Distributor News: 9.6.2011

HD Supply Sells Off A Piece Of Itself  

In an August recent filing with the SEC, HD Supply said it would “sell all…interests in its Plumbing/HVAC business” to Hajoca Corp.

According to Modern Distribution Management, Hajoca is No. 3 on its list of the top 10 HVAC/Plumbing/PVF distributors. MDM also said the sold-off operations totaled $421 million in 2010 sales. In fiscal 2010 (ended Jan. 30), total sales at HDS was $7.48 billion.

Additionally, on the 2010 Premier 150 list published by Supply House Times, Hajoca of Ardmore, Penn. ranked ninth among plumbing, HVAC and PVF distributors, and was credited with 250 locations. HDS was placed second, with 900. Both were included among the 14 distributors with $500 million or more in annual sales.

Below: The top 14 distributors serving the plumbing, HVAC & PVF industries on the Premier 150 list, as ranked by Supply House Times.

Specific units HDS is shedding have not yet been publicly disclosed. Neither the HDS nor Hajoca websites hosted a release on the deal as of close-of-business on Sept. 2.

Industry gossip: See what plumbers are saying about the transaction on the Ridgid Forum.

Perhaps of some interest is this comment: “I guess the days of getting tons of markdowns by bringing in 5 different quotes for them to price match, then the pro rewards of 3% and then slapping them with a 10% off coupon at Lowe's days are over?”

Commentary: Tom Gale of MDM, in an Aug. 29 blog, offered commentary asking about the “direction of industrial distribution”—wondering aloud if anyone would ever successfully pursue industry-wide consolidation. 

Official explanation: TheWholesaler.com offered what it said were official HD Supply responses to some obvious questions arising from the deal.

Background: According to Gale, the sold-off operations consisted of distribution locations formerly incorporated inside of Hughes Supply, which was acquired by HDS years ago—back when it appeared to be the “industry consolidator.” Hughes, strong in the Southeast, also transferred to HDS a significant electrical distribution operation which remains inside of HDS.           

HDS, is the company sold off, for the most part, by The Home Depot to a three-headed owner group consisting of Bain Capital, Carlyle Group and Clayton, Dubilier & Rice. The Home Depot owns a small portion (12.5%, at last check) of HDS.

Note that Clayton, Dubilier & Rice is also one of the three majority owners of Rexel SA of France, which has a minority ownership share in public hands.

Hurricane & Earthquake Impact

Distributor’s point-of-view: Mike Leman, owner of Main Street Plumbing and Electrical Supply Co. in Mineral, Va.—roughly the center of the 5.9 quake—told The Washington Post, “Nothing happens here. Nothing. I’m serious. This is a shocker for all of us.”   

Leman reportedly moved to the town 17 years ago from Philadelphia.

Leman was also quoted in the News Leader, a local newspaper, saying his business needs “serious and expensive repairs” at best. “At worst, it could be condemned,” the newspaper noted. “The facade had become detached from the rest of the building, and daylight was visible through a 4- to 6inch gap that opened between the front wall and the ceiling.”

Below: Leman surveys the damage to his building—photo from Zimbio.com

Stock up on D-cell batteries: According to Home Channel News, “Most hardware stores and home centers along the Eastern Seaboard ran out of D-Cell batteries early on Friday (before the storm hit).”

Distributors Expanding

CED exploring new markets in Northwest: According to CEDnw.com, CED is looking to open “more locations to better serve our communities.” The company’s website says it will be opening a location in Williston, N.D. in October. The company also says it is hiring “entry-level drivers, warehouse, and clerical workers, as well as experienced individuals in sales.”

CED leases spot in Newbury Park, CA: According to the website of the Ventura County Star, CED “signed an office lease for 600-square-feet at the Paraiso Town Center in Dos Vientos.”

Rexel in Daytona Beach: The News-Journal reported on Aug. 27 that Rexel had leased a 10,500-square-foot space and had “moved its regional distribution operations into the newly leased space on Aug. 15” from a nearby location.

WESCO augments credit lines: WESCO Distribution made moves to “provide long-term, low-cost access to bank-funded capital,” CFO and VP Richard Heyse said in a recent news release.

Elsewhere In Distribution

Affiliated Distributors: In a short video, Mary Jo Martin, editor of The Wholesaler magazine, shared notes on her recent trip to Philadelphia—which included a visit with the “great guys” at A-D, including CEO Bill Weisberg. An article in the magazine’s October issue will discuss A-D on the occasion of its 30^th anniversary.

Interline to buy back shares: The company, with stock in public hands (symbol IBI), said on Aug. 15 that it would buy back up to $25 million of its common stock in the open market or in private transactions.

NAW book on Kindle, NOOK: Taking Charge of Distribution Sales: 9 Proven Skills to Lead and Manage Your Sales Team is now available as a Kindle edition and a NOOK book, NAW said.

Retail Watch

A July posting on LowesforPros.com noted that “business customers” can save 5% on in-store purchases via use of a Lowe’s Business Credit Account.

ReStore, the retail operation of Habitat for Humanity, recently opened a retail store in the Chicago area. A local newspaper reported that customers could find “appliances, cabinets, countertops, doors, electrical supplies, plumbing, lumber (6’ or longer), hardware, tools, lighting and wooden furniture” in the retail outlet.

Something up your sleeve? According to Home Channel News, on July 9, a customer at The Home Depot in Linden, N.J. was arrested for allegedly walking out of the store without paying for copper pipes. The man allegedly took $1,876 worth of copper pipes and placed them inside of PVC pipes. He then put caps on the ends of the PVC pipes to hid the copper pipes. The customer has been charged in this case.

The Home Depot

• Competing for pro customers, The Home Depot “recently began rolling out its First for Pro initiative, designed to boost service for pro customers,” Home Channel News reported.
• The company now serves 100% of its retail outlets from its regional distribution center infrastructure, a company exec said at a July conference. The Home Depot now has 19 rapid deployment centers (RDCs). The company thinks it can “put more volume through [the RDCs]…add more vendors, and continue to lower the cost of goods” with this infrastructure.”