Stock Building Supply, America's No. 2 LBM dealer, saw its operating loss for September through December 2008 fall to $110 million, double what it recorded in the year-earlier period, Stock's U.K.-based parent, Wolseley Plc, announced today. Stock's revenue fell 28% during that period.
The declines occurred during a period in which, starting Oct. 23, Stock launched a $225 million restructuring effort in which it expected to close 86 facilities, cut 3,000 jobs, and exit 16 markets in six states. In an ProSales interview with Stock executives during the International Builders Show last week, Stock president Joe Appelmann said Stock now has 207 facilities and just less then 8,700 employees in 52 markets. That's a marked drop from its 363 facilities and 13,120 workers at the start of 2008.
Steve Short, Stock's senior vice president for store operations, said during that interview that the restructuring was 98% complete. Today, Wolseley said two more unnamed locations will be closed.
"Stock's revenue and trading profit ... have been impacted by the continuing slowdown in the new residential market," Wolseley's statement said. "Annualized housing starts for December have now fallen to 550,000 units, a fall of 45% on the equivalent period in the prior year. Lumber prices also continue to decline to unprecedented levels and recently fell below $200."
As for the future: "Until consumer confidence returns and availability of finance for customer projects improves, the group expects performance in North America to decline," Wolseley said. Along with Stock, Wolsleley owns the Ferguson plumbing group in the United States and has a Wolseley LBM operation in Canada.
During the interview, Appelmann said he believes that once the slump ends, America could sustain a rate of new housing starts of as much as 1.4 million per year. "When do we get there? I don't know," he said. "I expect the next six months to be challenging."
Appelmann also said that while he hopes the slicing is over, "we will continue to rightsize the business. ... If housing starts stay where they are, we will continue to look at [possibly exiting] markets."
Stock ranks second on the ProSales 100 list of the nation's largest LBM operations, with sales in 2007 totaling $4.7 billion, 94% of them to professional builders. Wolseley calls itself "the world's largest specialist trade distributor of plumbing and heating products to professional contractors and a leading supplier of building materials in North America, the U.K. and Ireland and Continental Europe."
Stock and Ferguson did see one benefit this year: Because Wolseley reports its overall results in pounds sterling, the fact that a pound now is worth just $1.68 vs. $2.03 in the same period last year means that its results helped Wolseley's overall number. Wolseley said its revenue in sterling terms in the five months ended Dec. 31 rose 6% while trading profit was down around 16%. In dollars, revenue and trading profit both dropped 30% from the year-earlier period.
