware. We do private labeling of vanity tops. We’ve done that for maybe 10 years now. We have a private-label kitchen cabinet that we’ve been selling for a couple of years, the Europa line. So we already have the capacity to do that, and we’re going to do more of it. The extent that we do more of it would probably [involve] reorienting some of our staff to do that rather than simply purchase material that’s out there on the market. 


HCN: What’s your biggest product category?


Wolf: Kitchen cabinets.


HCN: Do you see that changing?


Wolf: I would think we might see in the next year or two a slight increase in building product sales. But it will probably be fairly equal.


HCN: You’re eyeing the Midwest for expansion. What are the challenges there to overcome?


Wolf: Well, the first barrier for a traditional two-step distributor to move is: Your vendor may or may not be interested in giving you that territory. They have other relationships, so one of the things with going with our own products is it frees us to make our own decisions on expansion. So if we’re beyond the constraint of our vendors’ inclinations on that, then we’re left with the relationships that are already in place. Are the products that we’re selling competitive and relevant to the market? How fast can we find good employees and good facilities? That kind of thing. But that’s something that I think would be a lot easier than trying to convince a recalcitrant vendor to give us a new territory.


HCN: It’s difficult to make changes to any business. What’s the secret?


Wolf: The reason we’ve lasted 167 years is because we’ve made changes, and I think this is along those lines. A lot of times people say “167 years — you obviously [have done] things the same way for all that time.” Well, actually, the reason we’ve been around that long is because every once in a while we’ve blown up the model and reoriented ourselves, and that’s what we’re doing here. e

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Roper Bros. bankruptcy sparks family lawsuit

BY HBSDEALER Staff

The Chapter 11 bankruptcy filing of a century-old lumberyard business in Petersburg, Va., has resulted in a legal battle between family members, according to an article in the Progress-Index.

Roper Bros. Lumber Co., which filed for bankruptcy protection in December 2009, is the subject of a lawsuit that claims a family trust was used to prop up the finances of the failing firm. Leroy Roper Jr., Gay Diz and Clair Roper Eads allege that their brother, Philip Roper III, improperly used money from trusts set up by their parents for all four siblings.

The Dec. 17 complaint, filed in Richmond Circuit Court, alleges that Philip Roper, who served as trustee of three family trusts, "transferred, or caused or allowed to be transferred, a substantial portion of the funds held in each trust for his own use and benefit," including transfers to the lumber company, of which he was the chairman, president and sole owner.

Two of the trusts are listed as unsecured creditors in bankruptcy court filings, with outstanding debts of $1.3 million.

A lawyer for Philip Roper released the following statement to the newspaper:

"The allegations are completely without merit. The funds in the trust are assets of Mary Clair C. Roper, who is very much alive and well, and she is extremely upset that her children have asserted this claim and does not understand why they would do this."

Roper Bros. Lumber ranked 72nd on the Home Channel News Top 350 Scoreboard in 2008, with $100 million in sales.

The company’s Chapter 11 case is still proceeding in U.S. Bankruptcy Court in Richmond. The court in November approved Roper Brothers’ plan to liquidate its remaining assets, which totaled $4.2 million at the end of November.

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KB Home narrows loss for 2010

BY HBSDEALER Staff

Los Angeles-based home builder KB Home achieved a fourth-quarter profit in what the company’s CEO described as a "challenging market."

The company reported net income of $17.4 million for the period ended Nov. 30, down 82.7% from $100.7 million reported for the same quarter last year. Total revenues for the quarter were $450.9 million, down 33% from $674.5 million reported for the same period in 2009.

"We are very pleased to have ended the year with a solidly profitable fourth quarter," said Jeffrey Mezger, president and CEO. "This is the eleventh consecutive quarter we have achieved year-over-year improvement in our pretax results and the first time in nearly four years that we have generated pretax earnings. Given the challenging market and economic conditions we have faced, our consistent progress in improving both operational and financial metrics illustrates our success in accomplishing our strategic goals through our focused execution of our KBnxt Built to Ordee business model."

Fourth-quarter housing revenues totaled $447.9 million in 2010, down 28% from $671.4 from the same period last year, reflecting a decline in the number of homes delivered, partly offset by an increase in the average selling price.

Net orders in the fourth quarter were 1,085, down 25% from 1,446 in the year-earlier period. 

For the full year, the company reported a net loss of $69.3 million, compared to a loss of $101.7 million for 2009. Revenues for the year were $1.58 billion, down 13.1% from $1.82 billion for 2009.

The company’s year-end backlog totaled 1,336 homes; a 37% decrease from 2,126 homes in backlog in 2009. Potential future housing revenues in backlog for the year decreased 38% to $263.8 million from $422.5 million a year ago, primarily due to the lower number of homes in backlog. 

The company delivered 7,346 homes during the year, down 13% from the year-earlier period, while the average selling price increased 4% year over year to $214,500. 

 

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L.Meister says:
Jan-08-2011 05:21 am

Everyone is singing the new
Everyone is singing the new KB Home Song: http://www.youtube.com/watch?v=sPUSq0ztSwI KB Posted a profit using materials not capable of the lowest standard possible. They laid off everyone but a skelton crew. They always do this each year so that the executives can cash in their bonuses for a mediocre job well done. Pass the Home Lemon Law in the new legislative session. Bruce Karatz Stock option backdating how is month # 2 in home confinement going? Can TMZ post a camera crew to make sure Bruce Karatz is still home? http://www.akbhomesucks.com

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