Stock Building Supply to cut 3,000 jobs
Triangle Business Journal - by Chris Coletta and James Gallagher
Stock Building Supply, one of Raleigh’s biggest companies, will cut 3,000 jobs and close 86 branches in an effort to save money – but a spokeswoman says she expects cuts to be "minimal" in North Carolina.
Stock’s parent, British company Wolseley plc, announced the cuts Thursday.
Wolseley, led by CEO Chip Hornsby, said the announcement was the culmination of a review of Stock Building Supply announced in late September. The company considered selling Stock but wasn’t able to find a buyer because of the poor state of the capital markets. Wolseley also considered closing Stock but said it believes the building supply company will have value when the U.S. housing market recovers.
Stock Building Supply's fortunes have headed south in tandem with the unraveling of residential real estate. In the fiscal year ended in July 2006, Stock posted sales of $5.3 billion; two years later, sales had fallen to $3.5 billion. The company lost more than $200 million in fiscal 2008.
Stock Building Supply has 1,100 workers in the Triangle area, a headcount that includes its headquarters as well as multiple building supply locations. The figure is down by about 600 workers from just two years ago.
Cuts to the North Carolina operation, which includes more than 60 building supply locations around the state in addition to the Raleigh HQ, are expected to be "minimal" in the current round of layoffs, says Wolseley North America spokeswoman Denise Waters. Waters didn't have specific figures.
North Carolina is on a list of states, which also includes Florida, Texas, California, Utah and South Carolina, where Stock has a strong market position, according to Wolseley, which says Stock will benefit from business in those states after the housing market recovers.
It's not likely that Stock's headquarters operations will be cut much further than they already have been, says Kevin Cammack, an analyst at Kaupthing Bank HF in the United Kingdom.
There may be a few more cuts, Cammack says, but Stock already has pared down its headquarters staff in the past two years – a time that's seen the company's overall headcount drop from more than 19,000, to less than 12,000.
"They've got to the point that they're cutting the fabric of the business," he says.
The closure of 86 branches will bring Stock Building Supply to 209 locations overall. The 3,000 job cuts will bring it to about 8,700 workers – a 55 percent reduction since the company hit its employment peak in 2006.
Wolseley's stock was trading down sharply in trading in London on Thursday – an indication that investors expected Wolseley to take more drastic action with regard to Stock. And more cuts could well be coming, given the huge scope of Stock's losses, says Cammack.
"You certainly cannot conclude that this is the end of the downsizing process," Cammack says.
Wolseley said Thursday that its layoffs and closures are expected to cut Stock Building Supply’s annual run rate for losses by about $100 million. Stock will post losses of less than $200 million in the fiscal year ending in July 2009, Wolseley says.
Cammack says such losses will persist for at least a few years – and are likely to remain in the hundreds of millions of dollars – as the U.S. housing market recovers.
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