In its final results for the year ended July 31, 2008 released in late September, parent company Wolseley plc reported that local currency revenue in the U.S. plumbing and heating operations (Ferguson) rose by 1.3% to $11,226 million, with trading profit 0.8% lower at $794 million, excluding $42 million of exceptional restructuring costs. During the year, headcount in the U.S. plumbing and heating operations was reduced by more than 2,250 and 123 branches were closed. A new 645,000-sq.-ft. distribution center in Stockton, CA, opened in spring 2008 and a 537,000-sq.-ft. distribution center is scheduled to open in Frostproof, FL, in October 2008. More restructuring and cost-cutting measures are planned.


More than 90% of Ferguson’s branch locations are outperforming their local market in residential product sales and over 70% in non-residential product sales. Gross margin was unchanged. Some pricing pressure was offset by managing the pricing matrix, increased counter and showroom sales and more private label sales with higher gross margins.

Chip Hornsby, Wolseley’s chief executive, attributed Ferguson’s performance to its attentiveness to cost and customer service, and in particular, its increased focus on working capital. Inventory is about 25% lower than it was two years ago while service levels to customers are higher than they were 24 months ago.

Stock/U.S. Building Materials

Stock Building Supply closed 70 locations and has reduced its workforce by about 40% over the past few years. Stock’s sales were down 24.5%, reflecting a 21% decline in same-store sales volumes, the effect of previous branch closures (4%) and 3% price deflation in lumber and panels.

Despite the deterioration in trading conditions, Stock outperformed across all its districts. Stock’s gross margin continued to decline due to pricing pressure in the difficult markets. A trading loss of $246 million was reported for the year, excluding exceptional restructuring costs of $13 million relating to 36 branch closures and headcount reductions.

During the year, Stock reduced headcount by 3,150, representing another 20% of the total workforce. In August 2008, headcount was reduced by a further 135. As of July 31, 2008, Stock had 285 branches, vs. 308 in 2007.

“If we separate out the Stock business and … look at the underlying performances of the other business, our results were only down 3% last year,” Hornsby said. “Stock is … in a very difficult position, with the U.S. housing market being the way it is,” Hornsby said. “And we see … no opportunity for that to improve … we’ve got to continue to address that, almost as a separate issue, and move forward with the balance of the organization.”

For more information,