Stine Lumber president Dennis Stine saw an opportunity to revamp his now-12-location Sulphur, La.-based LBM and home center operation after business bottomed in early 2009. But, as Stine told dealers at the ProSales 100 Conference Thursday morning, the retooling focus was as much on returning the company’s balance sheet to profitability as it was about creating a measurable shift in corporate culture.
By 2003, Stine was preparing to launch a concept relatively new to the dealer channel—a 100,000-square-foot facility that mirrored aspects of a “big box” but with a drive-through lumberyard and a showroom. Between 2003 and 2005 the dealer went to work expanding its Louisiana operations by building a handful of the new type of locations. Following hurricanes Katrina and Rita in 2005, Stine said, the company became eligible for 50% advanced depreciation from the federal government on its capital expenditures—including buildings—in an effort to kick start post-storm construction in the Gulf region.
“We had a partner,” Stine told dealers of the federal government’s program, “and we could scale it.” The capital expenditure plan gave Stine Lumber $65 million to grow but shortened the company’s implementation timeline from 10 years to three. From 2005 to 2009, Stine said, the company had planned to continue to scale operations by replacing existing locations with the larger stores. But the market began to slide and, in May 2009, the company hit bottom.
The turnaround was swift. “We cut and we cut and we cut,” he said. The firm slashed its payroll by 27%, closed one location, and suspended its 401K among several efforts to trim operations and reduce assets. A cash-based retail segment kept EBITDA (earnings before interest taxes, depreciation and amortization) strong in 2009 and helped the company launch its series of initiatives to boost margins by increasing ticket value for existing customers.
The company launched the Stine Loop—a customer resource management program that seeks to bundle contractors’ projects. “We wanted to make certain our OSRs had a CRM tool that they [could use] as a quarterback to make sure we were driving more product through our existing customers,” he said.
The company also cleaned up its stores and picked up its retail-oriented marketing and advertising initiatives with biweekly mailers, social media campaigns, and a website that offers ship-to-store services.
The firm’s biggest shift occurred in its internal relations. Stine evaluated the McDonald's "Plan to Win" strategy and decided to put its own twist on the program, focusing it on getting existing customers to spend more. He called it 'Sharpening the Saw.' “We did big work with little capital,” Stine said. “We spent our big wad of money so we had to work with what we had. Our fast growth had made us less efficient."
Stine’s interpretation of Plan to Win focused heavily on brand loyalty and associate growth—the company now asks associates to fill out self-evaluation forms as well as manager assessments. The process also required Stine to revise areas of its operations manual and more transparently tie that information into the self-assessment process and other reviews.
So far, says Stine, the work has paid off. The company posted $151 million in sales during 2012 with 40% to pros and 60% to retail customers. In 2011 the company posted sales of $144 million, of which 38% was to the pros, ranking the firm No. 54 on the ProSales 100 list of top LBM dealers.
Download a copy of Stine's presentation here .