Dealer profile: K&B True Value
The way Jared Littmann explains it, not much has changed at K&B True Value in Annapolis, Md., since ACON Investments closed the deal on its 70% purchase of True Value Company.
“The only change has been that instead of an illiquid asset on our balance sheet, I have cash in the bank,” he told HBSDealer, in an e-mail interview.
Littmann, owner of K&B True Value, said the post-acquisition, day-to-day flow at K&B has been “business as usual.” And he expects more of the same. “My customers won’t see any difference,” he said. “There is nothing tangibly different that the employees would notice. We place our orders as we always have and continue to get on-time deliveries of our product.”
Another thing that remains similar is his participation on the co-op’s board. Here’s how that works: The ACON deal created two boards – a board of managers for the new True Value Co., and a board of directors for the co-operative’s 30% share in the new company. Littmann will serve as chairman of latter board.
Also with seats on the new co-op board are Brent Burger, VP of the co-op; Alan Bryant, treasurer; and Brian Webb, secretary. Separately, Burger will have a seat on the new company’s board, along with the new ownership and True Value Company CEO. Burger, a True Value dealer with several stores in Maine, was chairman of the True Value co-op before the acquisition.
What will keep the co-op board busy? Littmann lists the basic responsibilities:
- Ensure that the co-op’s obligations under its charter and by-laws are met;
- Exercise oversight over the actions taken on behalf of the co-op by the True Value Company
- Exercise oversight over the finances and patronage dividend activity of the co-op
- Advocate on behalf of the co-op when appropriate, and
- Ensure that the co-op has the requisite directors and officers to carry on its business.
In addition, the board and officers will be available for any new issues that arise, for communication with the True Value Company, and to shareholders of the co-op, he said.
Littmann says the ACON transaction puts True Value on the right path for growth. It creates the only major hardware supplier with a nationally recognized name brand without an equity requirement. And it returned more than $220 million in cash to dealers.
Not everyone in True Value nation is satisfied with the ACON deal. As Littmann sees it, that was to be expected. Stores in the True Value network range in format from rural to urban; they range in size from small to large; and they range in ownership from new investors to multiple- generations of a family. Even with this diversity, more than 80% of votes cast were in favor of the transaction, Littmann said.
He added: “Whether an individual shareholder supported the transaction or not, the board and officers of the True Value Cooperative will continue doing its best to advocate for the entire cooperative and represent its shareholders,” Littmann said.
Formerly an associate county attorney, Littmann came to True Value’s board in late 2013. His background includes service on the Annapolis City Council as an alderman, chair of the Environmental Matters Committee, and member of the Housing and Human Welfare Committee.
No longer in a government role, Littmann has more time on his hands to focus on business. “Fortunately, there is a terrific core of managers at the store who took on more responsibilities and authority when I was attending city business – and that has continued,” he said. “Because that didn’t change when my public service ended, I now have more time to work on big picture issues like the long-term growth of the business.”
As for K&B True Value, a 2015 HBSDealer Hardware All Star from the state of Maryland, Littmann hasn’t made a final decision on how to use his share of the acquisition payout. He’s considering using the funds to pay down the loan of his original purchase of the business.
“I’m not expecting major changes for K&B True Value,” he said.
Orgill earns export accolades
Orgill, Inc., was one of 43 U.S. companies recognized this week by Secretary of Commerce Wilbur Ross with the President’s “E” Award, which honors companies throughout the country that export U.S. goods and services.
The Presidential “E” Award is the highest recognition any U.S. entity can receive for making a significant contribution to expanding U.S. exports. This year marks the 56th anniversary of the award. The 2018 honorees come from 18 states and include 33 small and medium-sized businesses and 17 manufacturers.
“We are honored to be among the select group of companies recognized with the Presidential ‘E’ Star Award,” says Ron Beal, Orgill chairman, president and CEO.
Orgill received its first “E” award in 2014. This year, Orgill was honored with an “E” Star Award for Exports, which recognizes previous “E” awardees who have reported four years of additional export growth.
“Receiving the ‘E’ Star award this year after having received the ‘E’ award four years ago shows how we continue to grow and support the global economy through our consistent export business,” says Jerry Cardwell, Orgill’s senior VP of international sales. “What’s more, it shows the dedication and diligence of our fantastic employees who go the extra mile to help our customers grow and strengthen their businesses.”
Memphis-based Orgill, Inc., was founded in 1847 and is the world’s largest independently owned hardlines distributor. It provides retailers in nearly 60 countries around the world with access to more than 75,000 products from its seven distribution centers and three export consolidation facilities. It continues to grow at a rapid rate, with annual sales exceeding $2 billion in 2017.
The “E” Award was created in 1961 when President John F. Kennedy signed an executive order to recognize companies that make up America’s exporters. The companies honored this year helped export more than $2 trillion worth of U.S. goods and services in 2017.
Dealer profile: Thompson True Value
A fan of the co-op model, and critic of his company’s transformation.
David Thompson of Thompson True Value Hardware & Rental in Marshalltown, Iowa, remembers clearly the day he became a True Value member.
The year was 1972. He was 24.
“John Cotter shook my hand the day I bought my store,” he told HBSDealer. “In fact, he was the reason I bought my store. He gave me my backing. I’ll never forget the opportunity I was provided.”
Cotter wasn’t Thompson’s first brush with a home improvement legend. Growing up in Eau Claire, Wis., Thompson and his family would often share their dinner table with a young entrepreneur named John Menard.
As a retailer, Thompson takes community to heart. He’s a county supervisor (similar to a business manager) in Marshall County. The store is active in Little League and various fund-raising efforts. “We have huge community support, and we give it back,” he said.
Thompson’s retail background and his roots in the Midwest — where co-ops played instrumental roles in the dairy and farming industry — shaped a positive feeling toward the co-op business model.
He bled True Value red during his retailing career. In a True Value promotional picture with his son, Paul, the headline read “The Value of Being the Local Expert.”
Then came the new deal — ACON Investments’ purchase of 70% of the company. True Value said the deal was accepted by more than 80% of voting members. Thompson was not among them.
“I withheld my vote,” he said. “In effect, my vote was one of no confidence. The only reason I can imagine any store owner voted ‘yes’ was in fear of losing their investment. Getting 70% of your investment back was better than getting nothing.”
Will he use his windfall check to invest in the business? “I have invested in the business from day one and will continue to do so.”
Will he go to the True Value Reunion in Denver? “Yes. I will go to many other shows, too.”
What is his post-transaction strategy? “Wait and see.”
Critical of the handling of the transaction, Thompson called the 30-day window (it was extended by a week) an “absurd” amount of time for such a momentous decision. “This was a transaction of a member-owned organization that involved people’s life work and lifetime savings. It was unconscionable,” he said.
He also takes issue with the requirement to pay $150 per store per month for True Value branding and participation in ship-to-store. “A name that many of us had worked a lifetime to build and are now being charged $150 a month to use — it’s an insult.”
There are plenty of alternative opinions regarding the True Value deal. For instance, Dorn True Value of Madison, Wis., emailed the following: “There is change happening in all of retail, and old structures and ownerships need to change to survive. I think True Value is ready to grow again.”
As for Thompson, he expressed a feeling of good fortune that his family will carry on the business: “The greatest issue facing our industry today is succession planning,” he said. “I’m very fortunate that I have a son that has been through school and understands the opportunity. He has a solid future ahead of him.”
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