Stock Building Supply confirmed today it is closing its last dozen facilities in Minnesota and Wisconsin as well as several operations in the Carolinas, Virginia, and Utah. It also is believed to be holding discussions to sell operations in Illinois and Indiana. Reports by Stock spokespersons and field employees now indicate more than 50 locations have been targeted for closure since America's No. 2 LBM operation got a new 51% owner on May 5 and filed the next day for Chapter 11 bankruptcy law protection.
The Wisconsin lumberyards are in Green Bay, Marinette, Appleton, La Crosse, Windsor, Sussex, and Plover. They join a components plant in Delavan that Stock previously said it would close. The Minnesota lumberyards, in Rochester and Eagan, join other operations in Eagan and Cedar that were shut last year.
In the mid-Atlantic, Stock confirmed it is closing operations in Wilson, Kernersville, and Fayetteville, N.C., as well as in Conway and Spartanburg, S.C. Employees also say the company is closing facilities in Newport News and Charlottesville, Va., While the Minnesota and Wisconsin moves mean Stock is exiting the state, the company plans to continue serving customers in the Carolinas from other locations, a Stock spokesperson said.
Meanwhile, Stock plans to shut facilities in St. George, Brigham City, and Logan, Utah, a Stock spokesperson said. That indicates the company wants to hold onto its locations in the Salt Lake City area.
Meanwhile, reports from Illinois and Indiana indicated that Stock will sell nearly a dozen facilities in the Chicago area as well as two in the southern Indiana city of Sellersburg. A Stock spokesperson said the company had no comment on any deal except to say that when faced with the option of closing a facility or selling it, "our option is to sell." Another Stock spokesperson told a North Carolina-based business journal that the company also hopes to sell its Kernersville operation.
In its Chapter 11 filings, Stock said that as of May 5 it had 7,220 employees at nearly 200 locations nationwide; that's down sharply from the approximately 17,000 employees and 360 locations it had at its peak a few years before. It said it expected as part of its Chapter 11 reorganization to drop to about 5,000 employees and close an undisclosed number of properties. Even in that reduced state, based on the latest ProSales 100 listing, it still would rank among the 10 biggest building material dealers in the United States.
On Thursday, a federal bankruptcy judge rejected more than 200 leases that Stock has entered into over the years and now needs to get out from under as part of its recent ownership change and revival plan. Meanwhile, Stock's former majority owner said Stockn incurred an operating loss of $172 million in the first nine months of its fiscal year on a 30% drop in revenue.
In Wilmington, Del., Judge Mary F. Walrath found no objection to virtually all the leases that Stock wants to reject. See map and spreadsheet showing the leases.) She reserved action until June 15 on only a couple of properties where there are questions over whether fuel storage tanks have been properly drained, capped and possibly removed under local environmental laws.
Getting the leases rejected was a key condition set by the Gores Group, a private equity firm based in Los Angeles, when it bought a 51% interest in Stock from Wolseley Plc on May 5 and entered into a joint-venture agreement with the British giant. Stock closed roughly 165 facilities between mid-2006 and mid-2009. Stock said in Chapter 11 filings that restructuring and impairment costs related to those closures totaled $430 million in the fiscal year ended July 31, 2008. Today, Wolseley said it ran up $235 million in exceptional costs relating to Stock's cuts in the nine months ended April 30.
Also earlier Thursday in London, Wolseley reported that in the first nine months of its fiscal year--i.e., from Aug. 1, 2008, through April 30--Stock incurred a trading loss of 108 million pounds sterling, or $172 million at current exchange rates. That compares with a trading loss of $158 million in the year-earlier period, but the newer number excludes $32 million in losses by Stock's construction division, which Wolseley is retaining. Stock said revenues shrank 30% from the year-earlier period, but it didn't give a number.
Aside from rejecting the leases, Walrath also approved a request to let Stock pay sales commissions exceeding the usual federal limit of $10,950. She also approved--after learning that various objections were resolved--a motion barring utility companies from cutting off service while Stock is under Chapter 11 protection.
Walrath's next hearing on Stock will take place at 4 p.m. ET June 15.