For True Value CEO, growth looms large
Chicago-based True Value CEO Lyle Heidemann had some good news for dealers gathered in Orlando, Fla., during the general session of the co-op's 2012 spring market. Sales were up, he said. So are expectations.
For the year ended Dec. 31, True Value revenue increased 3.4% to $1.86 billion, as the co-op is riding a wave of consecutive quarterly sales increases that now extends to five. Full-year earnings for the co-op were $60.3 million, down 0.7% from $60.7 million in 2010.
"Our goal is to generate $60 million of new business growth each year -- that's right, $60 million of new business growth." That's about how much the co-op gained in 2011. So how do you keep it up? Heidemann pointed to farm & ranch products; new bill-through vendors such as Benjamin Moore; international business, expansions and relocations, "and of course," he said, "new True Value stores."
Regarding this last point, Heidemann unveiled a new option he described as "an offer you can't refuse.” It includes a 10-year equity loan and 100% free opening stock order based on the co-op's Destination True Value planogram assortments and recommended inventory levels.
Heidemann said the new option can reduce the investment in a new store by almost 60%.
Following the event, Heidemann told Home Channel News the proposal will change attitudes about retail expansion.
"The obvious targets are the retailers who are already running a hardware store, but this should also change the interest level for some of the people who want to open their first store," he said. "We had a lot of interest. It was a surprise announcement. We're trying to take the cost out of opening a hardware store. It's very capital intensive between the inventory, fixturing, computer and finishing up the store -- for a 10,000-sq.-ft. store its about $850,000 to open."
For the quarter, True Value revenue was $441.9 million, up 5.8%. Quarterly earnings were $12.4 million, up 39.3% from $8.9 million in the prior-year quarter.