Article Number : 2190 |
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| Date | 8/6/2007 8:37:14 AM |
| Written By | LGM & Associates Technical Flooring Services |
| View this article at: | //floorbiz.com/BizResources/NPViewArticle.asp?ArticleID=2190 |
| Abstract | MIXED BAG: The good news: Home Depot finally sold its Supply Unit to three private equity firms for $10.3 billion, removing a liability from Robert Nardelli’s reign as CEO, which was terminated earlier this year... |
| Article | MIXED BAG: The good news: Home Depot finally sold its Supply Unit to three private equity firms for $10.3 billion, removing a liability from Robert Nardelli’s reign as CEO, which was terminated earlier this year. He created Home Depot Supply in 2000, and its failure to reach its potential in cost savings and profit margins was not popular with investors or analysts. His departure from the company was softened by the comforting thought that he took home $270 million for the past six years—$45 million every 52 weeks. The bad news: Home Depot Supply provided $12 billion in revenue and now the company must find another way to grow, to fill that gaping hole in its volume. To accomplish that, Home Depot is counting on new CEO Frank Blake to turn things around. Of course, the $10.3 billion puts a lot of options in play. HOUSE CALL: New home construction fell again last month as the nation’s homebuilders continued to struggle with a debilitating housing slump. The decline was expected and reflected weakness in the South and West, which offset construction gains in the Northeast and Midwest. The problems in the housing sector signal the end of a prolonged boom period in which sales of both new and existing homes set records for five consecutive years. When the boom ended last year, builders were left with record levels of unsold homes and had to deal with the problem. The inventory glut worsened in recent months as buyers who stretched to purchase homes during the boom years are now going into default at record levels, dumping more homes back on the market. Bottom line: The housing market will rebound. There are more people than product; the demand exceeds the supply. GONE: More than 95% of the voting shareholders of Armstrong Holdings, Inc. (AHI), former parent company of Armstrong World Industries, approved a Plan of Dissolution, Distribution and Winding Up at a special meeting held last week. The board of directors of AHI, which has no operations and no employees, must distribute the company’s assets of approximately $27 million in cash. There are 40.55 million AHI shares outstanding, and almost half were voted. The timetable for dissolution depends on several factors that are not controlled by the company, which includes the receipt of necessary tax clearance. AHI plans to file Articles of Dissolution and dispense its net assets to shareholders in the fourth quarter. UPDATE: Ben Bernanke, Federal Reserve chairman, at a meeting last week, altered his earlier forecasts when he said the economy was positioned for moderate growth for the remainder of this year, but that continuing problems in the housing market caused the Fed to slightly reduce its projection from estimates it released in February. The forecast now calls for the economy to expand at a 2.25% to a 2.5% rate in 2007 and by approximately 2.75% in 2008—that’s about .25% lower than its February prediction. Inflation is the Fed’s “predominant policy concern” and there is general expectation that it will leave the interest rate unchanged at 5.25% for the rest of the year. Among other benefits, not raising the interest rate will surely help the limping housing market. REALLY BIG: The National Association of Wholesaler Distributors (NAW) says sales of all wholesaler-distributors reached $3.9 trillion in 2006, a 10% increase over the previous year. There are 13,000 distributors—roughly 5% of the total number of 259,000—with annual sales greater than $25 million. The largest of the group have annual sales exceeding $80 billion. Our own National Association of Floor Covering Distributors contributed to that $3.9 trillion last year and some of its members are part of that elite 5%. |