Stock Building Supply continued to shut down its Mountain West operations by confirming today it will exit Colorado and Wyoming. It also set up an e-mail address -- firstname.lastname@example.org -- for buyers interested in acquiring any of the more than 80 properties the America's No. 2 lumberyard has said it will shutter in the days since it got a new 51% owner and filed for Chapter 11 bankruptcy protection.
Stock's sole Wyoming property, slated to close June 30, is in Evanston, 80 miles from the Salt Lake City market, where Stock intends to keep properties. Stock's web map for Colorado lists 11 operations in the state, all in Denver except for one in Alamosa, but a Stock spokesperson today said the closures also will include a facility in Colorado Springs that's not on the map.
The new departures come on the heels of Stock announcements that it is shutting operations in Idaho and Utah, its only Montana facility, its last dozen posts in Minnesota and Wisconsin and yards in the mid-Atlantic.
Stock spokespeople also have confirmed the company is looking to sell any of the locations it has closed as well as some for which it hasn't announced closures--yet. For instance, Stock is believed to be holding discussions to sell operations in Illinois, Indiana and Connecticut, as well as some of the western and mid-Atlantic facilities it is shutting. The creation of email@example.com represents one part of that effort.
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.
Last week, on May 28, 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 Stock 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. Last week, Wolseley said it ran up $235 million in exceptional costs relating to Stock's cuts in the nine months ended April 30.
Also last week, 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. In addition, Walrath 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.