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 United States.
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 presence.
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
this, the board of directors believes there is significant potential to create
long-term value in the business.
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.
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.
restructuring of Stock does not affect any of the other operations in the