Big messages from Do it Best
Dan Starr, CEO of Do it Best, speaking to a full house of member-owners at the Fall Market, called fiscal 2022 “a very good year.”
“We set records in every category of sales. Warehouse sales were up 3% going up against a record year last year. Directs were up 11%. Lumber was up 5%. In total, our sales increased 7% to close the year at a record just over $5.5 billion.”
The lights in the auditorium dimmed and the stage glowed.
“All of that activity led to a very strong bottom line: Our rebate.” The crowd quieted.
“Distributed to all of you tonight,” said the CEO, “is $129 million. And that is our second highest rebate ever.”
Though there has been a positive trend line on sales in recent years, he said, the strong bottom line still felt unique pressures on profit this past year.
He indicated that “member rebates surged by nearly 35% over the prior year’s rebate, which was itself a record high. Then in 2022, those costs ramped up quickly and impacted our bottom line.”
But before he shared more on that, he shared what did not affect profitability in ’22, as follows:
“Operating expenses. Our team worked very hard throughout the year to control expenses. Simply put, sales exceeded budget while operating expenses came in under budget. We work hard to deliver on that every year – and fiscal ‘22 was no different,” said Starr.
“Product costs. All year long, we kept up with increased product costs. When prices increased, we made sure to keep those current, which I know everyone in this room has felt. We know managing those price changes has required a lot of effort,” he said.
“Now, back to profitability for the year. What put pressure on profit this year were those non-product-related costs. All the costs within the supply chain. transportation, fuel, carrier, ocean freight, and port-related charges. Port-related charges in particular.”
Future Forecast
The CEO talked about planning for the future.
Among his key initiatives, he said, “we're investing in a brand-new warehouse management system (WMS). It's already been deployed in our Dixon and Waco warehouses. Two more warehouses will go live this calendar year and we'll deploy in all remaining warehouses by next fall. That's an aggressive schedule.”
It's a significant investment, he added. “But all of that is absolutely necessary in order to meet that continued increasing demand that we have for product through distribution.”
In addition to that investment in WMS, he said, “we're also working on a brand-new distributed order management system. That will be a member facing system that will have benefits for you, including greater flexibility on how you order from Do it Best. That will also deploy by next fall.”
Then, in addition to both of those, he said they are transitioning to a brand-new core financial system. “It's an Oracle-based system that will run the entire financial backbone of the organization, which will be deployed, again, by next fall.”
The CEO went on to say that another investment related to increased demand and future growth is a significant facility expansion at their Woodburn warehouse.
This had already been in the planning stages, he said, but they accelerated the project to support demand.
“Beginning this fall, we will be increasing the total cube space by 50%. We’ll have more to share on that as construction progresses. And we’ll continue to evaluate warehouse capacity in other locations,” said Starr.
He mentioned strong “new member growth” and pointed out “we had over 300 new store signings just last year alone.”
Do it Best has strengthened its support for store improvement projects, he said, “we’ve already helped more than 300 of you enhance your customers’ shopping experience this past year.”
He saluted several store owners in video presentations and on stage in-person.
Starr concluded by giving the member-owners an update on performance so far in the first two months of fiscal 2023: “Sales through distribution are up 9% through the month of August. Again, that’s measured against prior year all-time records.”
At the end he said, “I’m so excited for what’s ahead. There’s so much opportunity for growth. I’m proud of our ability to help you grow and achieve your dreams.”