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Wolseley Plc, 49% owner of Stock Building Supply, announced today that Chip Hornsby stepped down as group chief executive, effective immediately. The move ends a nearly three-year period at the top in which Wolseley struggled to survive the global recession and ultimately ended up selling a majority stake in Stock, America's second-biggest LBM dealer.
Ian Meakins, former chief executive of Travelex Holdings Ltd., a foreign exchange and payments business, will take over Wolseley on July 13, U.K.-based Wolseley announced.
Hornsby joined Wolseley when the company acquired Ferguson, the Newport News, Va.-based plumbing equipment supplier, in 1983. "Since taking over as Wolseley CEO on 1 August 2006, he has led the drive to reduce costs and improve cash flow in response to increasingly challenging trading conditions arising from the global financial crisis," Wolseley's announcement said. "He leaves Wolseley following the completion of the £1 billion ($1.66 billion) capital raising in April 2009 and the recent disposal of Stock Building Supply which have significantly strengthened the Group's financial position."
Raleigh, N.C.-based Stock had been one of Wolseley's prize possessions, accounting for 10% of the company's worldwide revenue, and standing second on this year's ProSales 100 with 2008 revenues of $3.2 billion. But those numbers don't reflect the sharp drop in Stock's fortunes as it sought to rebalance itself after growing sharply before and during the U.S. housing boom and then cutting back when the construction industry went into near-collapse. The company recorded operating losses of $744 million, including restructuring and impairment provisions of more than $430 million, in the fiscal year ended July 31, 2008. That's from sales of roughly $3.5 billion.
A ProSales count finds that Stock has closed roughly 270 operations just since January 2008, while it's employee count has shrunk from 13,000. It had roughly 200 facilities and 7,200 employees as of May 5, the day that Wolseley sold a 51% stake in Stock to the Gores Group, a private equity firm based in Los Angeles. The deal calls for Gores to invest $75 million in Stock and provide a $125 million revolving credit bridge facility. As part of the investment Stock filed on May 6 for protection from creditors under Chapter 11 of federal bankruptcy laws. It has since won a bankruptcy court's approval to cancel hundreds of leases on facilities that it had taken out over the years, mainly to run operations that it has since closed.
Of the 270 operations closed since January 2008, roughly 140 have been closed or slated for closure just since Stock entered Chapter 11. It hasn't said how many dealerships it hopes to have by the end of its restructuring, but has said it expects to have a payroll of about 5,000.