Smitty's Building Supply, the Northern Virginia-based LBM dealer that rode hot growth in the Washington suburbs and then plunged into bankruptcy with the market's crash, will close its Alexandria, Va., location by Dec. 1 and consolidate operations in its Manassas, Va., yard. The move follows the closure of its four window showrooms in May or June, shortly before Smitty's emerged reorganized from six months under Chapter 11 bankruptcy-law protection from creditors.
According to a statement from the company, the Smith family that controls Smitty's "attributed the need to close the Alexandria location to functional obsolescence induced by a consumer migration to so-called 'big box' home improvement centers. Consolidating operations in Manassas will allow the company to maintain and improve upon the level of service Smitty's customers have experienced for the past 34 years. In addition, the owners believe that the potential to sell the Alexandria property will work to help sustain the business and build a solid future for the firm."
Smitty's ranked No. 57 on the 2009 ProSales 100, with $66.3 million in sales in 2008 (down from $91.5 million in 2007), virtually all of them to professional builders and remodelers.
The closure of the Alexandria location comes 2-1/2 years after ProSales featured Smitty's in a February 2007 cover story about its $1.5 million retrofit of the Alexandria yard to serve areas close to Washington that were seeing lots of infill and remodeling work. That story came out at about the same time Smitty's made serveral acquisitions.
"At the time, Smitty's believed that it was strongly positioned to take advantage of the unprecedented boom in residential and commercial construction," the company said in a Chapter 11 filing.
Then the housing bubble burst and credit markets tightened just as Smitty's debt load had increased because of its acquisitions. "Unable to pay both its vendors and its secured creditors, Smitty's resorted to lowering inventory levels and cutting operating expenses to stay afloat," the company said in the same filing. Smitty's worked out a new credit agreement with Bank of America in September 2007, but half a year later it defaulted.
In April 2008, a separate Smith family holding called S&D Manassas LLC, the official owner of a Smitty's distributon center in Manassas, got a loan from Access National Bank using that yard as collateral. But by August, S&D fell into technical default on the loan. Fearing that Access National would foreclose on the Manassas distribution center, Smitty's executives renegotiated terms with several lenders and found replacement financing for the Access National loan. But even with those improvements, Smitty's still found itself forced to enter into Chapter 11.
While in Chapter 11, Bank of America provided the company with a $10.5 million line of credit, including $3.75 million in post-filing debtor-in-possession financing.