Orgill Case Study | 11 A Plan for Improvement 03 PRIOR TO THE ACQUISITION BY CNRG, H&M Lumber Company was already a financially stable company. In 2018, H&M had posted sales of $5.9 million. This is well above the average sales per unit for home centers, according to the North American Hardware and Paint Association’s (NHPA) 2020 Cost of Doing Business Study, which pegged average per unit sales for home centers in 2018 at $3.5 million. In 2019, sales at H&M remained relatively flat at $5.7 million, but remained higher than the national average of $3 million, according to NHPA. In the rolling 12 months leading up to the acquisition, H&M was tracking at $5.9 million in sales. Under the legacy owner and management team, the store was maintaining an average gross margin of about 32 percent and running at approximately a 10 percent contribution, which also significantly outpaced the national average for home centers, which runs about 3 percent. By nearly every measure, the H&M Lumber Company was a strong performing retail operation prior to CNRG’s acquisition. However, even with strong numbers, the CNRG team identified a number of areas where they saw opportunities for incremental performance increases. “We didn’t think we were going to have to make a lot of sweeping changes,” Dorrill says. “Not only was it a goodlooking store. It was a well-run store. But, through our experience at CNRG, we also knew we could find incremental ways to improve the operation’s performance. It is the 1 percent changes you can make here and there that can really make a difference in an operation’s overall profitability.” STRATEGY
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