Wolseley announced plans for a significant restructuring of Stock Building Supply to further downsize its operations as a result of the continued deteriorating market conditions in the United States.
Plumbing and heating distributor Wolseley plc (Reading, England) announced plans
for a significant restructuring of Stock Building Supply to further downsize its
operations as a result of the continued deteriorating market conditions in the
The board of directors has decided to cut another 3,000
jobs (7,000 jobs were cut last year) and close 86 branches (about 25 percent of
Stock’s revenue and 28 percent of its employees). Stock Building Supply will
focus on maintaining a presence in those markets where it is a leading player
and where it will benefit most from any market recovery - North Carolina,
Florida, Texas, California, Utah and South Carolina are its top states. However,
it will exit Louisiana completely, where it does not have a significant
Despite cutting jobs about 40 percent and closing 70 branches
since the market peak in January 2006, Stock reported a trading loss of $246
million in the year ended July 31, 2008, on revenues of $3,471 million.
“With the on-going decline in U.S. new residential construction,
significant over-capacity in the industry and the consequential negative impact
that Stock is having on the group’s results, it is imperative that we take
further action to restructure this business,” saidChip
Hornsby, group chief executive of Wolseley. “The measures we are taking
will move us back towards profitability, while still keeping a presence in key
districts for when the market recovers.”
Despite this, the board of
directors believes there is significant potential to create long-term value in
Over the last six months, the board has explored four
principal options for the company, including outright disposal, a joint venture
with another party, complete closure and a significant restructuring of the
business. Given the current conditions in the global financial markets,
concluding a transaction with a third party that recognises the long-term value
of Stock and that is financeable has not been feasible, the company stated.
In addition, it was decided that completely closing the operations was
not an appropriate strategy, since it would deprive shareholders of the
opportunity to benefit from a market recovery.
The restructuring of
Stock does not affect any of the other operations in the group.