Stock Building Supply to Close 86 More Branches

October 24, 2008
Companies

Wolseley plc, parent company of Stock Building Supply, plans to close 86 more branches of the building materials distribution operation, bringing its total number of locations to 209.   The 86 branches to be closed represent around 25 percent of Stock’s sales and 28 percent of its headcount, officials report.

“With the on-going decline in U.S. new residential construction, significant over-capacity in the industry and the consequential negative impact that Stock is having on the Group’s results, it is imperative that we take further action to restructure this business," says Chip Hornsby, group chief executive of Wolseley. "The measures we are taking will move us back towards profitability, while still keeping a presence in key districts for when the market recovers.”

With the restructuring, Raleigh, N.C.-based Stock is exiting 16 markets in 6 states, leaving a presence in 27 states. It will focus on maintaining a presence in those markets where it is a leading player and where it will benefit most from any market recovery, officials state. For example, Stock will remain in its top states, namely North Carolina, Florida, Texas, California, Utah and South Carolina, but will exit Louisiana, where it does not have a significant presence. About 3,000 employees are expected to lose their jobs.  With previous reductions, Stock will have around 8,700 employees, which represents a 55 percent decline from the company's peak in 2006.

“These are very painful decisions that affect loyal associates and their families.  Without a doubt, we are facing unprecedented times in our industry," says Joe Appelmann, Stock president.  "There is over capacity in an industry geared up to supply 2.3 million new housing starts 2 years ago; today the number is less than 1 million.  The realities of the current market have changed the capacity of our industry and necessitated these actions.”

In addressing how specific markets and states were evaluated, Appelmann explains, “We have redefined our size and scale relative to the current market and have selected the footprint that will bring us out of the downturn more quickly than others.”

The latest round of closures is the result of a Wolesley board review announced in September.  The parent organization looked at several options, including a a sale or complete shutdown of the Stock business.  Given conditions in the financial markets, a sale was not feasible, executives note.  It was also determined that shutting down the business would be a poor option for shareholders, as the value of company is still expected to increase over the long term when the housing market eventually recovers.

"This is not just about cutting losses," Appelmann notes. "If that were so, you wouldn’t see our commitment to markets such as Florida where our current losses are hurting us.  Florida, for example, has great potential for rebounding and we will be there to take advantage of the upswing. Over the next few days, we are focused on reaching out to our associates and minimizing the disruption for our customers.  We will be more specific about markets and cost savings after those important steps are taken.”

 

Stock distributes windows and doors from a number of manufacturers through its various locations and also manufactures its own Portrait line of windows and doors.  Many of its operations also offer installed sales of windows and doors.