Mona Lisa would feel at home with a lot of LBM dealers these days. Her hint of a smile matches the mood of dealer executives, whose responses to ProSales' latest survey blend a bit of optimism about the future with huge amounts of fatigue, frustration, and foreboding.

Consider, for instance, the mixed but ultimately upbeat message from the president of an LBM operation in Georgia. "Even though we are in the red, it is just slightly," he said. "With the huge drops in business for the past three years we have managed to stay about at break-even. Some months we have even made a little money. However, just a slight uptick in sales will be going straight to the bottom line.

"We are, for the first time in many months, seeing an increase over same-month sales from the previous year," added the dealer, who asked to remain anonymous. "We are seeing just a hint of business in the marketplace, and when you couple that with a slight increase in market share through aggresive sales, we feel better right now than we have in a long time. It may change tomorrow, but for now, we can at least take a breath."

Another dealer put it more succinctly: "After nearly three years of getting our butts whipped, it looks like slow improvement is on the horizon."

What's on the horizon certainly looks more appealing than the path just traveled. According to the survey, 60% of the 308 dealer respondents said sales declined by at least 20% and only 11.5% reported sales rose. (See chart.) Close to 43% said profit margins had shrank, and just over half expected their location would post an operating loss.

Dealers in the Southeast and West regions of the United States reported the worst troubles, with at least two-thirds of dealers in both areas reporting sales declines of at least 20%, compared with 54% in the Central states and only 41.3% of dealers in the Northeast reporting the same-sized slump.

Hale, Mich.-based Bernard Building Center was seeing so few contractors that it began selling dog food by the pallet. "We have to sell something!" Bernard vice president Bruce Bernard joked.

Kibble might be less of a concern in 2010. Only about 4% of dealers expect sales to drop by at least 20% next year, while 46% predict sales will rise. Southeastern dealers were most optimistic, with 54% predicting sales increases vs. 49.7% in the West, 46.5% in Central states and 45.6% in the Northeast.

"This year will definitely be a loser," one dealer said of 2009. "We have made enough adjustments and are predicting a small amount of growth for [2010] which should amount to a small profit." Added another: "Most of the losses we had came early in 2009, but we have stabilized the company by cutting expenses across the board. On slightly higher sales, 2010 should be marginally profitable."

The traumas that dealers experienced last year show through the actions they took. More than 60% said they fired some operations staffers, 46% fired some sales staff, and 32% left jobs unfilled after staffers left. Nearly 37% of respondents said their yard furloughed workers (i.e., required staff to take unpaid time off), and 34% reduced store hours. More than 70% said they ended 2009 with fewer employees than they had at the start of the year.

Some of those jobs might return in 2010, but the record is mixed. Nearly half the respondents said they will hire staff to meet increased demand and 30% plan to recruit people even if they don't hire new staff. On the other hand, 22% of the respondents said they expect to fire people if demand drops or even stays at current levels, and 32% will continue to reduce staff by not replacing people who leave.