84 Lumber revealed Monday, April 21, that it has signed a new five-year financing package with SunTrust Bank and Wachovia Bank totaling $590 million, ProSales senior editor Andy Carlo reports. According to company president and owner Maggie Hardy Magerko, the move will allow 84 Lumber to work through a weak housing market that saw single-family housing starts fall 27% last year as the dealer?s sales fell nearly 21% to $3.1 billion in 2007.
?Our plan is to emerge from the housing slump debt free by eliminating unprofitable stores, reducing slow-moving inventory, increasing vendor terms, reducing overhead, and improving our accounts receivable aging while focusing on market share in our core markets nationwide,? Hardy Magerko said in a prepared statement released by the company Monday afternoon.
In recent months, the third-largest U.S. pro dealer has exited markets it deemed as unprofitable while closing stores and consolidating branches in key regions?a plan that has seen 52 closings this year. The dealer said April 21 that ?a main focus of reducing debt? is closing and selling off the unprofitable stores.
84 Lumber says it owns about 85% of its operating locations at a value of approximately $650 million. Additionally, the company owns inventory and receivables of about $500 million. The operating decisions, along with the new financial package, should allow 84 Lumber ?to take full advantage of the housing market turnaround when it occurs,? in addition to being debt-free, Hardy Magerko said.
Headquartered in Eighty Four, Pa., 84 Lumber operates 380 locations nationwide.