Home » Wolseley Looks to Exit Stock Building Supply Business
Wolseley Looks to Exit Stock Building Supply Business
March 5, 2009
UK-based distributor Wolseley plc is once again looking to exit its U.S.-based Stock Building Supply operations with a deadline of Aug. 1, 2009.
Even after extensive cost-cutting measures last fall that included reducing headcount by an additional 3,000 and closing 86 branches, the business lost $246 million last year.
Stock Building Supply is heavily reliant on housing starts in the U.S., which declined from around 750,000 in Oct. 2008 to about 460,000 in January. Enough is enough, John Whybrow, chairman of the board, says in a Webcast on the Wolseley site. "We cannot go on with markets deteriorating like that."
Wolseley said it prefers a joint venture partner for the business, though closing Stock - the worst-case scenario for Wolseley - remains an option. "We are determined to exit the business," CEO Chip Hornsby says.
Wolseley's Central and Eastern Europe business is also under strategic review.
In its announcement Friday, Wolseley said it wants to focus on its North America Plumbing and Heating unit, as well as UK, Ireland, Nordic and French operations. Although it did say it would not allocate "further expansionary capital" to France until financial performance improves.
Wolseley also provided a financial restructuring update, saying it will initiate a share sale to raise £1 billion (US$1.4 billion) to reduce debt. Wolseley will also secure €1 billion, two-year debt facility starting in August 2011 if the company is successful in raising the funds.
The moves are another step in response to a rough couple of years for the distributor. Since Aug. 1, 2007, the company has reduced headcount by 17,000, and closed 713 branches.
In a separate statement, Wolseley said that it believes the downturn in the UK, Irish and Nordic economies is likely to be more severe than experienced in the rest of Continental Europe.