2015 Annual Report

2015 ANNUAL REPORT
70 years
of
HELPING OUR
MEMBERS GROW
AND ACHIEVE
THEIR DREAMS
70 years
of
helping our members
grow and achieve
their dreams
this year marks the
70th anniversary of
Do it Best Corp. and our
unwavering commitment
to helping our independent
member-owners grow
their businesses and
achieve their dreams.
1
In 1945, Arnold Gerberding realized his vision for increased buying power through the
cooperative then known as Hardware Wholesalers, Inc. (HWI). Since then, we’ve grown to
serve more than 3,800 members across the US and in 54 other countries who are supported
by 8 strategically located retail service centers. Through the years, we’ve maintained
Mr. Gerberding’s commitment to keeping operational costs low and being exceptional
stewards of our members’ resources. Today, under the leadership of just our fourth
President and CEO, Bob Taylor, we continue our focus on our #1 goal:
helping our members grow and achieve their dreams.
2
from
the chairman
BUILDING SUCCESS ON THE
STRENGTH OF OUR RELATIONSHIPS.
As my first year as your Chairman of the
Board of Directors comes to a close, I want
to convey what a tremendous privilege it is
to serve the membership of Do it Best Corp.
and how impressed I am with this entire
organization. From the executive team to
each associate, everyone at the company
is guided by a culture of service and
the highest level of integrity. I can say
firsthand that our co-op is 100 percent
driven by the goal of helping our members
grow and achieve their dreams.
Every Do it Best member-owner should take
great pride in this year’s strong financial
results. They clearly reflect the hard work
and success you’ve had in your business
and we should all be proud to be part of an
organization that has distributed rebates
in excess of $100 million to its members
for 12 consecutive years. It’s an affirmation
that our co-op demonstrates outstanding
stewardship of our resources. And I hope
you share my satisfaction in witnessing
the tremendous effort put forth on our
behalf to maintain the lowest operating
costs of any co-op in our industry.
In this report, you’ll read about the many
ways Do it Best Corp. delivers supply
chain efficiencies and supports programs
and services that create real value for
its members. I credit our outstanding
leadership team with driving continuous
improvement and helping the co-op evolve
with new technology and emerging sales
jim lehrer
chair m an of the board
3
opportunities to best meet members’ needs. They and
the entire team have a level of responsiveness to our
membership that is simply unmatched in our industry.
Indeed, this is a relationship-driven organization, and
I want to speak to the importance of the two-way
aspect of that relationship. Eighteen years ago, I
served as General Manager of Our Own Hardware as
it was undergoing its merger with Do it Best Corp.
(then known as HWI). I spoke to our members at length
about the full benefits of this co-op combination and
what this new partnership could mean for them.
After seeing the two companies joined successfully, I
left the wholesale side of the business and purchased
Brownsboro Hardware & Paint in Louisville, Kentucky.
And now, like many fellow Do it Best members, I
work long hours and regularly do everything from
stocking shelves to refilling the soda machine.
What makes us successful as retailers is our
understanding of our customers. I know they can
probably buy many of the items in my two stores at
a national chain or online, but what brings them back
in time and again is the experience they have at our
stores. We are problem solvers who use our expertise
to provide solutions for our customers. We are
independent business owners who know our markets
better than anyone. Most importantly, we’ve learned
through experience what works and what doesn’t.
And this is where Do it Best Corp. makes all the
difference in our success. Our co-op acknowledges
that we know what’s best for our businesses, and they
work to provide us the tools to translate that knowledge
into real growth. We have a powerful partner with more
than 160 programs available to members, and not a
single one is required or mandated. As independent
business owners, we each pick and choose what’s right
for us. And no matter what type of markets we serve,
we have the buying power of a $3 billion company.
For my stores, an important example is ADpakSM with
its professional circulars and catalogs that we can
customize right down to the item. We use this program
to drive sales and build relationships with our diverse
customer base. With ADpak, my advertising costs
are a fraction of what they would be otherwise — and
the program allows me to compete with the same
level of professionalism as the national chains.
Of course, a significant aspect
SIMPLY PUT, YOU OWN THIS
of being a Do it Best member
is the consistently high
CO-OP AND THE MORE YOU
rebate and how it helps fuel
SUPPORT IT, THE MORE
whatever you need to grow. Is
YOU WILL GAIN FROM
it time for a store improvement
project? Or does growth mean REBATES AND INDUSTRYexpanding into new locations? LEADING PROGRAMS.
Whatever plans you can dream,
the rebate is there to help make them happen.
So this is where I encourage each of you to look at
your level of commitment to Do it Best Corp. – your
company – and see where you might benefit from
consolidating your purchases and streamlining
your operations. Simply put, you own this co-op
and the more you support it, the more you will
gain from rebates and industry-leading programs.
As I say over and over, “Buy from yourself!”
As we turn toward the year ahead, I wish each of you
success and prosperity. Thank you for the opportunity
to serve you.
4
from
the president
DELIVERING CONSISTENTLY HIGH
PERFORMANCE FOR 70 YEARS AND COUNTING.
Seventy years ago, our founder, Arnold
Gerberding, met with seven independent
hardware store owners to officially incorporate
Hardware Wholesalers, Inc. What started then
as a 96-member Midwestern co-op with just
over a dozen product lines available in whatever
warehouse space Arnold could find, is now a
$3 billion international powerhouse supporting
3,800 member-owners across the US and in
54 other countries. That success has been
built on a simple but important philosophy of
serving others as we would like to be served,
and with an unwavering commitment by the
Do it Best Corp. team to our #1 goal of helping
our members grow and achieve their dreams.
While there are many milestones for us to
take pride in over those seven decades, it’s
the consistently high level of performance of
which we can be most proud. In good times
and in challenging times, we have consistently
delivered on our promise to make the best even
better. We’ve done it through the strategic
growth and operational efficiency in our global
distribution network, in our co-op infrastructure
and technology, in our rock-solid financial
foundation free of any long-term debt, in our
world class team, and in our ability to deliver
consistently high member rebates year after
year after year. That’s the performance our
member-owners have come to depend on, and
again this year Do it Best Corp. delivered.
Gross sales for Fiscal 2015 finished up 4.34%
at $2.998 billion. Within that total, direct
shipments led the way, up 5.73%. Sales through
distribution followed, climbing 3.52%. And, in
spite of tremendous price deflation, unit sales
of lumber remained positive, allowing us to
finish the year up 2.71%. Even with considerable
investments in IT and infrastructure, our continued
close discipline helped us hold total operating
expenses for the year at just 1.94% after
inventory capitalization, enabling another strong
profit year for Do it Best Corp., and a year-end
rebate to members of $116.4 million. In fact, this
is our twelfth consecutive year with a rebate
above $100 million! Classic Enhanced Rebate
members will receive an average 11.88% rebate
on their regular warehouse purchases, while
Vision Enhanced Rebate members will receive
an average 6.28% regular warehouse rebate.
bob taylor
president & ceo
5
In addition to the strong year-end rebates,
members who increased their regular warehouse
purchases over their prior high water mark will
receive an additional 3% incentive in Do it Dollars
on that incremental growth as a part of our
RSC/VIP! rewards program. Members can use
those incentive dollars to cover expenses like
Market and Winter Conference travel costs,
invest in ADpakSM and Signature™ Store Design, attend
Do it Best Corp. CORE® training and much more.
With the housing market continuing to build momentum,
consumer confidence on the rise, and the benefit of lower
energy costs, our members are enjoying growing sales
and profitability, and they are overwhelmingly positive in
their outlook for the year ahead. Our Do it Best Corp.
team has been keenly focused this past year on helping
them add even more new business-building tools to
their tool box to capture those opportunities.
With the explosive growth of smart phones and tablets
accessing the web, we re-launched doitbest.com, our
ecommerce platform, last fall to provide members with
flexible service options and complete online sales support.
We also took our online product catalog to new heights with
the enhancements to mydoitbestcatalog.com. This fully mobile
platform makes it easier than ever for members to place their
orders with Do it Best Corp., and ensures they can get the
items they need, when they need them, from the store, the
jobsite or from home over the weekend. Our efforts to make
the best even better garnered the first ever IT development
patent for Do it Best Corp. and
were recognized once again by
I AM PROUD TO BE A
MEMBER OF A TEAM THAT’S the leading IT industry magazine
InformationWeek with a coveted
DEDICATED TO THE SUCCESS
spot in their annual Elite 100 list.
OF OUR INDEPENDENT
MEMBER-OWNERS AND
WORKS RELENTLESSLY TO
CONTINUE TO MAKE THE
BEST EVEN BETTER.
With tremendous growth of over
80% in just the past three years,
INCOM Distributor SupplySM has
helped us tap into the huge potential
in the true industrial/commercial
market. This past year we launched
Do it Best INCOM SupplySM to better help our retail hardware
and LBM members tap into this significant opportunity. Our
comprehensive training and support positions Do it Best
members to win in this key business segment.
Having the right mix of product in key product categories
is essential for success at retail. With over 32,000
planograms placed in just the past six years, Do it Best
members have demonstrated with their strong support that
our Category Solutions program is exactly the tool for that
effort. Best of all, every planogram is fully supported in
distribution providing for easy, weekly fulfillment. With over
67,000 items available through distribution and over 1,400
no-adder drop ship vendor programs, members have access to
a wide array of product at very competitive prices. In addition,
Do it Best Corp. supports a wide selection of private-branded
items, including our exclusively licensed line of Channellock®
products where sales climbed another 17% this past year.
Conveying a competitive retail price image while driving
strong bottom line margins requires a disciplined
pricing strategy. Our dedicated team of pricing analysts
continuously evaluates the marketplace through data
collection and price shopping, consumer awareness studies,
category reviews, and research into emerging product
trends to ensure our members have the right product
assortments, at the right prices in their local markets.
With tools like RetailSTART!®, which helps members open
new stores or significantly expand existing locations, and
RetailPLUS!®, which helps members ramp up the performance
of their existing footprint, our Retail Performance team is
uniquely positioned to help members move their operations
from good to great! And, our Signature Store Design Program
continues to provide Do it Best members with the very best
in both retail and pro-yard development. The results are
an average 17% gain in sales! We’ve now added even more
fuel to those efforts with the introduction of a new incentive
discount of up to 50% on a member’s initial stocking order
for an approved RetailSTART! project! Over the past three
years, our members have completed 220 store enhancement
and expansion projects all across the US and in more than a
dozen countries, with another 150 in progress, including our
latest Do it Centers planned for early 2016 in Saudi Arabia.
Providing our members with access to capital to support that
growth has been an important focus for Do it Best Corp. In
just a few short years since its inception, we’ve invested
over $14 million in our members’ growth through the
Retail Performance Loan Program, offering loans at an
unprecedented rate of prime minus one percent.
At the core of our operations is a global logistics network that
efficiently connects Do it Best members with the products
they need, helping them spend less time worrying about
the back door and where those goods are coming from, and
more time focused on the front door and taking care of their
customers. This past year that included navigating carefully
through the slowdown at the West Coast ports to ensure
continued availability of our globally sourced products. The
team also demonstrated their resourcefulness and agility in
working with our vendors on winter storm related products
to keep our members well supplied when many other
merchants were out of stock. On top of that, our logistics
team continues to set the bar for the entire company on our
workplace safety initiatives, with our Waco, TX, service center
achieving a remarkable five years without a lost time injury!
There is a great diversity of members among the Do it Best
family. From small to large, from hardware stores to pro
lumber yards, from industrial commercial to e-tail only
operations, and from urban to rural, we support a wide
range of operations. As such, there’s no one cookie cutter
approach that could possibly work for all members. Instead,
it demands a flexible, scalable, menu-driven set of programs,
services and solutions to help each of our member-owners
build their brand in their local market. We don’t mandate their
participation, but rather work to earn their support through
the demonstrated strength of our offering. And, we match
that with the personalized service and support of our talented
team of professionals. The stories our members share in this
report are examples of how we do that. Collectively, they help
us tell the Do it Best story. Our team knows that these are
stories we earn every day through our steadfast commitment
to our #1 goal of helping our members grow and achieve their
dreams. I am proud to be a member of a team that is dedicated
to the success of our independent member-owners and
works relentlessly to continue to make the best even better.
6
ALL AMERICAN
DO IT CENTER®
Brian Buswell, Owner
Richland Center, WI
Member since 1994
WITH THE DO IT CENTER, WE HAVE A STRONG IDENTITY WHERE STORE DESIGN,
PRODUCT PACKAGING AND MARKETING ALL TIE TOGETHER.
Our family business started out humbly
when we bought our first 600-square-foot
lumberyard. Now over 30 years later, we’ve
recently opened our third ground-up store, a
fully-branded Do it Center® in Richland Center,
Wisconsin. The Retail Performance team led
our efforts from the very beginning with a
comprehensive market and site analysis that
helped us identify the best location for the
new store. They took the guesswork out of the
process, and helped us select an underserved
community with tremendous opportunity.
Once the project got underway, the
SignatureTM Store Design team did an
outstanding job of helping us maximize our
highway visibility by giving the side of the
building facing traffic a very welcoming
appearance. And the merchandising team was
ready with new planograms well in advance of
7
the store’s completion, helping the entire process
go very smoothly. I was most proud of our staff
members, who each stepped up and worked
hard to make the project a success. We’ve been
warmly welcomed by the community and sales
have continued to exceed our projections.
The expansion of Do it Best Corp. retail programs
over the years has been tremendous for members
like me. From financing and inventory incentives, to
marketing support and exclusive product lines,
there are so many ways to maximize the benefits
of member-ownership. Plus, the co-op’s purchasing
power and industry-leading rebates are keys to
growing our business.
My dream was to own my own business and
grow it into a regional powerhouse that I
could pass on to my children. With every new
store project, we’re building on that dream.
8
ROGERS DO IT BEST®
HARDWARE
Paul & Becky Rogers, Owners
Sparta, MI
Member since 1967
9
WITH GUIDANCE FROM DO IT BEST CORP., WE’RE TAKING MY FAMILY’S 87-YEAR
COMMITMENT TO OUR COMMUNITY AND BUILDING A VERY BRIGHT FUTURE.
Rogers Hardware was started by my great-grandfather
in 1928. When my father took over the store in the
1960s, he joined Do it Best Corp. and moved across
the street to our current location. In 2000, my wife
and I purchased the business from my dad, and we’ve
been working to help realize his dream of giving
the store a real “wow” factor for our customers.
Two years ago, we began the process of expanding into
an adjacent building using the RetailPLUS!® program. We
had been considering moving the store to a new location,
but the Retail Performance team at Do it Best Corp.
conducted a comprehensive customer survey, and
89% of respondents indicated they wanted us to
remain in our downtown location. So we listened and
chose a co-branded SignatureTM Store Design to unify
the old and new parts of the store. We used
our co-op’s inventory incentives to add 1,000
new SKUs, which really enhanced our product
offering to better serve our customers.
The Retail Performance team provided valuable
guidance to us throughout the project, while staying
flexible and respectful of our ideas for tailoring the
store to our particular market. When our customers
first walked into the expanded store, they were
astounded at the changes, especially the increase
in inventory. Right away we saw double-digit sales
increases, so we knew all the hard work was worth it.
The new store truly highlights what sets us apart from
larger chain stores: service and convenience. Our
customers appreciate that they can stop in, get help
right away and find what they need. And, they really love
that we chose to stay here in the center of town. For a
fourth-generation family business to still be relevant
to the community and continue to grow — to us, that’s
a huge accomplishment. It’s how we define success.
10
YOUR BUILDING CENTERS
Dean Conrad, Vice President Purchasing & Marketing
Williamsport, PA
Member since 1994
DO IT BEST CORP. HAS THE EXPERTISE TO
HELP OUR CONTRACTOR-FOCUSED BUSINESS
FULFILL ITS RETAIL SALES POTENTIAL.
Your Building Centers, known for years as YBC, is a
100% employee-owned company with 14 locations
in Pennsylvania. While many of our locations are
no-frills lumberyards, we recently opened our largest
retail facility in Williamsport using the expertise of
the Do it Best Corp. Retail Performance team.
The highlight of our new store is a 10,000-square-foot
design center with kitchen, bath, flooring, home décor
and millwork. It features a separate entrance so
that contractors can bring their customers in after
hours to select items for their projects. We chose the
member-branded SignatureTM Store Design and did
a complete renovation of the interior and exterior of
the building. We realized we had a huge opportunity
to be a one-stop shop for contractors who were going
elsewhere for hardware, paint, electrical and plumbing.
So as part of the new layout and updated fixtures, we
were able to add 6,000 SKUs to better serve them.
The Retail Performance team provided a wealth
of knowledge and guided us through the entire
process. They did an extensive evaluation of our
inventory and suggested a product mix based
on our footprint and customer base that would
provide strong sales and even stronger margins.
As an employee-owned company, we value our
relationship with a member-owned co-op. It is very
important to us to have confidence in pricing integrity
and buying power. It is also key that we can focus on
building and promoting the YBC brand. And, of course,
the consistently high rebate is a huge factor in helping
us maintain a healthy cash flow and grow our business.
With its significant sales and margin increases,
the Williamsport store is a big turning point
for us as we seek new retail opportunities in
all our markets. And I know we will be building
on this success for years to come.
11
Dean Conrad, Vice President
with Store Manager Chip Yost
12
Peter Luiten and Roderick Lucia
BUILDING DEPOT
Roderick Lucia
Curaçao, Netherlands Antilles
Member since 2000
WITH SUPPORT FROM DO IT BEST CORP.,
WE’VE TURNED A TRAGEDY INTO A FRESH START WITH A BRIGHT FUTURE.
Building Depot was born from the company
my father started in the 1970s that produced
chain-link wire fencing and other products here
on the island of Curaçao. In 2001, we had the
opportunity to meet with the Do it Best Corp.
International team, and they helped us establish
a growing home improvement business within
our store that also sold clothing, furniture
and many other items.
In 2013, on my 40th birthday, a devastating
fire completely destroyed our store, and with
it, everything we had built over the previous
12 years. Do it Best Corp. responded
immediately, sending down a team to begin
drawing up plans for a new store. Although we
started from scratch, we had enough experience
to know exactly what we wanted, so plans came
together very quickly. Once the foundation
was poured on our new 200,000-square-foot
building, we opened in just five months.
13
The team from Do it Best Corp. worked tirelessly
to assist us with everything from our store design
to helping us set up and merchandise the various
departments. In all, we were closed for 18 months,
but once we reopened, our customers returned
in record numbers. In fact, in the first six months,
we far surpassed our previous annual sales.
Our membership with Do it Best Corp. is invaluable
to our business. Each year we have access to
more and more vendors through the retail service
centers, meaning that we can now get many of
our household items through the co-op. This
streamlines our operations and also provides
the security of knowing that everything we
order is available and will be delivered reliably.
Most importantly, with Do it Best Corp.,
we’re not just a store number, we’re part of a
family. Our relationship is so strong that no
matter what happens — even when disaster
strikes — we know they’ll be here for us.
14
From left to right:
Linda Dailey, Accountant
Kevin Keely, President
Tom McLeod and Doyle Wiskur, Vice Presidents
LA CROSSE LUMBER CO.
Centralia, MO
Member since 1980
BY EMBRACING OUR COMMITMENT TO
DO IT BEST CORP. WE’VE OPENED UP TREMENDOUS
GROWTH OPPORTUNITIES FOR THE FUTURE.
As one of the oldest businesses in Missouri, we trace our
history back to 1873. At that time, northern white pine was
floated down the Mississippi River and manufactured by us
into lumber, right on the riverbank, before continuing on
to its final destination. Since that time, La Crosse Lumber
Company has expanded its lumberyards and currently
operates 14 full-service locations in Missouri and Illinois.
While La Crosse has been a member-owner of Do it Best Corp.
since 1980, not all of our locations had embraced that
membership. But because some of our locations have
overlapping customers, we recognized the need to have
consistent inventory and an overall unified look and
feel to enhance the La Crosse brand across two states.
So last year, we began bringing all of our locations
into the Do it Best family, beginning with our new
ground-up store in Centralia, which opened in 2014.
Our entire management team has quickly seen the benefits
of an enterprise-wide partnership with Do it Best Corp. To
begin with, their people treat even our smallest yards with
the same level of respect and service they’d give a big yard.
That mirrors our own philosophy of providing our customers
of all sizes with the very best knowledgeable service.
Plus, it was just a smart business decision. Do it Best Corp.
has the best programs to help up serve more retail
DIYers. They have the highest level of pricing integrity
and very advantageous terms. And most importantly,
they consistently keep operating costs low and
return the largest rebate to their members.
In many of our communities, La Crosse Lumber extends
back several generations, so our roots run deep. As
we strengthen our partnership with Do it Best Corp.,
we are confident that we’re putting our company in
a great position to serve generations to come.
15
From left to right:
C. J., Rob, Christine
and Bob Szafraniec
CRAGIN INDUSTRIAL SUPPLY
Rob Szafraniec, Owner
Chicago, IL
Member since 1982
YEAR AFTER YEAR, INCOM DISTRIBUTOR SUPPLYSM
CONTINUES TO BE THE BEST OPTION FOR
OUR INDUSTRIAL/COMMERCIAL BUSINESS.
My great-grandfather purchased Cragin Hardware Store
on the northwest side of Chicago in 1927, and we’re still
at the same corner, four generations later. Over the
years, we grew into a true industrial supply company,
because that’s who our customers are in this part of
the city. We became Do it Best member-owners in 1982,
and as we grew our industrial/commercial business, we
were one of the first to join INCOM Distributor SupplySM.
We view INCOM as a very strong partner in our business
because of the professionalism of the people and the
strength of its operations. In addition to the billions in
buying power, the co-op provides a very streamlined
purchasing system, outstanding order accuracy and
reliable deliveries. Over the years, they have been
extremely helpful in adding specific warehouse items
to help us better serve our commercial customers.
Most importantly, the availability of most items on a
one-each basis gives us the freedom to manage our
inventory in a way that’s most advantageous to our
business. We also have access to all of the Do it Best Corp.
programs and services that we can use as we see fit,
something a typical buying group can’t begin to offer.
Along with all of that, what sets INCOM apart is that
their people are always encouraging our input. When we
pick up the phone, we have confidence that the person
on the other end will be knowledgeable and will share
our feedback. We know that from the senior leadership
on to our day-to-day contacts in INCOM, everyone truly
cares about our business’ success. And as we look ahead
to providing for the fifth generation of Cragin Industrial
Supply, that’s the kind of partnership we’re glad to have.
16
FARM & HOME DO IT BEST® HARDWARE
Scott Jerousek, Owner
Wellington, OH
Member since 2007
INTEGRATED MARKETING PROVIDES A TREMENDOUS
OPPORTUNITY TO BUILD OUR CUSTOMER BASE.
Since the beginning, our business has been wholly focused
on serving the needs of our local community. My grandfather
started Farm & Home Hardware in 1960, and I’ve worked
here my entire life. Along the way, we transitioned from
a couple of different co-ops to Do it Best Corp., and I
purchased the company from my father in 2007.
Through the years, Best RewardsSM and ADpakSM have been pillars
of our marketing program. We’ve built a very loyal following
through an aggressive Best Rewards incentive strategy to
increase loyalty. And although our town has only 5,000 people,
we pull from an area of 15 miles in every direction. Using our data
collected through Best Rewards, we regularly send out about
23,000 ADpak circulars and 33,000 broadsheets. Across all these
communications channels, we’ve been very proud of the strong,
recognizable brand we’ve developed with the support of Do it Best Corp.
As I began to look to the future, one of the concerns I’ve had is
building the loyalty of the next generation of customers. With that
in mind, I’ve worked tirelessly with the experts at Do it Best Corp.
to develop a more comprehensive, integrated strategy that deploys
a wider range of marketing initiatives to intensify our customer
reach and build our brand across all customer touch points.
This integrated approach has really helped us focus on the many ways we
can leverage the tools available from our co-op to build even more equity
in the Farm & Home name. It starts with our ecommerce site, which not
only keeps us open for business 24/7, but also gives us an opportunity to
raise brand awareness, promote Best Rewards, increase subscribers to
our newsletter and expand our social media efforts. We work to ensure
that our channels are consistent as they complement and integrate
with all other touch points. For example, our Facebook site promotes
in-store activities and chances to earn even more rewards points — in
addition to promoting our community activities and involvement. In turn,
all of this allows us to learn more about our customers and cultivate
relationships so that we can not only further target our advertising for a
greater return, but also build closer connections within our community.
Our relationship with Do it Best Corp. has thrived because they support
our efforts to promote our brand and they are fully committed to
helping members like me succeed. On top of that, they are constantly
working to provide new, technology-savvy solutions to help us
grow our business with a younger generation. I feel strongly that
Farm & Home Hardware is well-positioned for continued growth
into the future — and I know my co-op is with me for the journey.
17
18
Newark, NY location
19
Brian with Co-owner David Secor
At their Savannah, NY location
SECOR DO IT BEST®
HOME & HARDWARE
Brian Secor, Owner
Newark, NY
Member since 1988
HAVING A STRONG RENTAL CENTER HELPS US EXPAND
OUR CUSTOMER BASE AND STAND OUT FROM THE COMPETITION.
Our company was founded by our grandparents
prior to World War II as both a lumber supply and
building business, and after the war, the housing
boom helped fuel its growth. By the time I joined the
business in the mid-1980s, we had become mainly
a building supply company with a little hardware.
One of the first decisions we made in that era would
become a defining factor of our future — our decision
to join Do it Best Corp. (then known as HWI).
By the early ‘90s, we began to look for ways to
differentiate Secor. We followed the advice of our
territory manager and began considering adding
equipment rental to our offering, and in 1994, we
established a Do it Best Rental Center™. We quickly
discovered that in our rural location, construction
equipment performed much better than lawn
and garden items, so as we grew, we added
mini-excavators, backhoes, lifts
and more. Today, we operate three locations: a
lumberyard; a hardware store; and a home center.
They vary widely in character and customer mix,
so we tailor our rental centers to meet the customer
demands of each.
The depth of knowledge of the rental experts at
Do it Best Corp. has been invaluable to our growth in
the program. They use a data-driven approach that
removes the guesswork and provides us a high level
of confidence that we’re making the right equipment
purchases. They also stress the importance of
maintenance, and that is a great opportunity to set
ourselves apart from competitors. Our customers
tell us all the time that they rent from us because our
equipment is “like new” and in good working order.
Having a successful Do it Best Rental Center takes
a big commitment and requires that you have
very knowledgeable employees. But if you have
a strong co-op partner like Do it Best Corp.,
with decades of experience in helping
members understand the rental business
and train your team, it’s a great opportunity.
With every successful rental, I believe we
earn that customer’s loyalty – and that’s
been a great way to drive our growth.
20
NIECE LUMBER
Marc Currie, Owner
Lambertville, NJ
Member since 2012
CATEGORY SOLUTIONS IS THE MOST
COST-EFFECTIVE WAY FOR US TO POWER
UP OUR PRODUCT SELECTION.
Niece Lumber has been in my family for four generations,
and I currently run the business along with my father
and aunt. The company started as a lumber, coal and
feed yard, and today we’ve evolved to have a full-service
lumberyard and millwork operation, as well as hardware,
paint and an extensive design showroom.
For 20 years, we were a member of another co-op, but I
wasn’t happy with their programs and national brand being
forced on us, and it just wasn’t a beneficial relationship.
In our market, Niece is a stronger name, and we didn’t
want to lose our identity. So three years ago, I decided
it was time to make a fresh start with Do it Best Corp.
Bruce Currie with son Marc
That move provided us a great opportunity to re-evaluate
our inventory. The Do it Best Corp. merchandising experts
introduced us to Category Solutions to help us bring
organization to our aisles and offer the right complement
of the best products in every department. Right away,
we saw significant increases in hardware sales simply
from having the right merchandise mix. We’ve embraced
the program fully, and in fact, it has led us to our current
project, a complete store redesign using a member-branded
SignatureTM Store Design. We tweaked the store so many
times over the decades that it had become clear that we
needed a modern store layout. Category Solutions has been
key to our ability to expand our inventory – because the
pricing and terms are so favorable, it’s really a slam dunk.
Even though our membership with Do it Best Corp. is still
relatively new, we’re already counting its many benefits.
They have a really great understanding of how a lumber
company operates in tandem with retail hardware, and
they’re experts at helping us maximize the benefits of
that combination for our growing customer base.
21
Jeff (center right) and the Hills Flat Lumber Co. team
HILLS FLAT LUMBER CO.
Jeff Pardini, Owner
Grass Valley, CA
Member since 1997
WITH EXCLUSIVE CHANNELLOCK®
BRANDED PRODUCTS, DO IT BEST CORP. GIVES
US YET ANOTHER WAY TO DRIVE RETAIL PERFORMANCE.
My grandfather started Hills Flat Lumber Co. in 1921 as a wholesale
lumber mill, which played a major role in supplying lumber for the
gold mines in Nevada County, California. In the 1950s, the mill was
sold, and the company diversified into lumber, building materials,
hardware and rental equipment. By the time my grandfather
passed away in 1983, my father had worked at the company for
nearly 30 years and was ready to step away. His plan was to sell
the business unless I was interested in taking it over. So at just
17, I made the bold decision to keep the business in the family.
At that point, we didn’t belong to a buying group and relied
on some regional suppliers for product. In 1991, my brother
Kennan and I attended a hardware show and started talking
with the various national co-ops. One vendor there strongly
recommended that we go with Do it Best Corp. (then known as
HWI), and we hold the distinction as one of the first lumberyards
in California to become a Do it Best member-owner.
Right away, we renovated the store and began to take advantage
of all the Do it Best Corp. retail programs. Our business increased
substantially, and we realized the tremendous value in being part of
a co-op. When Do it Best Corp. launched the exclusive Channellock®
branded products, I’ll confess that I was hesitant about the line’s
potential for competitiveness. My brother Jason, in charge of
purchasing for the company, convinced me to take another look.
He recognized that Do it Best Corp. had put a lot of planning into
it, and ultimately we wanted to support our co-op. So we
went all-in with the program. In hindsight, I’m not sure
why I was doubtful. Channellock branded items are great
sellers for us — everything from wet-dry vacs to hand
tools and the other 150 SKUs. It’s an appealing line of
recognizable, high-quality products, and the best part
is that our customers can’t get them anywhere else.
We’ve made a concerted effort in recent years to
maintain our professional contractor business while
growing retail sales. The exclusive Channellock
branded program has worked beautifully with
that strategy, giving us something distinctive
that helps differentiate us in our market.
Weathering the storms
without compromise.
Winter storms can serve as both a test
and a confirmation of retail logistics
capabilities for retailers nationwide.
This past winter, icy temperatures and
record snowfall in the Northeast provided
ample sales opportunities for stores
that could maintain their inventory
throughout the harshest conditions.
When the big box stores in Ellwood City,
PA, ran out of ice melt and snow shovels
in mid-February and could not reorder, the
local news covered the full stock available
at T&M Hardware & Rental CenterTM,
leading to record-breaking sales. “We’ve
been in this business for 25 years, and
we’ve never run out of safety salt,”
says member-owner Tim Post. “We
pride ourselves on not running out of
winter product, and I’m always telling
people it’s because the merchandising
and logistics groups at Do it Best Corp.
are the best in the industry.”
Through its relentless focus on serving
member-owners, Do it Best Corp.
continues to exceed expectations and
empower members like Tim Post to
meet the needs of their communities.
INCREASING OUR RESPONSIVENESS
TO BETTER SUPPORT OUR MEMBERS.
In a world where customers are accustomed to products
arriving on their doorstep the day after they click “submit
order,” brick-and-mortar stores need the backing of an agile,
responsive warehouse network to stay competitive. At
Do it Best Corp., this responsibility is embraced by the
Retail Logistics division, which provides member-owners
with effective product management, efficient order fulfillment
and agile delivery services through their eight strategically
located retail service centers (RSCs) across the country.
“The RSCs are truly an extension of each member’s back
room,” explains Tim Miller, Vice President of Retail Logistics.
“Members should be able to retrieve products from the RSC
just as easily as they can from their own storage racks.”
In serving that vision, the Retail Logistics team is exploring
new ways to provide more flexible service to members,
especially in the areas of order fulfillment and delivery. The
first step has been to change the way they handle incoming
orders. Rather than putting orders through a process
dictated by standard delivery methods and schedules,
they began asking questions at the onset to drill down to
exactly what the member needs, such as how soon products
should arrive and where they should be delivered.
To further ensure that deliveries are scheduled based on
member and customer timetables, the team has rolled
out a variety of cost-effective shipping methods. “We
want to serve our members when it’s most convenient
for them,” Miller continues. “If they need an item, we
have it, and we’ll evaluate the best way to get it to
them when they – or their customers – need it.”
As always, the safety of their 1,100 RSC staff remains
a top priority. “Safety is our first consideration for
everything – people, process and performance,”
Miller adds. “It’s the baseline for how we make
decisions, and it puts our people first.”
23
CELEBRATING FIVE YEARS OF SAFETY EXCELLENCE.
The Waco RSC once had the poorest safety record of any Do it Best Corp. retail service
center. One day, they decided they’d had enough of being at the bottom. The team
immediately began talking about safety, thinking about safety and taking complete
responsibility for safety, gradually setting new safety records among all the RSCs.
This year, Do it Best Corp. celebrated the Waco team’s achievement of five consecutive
years without lost time due to an accident or injury. For nearly one million work hours,
the 100 RSC staff members have walked the aisles of their 525,000-square-foot RSC,
handled thousands of products, moved tons of freight and operated heavy-duty
material-handling equipment without incurring a single day of lost time.
A significant milestone like this does not happen by chance. It is a direct
reflection of the proactive initiatives taken by the Waco team and the entire
Retail Logistics division to integrate safety into the company’s work culture.
Safety has long been a primary mission for the co-op, and it remains in the forefront
of strategic decision-making for numerous reasons. For one, employee safety
exemplifies the co-op’s philosophy of “Serving others as we would like to be served.”
Ensuring that each team member returns home without an accident or injury serves
to maintain their overall quality of life, as well as that of their families.
And a tenacious commitment to safety protects the co-op’s ability to
continue serving the needs of independent business owners through
the effective stewardship of company resources and consistently
outstanding service. A decrease in injuries and fewer missed work
days enhance the team’s ability to deliver products on schedule
while positively impacting the annual rebate to member-owners.
The Waco safety streak sets an aspirational goal for the
entire co-op, demonstrating what is possible when a team
engages safety as their number one priority. All RSC
safety successes empower members to be more
competitive in their individual communities, grow
their businesses and achieve their dreams.
24
nrha
young retailers
of the year
Each year, the North American Retail Hardware
Association presents its Young Retailer of the Year
Awards to a new generation of industry leaders.
JASON FUJIMOTO, COO
HPM Building Supply
Keaau, Hawaii
MULTIPLE STORE OPERATIONS
After a successful career in investment banking on Wall Street, Jason returned
to Hawaii and joined HPM Building Supply in 2004. He quickly applied his keen
analytical mind to refining each and every process within the company—no small
task for a giant operation like HPM. From purchasing, auditing and logistics to
finance, IT and training, no area escaped Jason’s intense scrutiny and evaluation.
Jason assumed the role of CFO just as the country slipped into the 2008 recession.
His many skills were called upon as he solidified HPM with sound financial management
during the downturn. Jason brought a greater focus on the retail opportunities
available to compensate for the drastic drop in building permits, and he boldly
capitalized on growth initiatives to increase market share and strengthen the company
ahead of the recovery. He expanded HPM’s operation from the Big Island of Hawaii to
the islands of Oahu and Kauai, tapping into new revenue streams for the company.
In addition to their thriving LBM operations, HPM also
HPM IS FORTUNATE TO HAVE
manufactures metal roofing, panels and trusses. This
A LEADER IN JASON WHO HAS
diverse business model—along with 2,500 miles of ocean
A CLEAR STRATEGIC VISION
separating them from the US mainland—creates a unique
FOR THE FUTURE OF HPM.
set of logistical hurdles. Jason painstakingly researched
and implemented a new enterprise resource planning
system to ensure that HPM’s infrastructure operates at peak efficiency. This central
computer system is used daily by all of the company’s 250 employees, positively
impacting the customer experience while better positioning HPM for growth.
Jason’s leadership dramatically improved the culture at HPM, from
turning around their underperforming flagship Hilo branch to empowering
employees at all levels to offer solutions to enhance productivity.
“Jason’s fingerprints are all over HPM,” said his father and CEO Mike Fujimoto. “He has
contributed greatly to virtually every aspect of the company. HPM is fortunate to have
a leader in Jason who has a clear strategic vision for the future of HPM; strong people,
leadership and communication skills; financial acumen; and a high performance focus.”
25
For 2015, Do it Best Corp. members were proudly represented
by two outstanding winners: Jason Fujimoto of HPM Building
Supply in Keaau, Hawaii, and Ryan Ringer of Gold Beach
Lumber in Gold Beach, Oregon. Each of these exemplary
young retailers was chosen in his respective category for his
hard work, dedication and innovative approach to retailing.
RYAN RINGER, OWNER
Gold Beach Lumber
Gold Beach, Oregon
MULTIPLE STORE OPERATIONS
Ryan Ringer has capitalized on the home improvement market along the southern
coast of Oregon with an impressive mix of astuteness, foresight, determination and
good old-fashioned hard work. When Ryan returned to Gold Beach after college in
2001, he brought a renewed enthusiasm that quickly made a big difference
for the company.
After tackling a point of sale system upgrade and restructuring the store’s pricing,
Ryan dove into an aggressive store expansion. While he added better offerings in key
categories for his pro customers, he also put emphasis on enhancing areas like paint
and lawn & garden to increase the store’s retail appeal for both women and DIYers.
Ryan extended the company’s reach beyond Gold Beach by opening a second
location in nearby Brookings, transforming a vacant building into a home
improvement destination in just six months. Despite the downturn that hit
immediately after the store’s grand opening in 2008, Ryan’s focused marketing
efforts and targeted outreach to the DIY market delivered not only sales and
transaction increases, but an impressive gain in
THE CULTURE OF OUR COMPANY IS
market share: Gold Beach Lumber has earned 75%
of the building materials business in Brookings.
ALL RYAN’S, AND THE FINANCIAL
WELL-BEING OF THE BUSINESS IS DUE
Ryan’s endless energy has him continuously
TO HIS EFFORT AND COMMITMENT.
looking for new areas to expand Gold Beach
Lumber. He added a successful INCOM department,
tapping into a valuable new customer base. After seeing that his customers
had nowhere to buy animal feed locally, he now offers a huge selection that has
made his store a destination in that category. He also added another location
in Port Orford in 2014, tapping into yet another underserved market.
“Ryan’s legacy with this business will be having transformed a single-store,
family company into a multi-store, regional player,” said Reed Ringer, Ryan’s
father and former store owner. “The culture of our company is all Ryan’s, and
the financial well-being of the business is due to his effort and commitment.
Gold Beach Lumber is in good hands and has a bright future ahead.”
26
Board of Directors
Back row, left to right
TOM BROWN
AMERICAN HOME & HARDWARE
Elkton, MD
Member since 1999 I 1 location
HOWARD MILLER
HARTVILLE HARDWARE
Hartville, OH
Member since 2002 I 1 location
SCOTT PARKER
PARKER DO IT BEST® LUMBER
Beaumont, TX
Member since 1975 I 21 locations
27
RANDY SKINNER
TAHLEQUAH LUMBER
MICHAEL COHEN
PANAMA DO IT CENTER®
Tahlequah, OK
Member since 2003 I 3 locations
Panama City, Panama
Member since 1989 I 19 locations
BRAD MCDANIEL
MCDANIEL’S DO IT CENTER®
BRIAN BUSWELL
ALL AMERICAN DO IT CENTER®
Snohomish, WA
Member since 1998 I 1 location
Tomah, WI
Member since 1994 I 3 locations
JOHN HOLMES
HOLMES BUILDING MATERIALS
TOM NOBLE
NOBLE SALES
Front row, left to right
Baton Rouge, LA
Member since 1995 I 3 locations
SECRETARY
TREASURER
KARENA REUSSER
MODERN HOME & HARDWARE
ROBERT ASHLEY
TRIPLE “A” BUILDING CENTER
Woodsfield, OH
Member since 1981 I 1 location
Canton, NY
Member since 1992 I 3 locations
Rockland, MA
Member since 1998 I 12 locations
CHAIRMAN
JIM LEHRER
BROWNSBORO HARDWARE & PAINT
Louisville, KY
Member since 1997 I 2 locations
VICE CHAIRMAN
Executive Team
Standing, left to right
STEVE MARKLEY
RICH LYNCH
GARY FURST
TIM MILLER
DOUG ROTH
JAY BROWN
MIKE ALTENDORF
DAN STARR
Vice President of Merchandising
Vice President of Human Resources and General Counsel
Vice President of Finance and CFO
Vice President of Information Technology
Vice President of Marketing
Vice President of Retail Logistics
Vice President of Sales and Business Development
Executive Vice President and COO​
GARY NACKERS
Vice President of Lumber and Building Materials
28
fiscal year 2015
in review
FINANCIALS
2.998 BILLION GROSS
$
MEMBER PURCHASES
Up 4.34%, RSC sales surpass $1 billion
116.4 MILLION
$
REBATE
12th consecutive year over $100 million
0 LONG-TERM DEBT
$
2 ENTREPRENEURS
OF THE YEAR
TOM CHRISTENSEN, Christensen Lumber Inc.
PAM & ERIC WHEELWRIGHT, Hoskins Building Center
RYAN RINGER, Gold Beach Lumber
JASON FUJIMOTO, HPM Building Supply
LBM Journal
North American
Retail Hardware Association
2 TOP GUN AWARDS
ROLANDO ROBLES, Anawalt Lumber
MIKE FUJIMOTO, HPM Building Supply
Hardware Retailing
29
RETAILERS
2 YOUNG
OF THE YEAR
1 EXCELLENCE AWARD
FRIEDMAN'S HOME IMPROVEMENT, Petaluma, California
ProSales
2 BEACON AWARDS
PAUL & BECKY ROGERS, Rogers Do it Best® Hardware
KELLY RODARMEL, Woodland Do it Best® Hardware & Home
The Hardware Connection
DEALERS
2 PRO
OF THE YEAR
MEEK'S THE BUILDER'S CHOICE, Locations in 4 states
S.W. COLLINS CO., Caribou, Maine
Hardware + Building
Supply Dealer & NLBMDA
OPERATIONS
INDEPENDENT AUDITOR’S REPORT
1.94 OPERATING COST
98.69%ORDER ACCURACY
96.5%FILL RATE
%
31
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
32
CONSOLIDATED STATEMENTS OF INCOME
33
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (LOSS)
34
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS’ EQUITY
35
CONSOLIDATED STATEMENTS OF CASH FLOWS
36
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
37
We state and attest that:
1. To the best of our knowledge, based
upon a review of the following
reports of Do it Best Corp.
(a) No report contained an untrue
statement of a material fact
as of the end of the period
covered by such report; and
(b) No report omitted to state a
material fact necessary to make the
statements in the report, in light of the
circumstances under which they were
made, not misleading as of the end of
the period covered by such report.
2. We have reviewed the contents of this
statement with the Do it Best Corp.
board of directors.
9
15
1
WOMEN IN HARDWARE
The Hardware Connection
Robert N. Taylor
President and CEO
HARDWARE STORE
ALL-STARS
Hardware + Building Supply Dealer
4 UNDER 40
J. Douglas Roth
Vice President of Finance and CFO
JUSTIN ELLIS, Builders Do it Center®
ProSales
30
PHILOSOPHY
Serving others as we would like to be served
MISSION
Making the best even better®
GOAL
Helping our members grow and
achieve their dreams
PO Box 868
Fort Wayne, Indiana 46801-0868
260-748-5300
doitbestcorp.com