Dealers’ Domain: OPE dealers share 2011 results, 2012 outlook

Question: How did your business fare in 2011, and what are your expectations for 2012?
 
2011 was a fairly good year in that we posted an overall increase in our gross numbers and opened our second location in March. One stumbling block we had this year is when Lowe’s decided to employ Altaquip as its vendor of choice. However, on a local basis the Lowe’s associates were not happy with the move because of the great service and response time that we provided, not to mention that we are a stone’s throw away so we stay in contact with the local store people. Losing this amount of work is a hardship that requires employee levels being adjusted accordingly. I don’t think the big box stores realize what kind of impact it has on their local customers (no local contact, longer repair time, etc.) or the impact on the local economy since the repairs and parts are sourced elsewhere. We have had a great relationship with the major retailers and hope that Lowe’s will re-consider at some time. To offset this loss of work, we decided to pursue more commercial accounts and offer a wider range of products. We really find it extremely difficult to compete with the national chain stores sometimes; however, we have found a way to be competitive by offering something they can’t — and that is my question — besides being a local servicing dealer, I would like to know if anyone has come up with a benefit that sets us apart, that most dealers miss?
— Carl Johnson, co-owner
MGM Mower and A to Z Mowers
Port Charlotte, Fla.

The spring and summer selling season in 2011 was unusual, to say the least. More akin to a cranky roller coaster ride…up…then down…then stop…then up again. It was hard to get any momentum going, but the season did extend a good 30 days beyond our norm. In the end, our numbers were good, and we entered the summer doldrums with just about the right mix of leftovers.
Fall sales came early. Alternative heating appliances sold well, in anticipation of a cold winter and high gas prices. However, when the cold winter failed to materialize, stove sales sputtered to a halt.
With above-normal fall temperatures, we began to sell mowers again. In fact, by the end of November, I had to adjust our budget to accommodate the unexpected late-year sales.
We enjoyed an 8-percent increase in our gross sales for 2011. Even though we are still considerably below our sales level before the economic downturn, this is the first year since 2008 that sales have actually increased from the year before.
It’s really nice to stop the downward slide and see some improvement.
Even though we have a long climb to get back to the numbers of 2007 and 2008, I’m optimistic that 2012 will continue the upward trend of 2011. Here’s why.
We are located in a rural, small-market environment where agriculture and oil production form the base of our economy. Obviously, oil prices are good, and there is no expectation for that to change any time soon. So our oil customers, whether they are involved with drilling, production or refining, have a secure revenue stream.
Our farmers have had several good years in a row. At first, their money found its way to banks and Ag equipment dealerships, but after a couple years of making major purchases, their spending has become more consumptive in nature. Now their purchases are less specific and more dispersed. Directly or indirectly, that flood of local spending is trickling into our store.
Although it has been a difficult and painful process, we have finally worked our way through the surplus (and dusty) inventory left on our floor when the music stopped in 2007. During the economic slump, some of our forward-thinking manufacturers have been busy designing fresh, innovative products, with attractive price points. We have been busy, as well, honing our core product lines and seeking out new retail opportunities. With our credit lines at lower levels of utilization than we have seen for years and interest rates still attractive, we are in a buying mode. Spring will see our showroom packed with new and exciting merchandise to stimulate buyer’s interest and create sales opportunities.
And finally, it’s an election year. As a country, we are optimistic. Everybody with tickets to a baseball game thinks that his team is going to win. Optimism creates a good sales environment. 2012 is going to be…better.
— Roger Zerkle
ZDE, LLC
Flat Rock, Ill.

2011 turned out to be our best year since 2007. I attribute most of our positive results to a snowy winter of 2010-11, and a warm wet growing season. A series of damaging tropical storms ending with a freak snowstorm in October kept our rentals and repairs of storm-related equipment very busy.
Unfortunately, other then the October snow that caused more tree damage than snow equipment interest, we have had a snow drought with absolutely no snow until a late-January 6 inches. At this point of the winter season, unless we have a series of Nor’easters, the first quarter of 2012 will be a bust.
Ethanol damage continues to keep our shop busy and is helping the sales of handheld equipment. We continue to focus on and see more growth in rentals and service, as we see more and more OPE sales going to the big boxes.
At this point, I still see the economy flat and hopefully prospects of less government interference will keep 2012 as good as 2011, However I don’t expect any real growth this year.
I am attending the Rental Show again this year and will be looking at adding a few high-end pieces of equipment to my inventory.
— Rob Leiser
Leiser’s Rental & Sales
Easton, Pa.

2011 was the best year ever, right after 2010. Sales are up again, as well as profit. Best December in my 30 years (with no snow) in business, guys buying bigger, high-end stuff before year end…makes me believe I wasn’t the only company having a good year. I’m in expand mode, working on a new building for one store and a remodel for another. Spring could be a little soft; the lack of bad weather will hurt my commercial guys.
— Tom Rigg

2011 was GRIM! We had a great 2010, and then it was like someone turned off the switch. We met sales projections for only eight weeks out of 52. Needless to say, we became even leaner and meaner, but you can only cut back so much. 2012 is looking to be not much better. We have been ruthless in inventory reduction, and we will place bare minimum preseason orders, and PRAY!
— Dean Davis
Dogwood Fireplace & Lawn
Carbondale, Ill.

We did well, with revenue slightly up over 2010. However, we noticed some falloff in homeowner business due, we think, to busy people turning yard work they used to do themselves, over to small, local, lawn-care entrepreneurs. We expect 2012 to follow the same pattern, stable but no dramatic increases or declines.
— Ty Brooke, president
Brooke Rental Center, Inc.
Vienna, Arlington & Leesburg, Va.

Going into last year, we had just come off our best year yet. Naturally, we went into 2011 cautious. Long story short, we ended up with 8 months above average, and almost 10 percent above 2010’s record year. We also set a record in number of riding equipment sold. Needless to say, 2011 was a good year. We beat one of my long-term goals in 2011, and looking forward to beating my next goal, but I am not holding my breath. Going into 2012, I use a phrase I see on TV all the time: “Results not typical.” With the economy and the fact we are in a small, rural community, I fear that we have tapped out the spending cash of the area. That being said, I’ve been proven wrong on more than one occasion.
— Todd Biddinger, manager
T&T Outdoor Power & Rental
Rochester, Ind.

Well, I don’t think it’s any big secret that the economy came into play this year in southwest Ohio!!! With the addition of a new store in October of 2010, we experienced some growing pains, but good ones!!! We overcame most of the economic woes and were able to maintain profitability for 2011. Our management team worked very closely to make sure our overhead was proportionate to our income, and we were doing everything we could to generate sales. More importantly, though, is 2012!!!!! We are making some huge changes for 2012. We are bringing on a new category of equipment that we’ve never sold before, and expect great results! Our business has been somewhat stagnant regarding volume of sales. We’ve been averaging the same volume with no significant growth over the past 3-4 years. This new category we’re bringing in is new and exciting for all of us at West Chester Lawn & Garden and Moe’s Outdoor Equipment & Supplies, and we are “chomping at the bit” to get it under way!!!!
Here’s a quote that I truly believe in. If everybody viewed their customers this way, you’re sure to grow your business to its full potential!
“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.” — Mahatma Gandhi
— Jason Hicks, inside sales, parts & service manager
West Chester Lawn & Garden
Liberty Township, Ohio

2011 was a very good year for us. Mower sales have shown only a little growth, but the handheld market was strong. The real plus came from the parts and repair business. The outlook for sales in 2012 is good; a lot of customers have patched their last patch and will need new machines. I have given quite a few quotes and have a good number of commitments so far. I believe this will be the year big-dollar items will begin to move.
— Matt Borden, owner
Ed & Matt Equipment
Greenville, R.I.

2011 started out with the promise of being our best year ever. Mower season started kicking in somewhere around the middle of February. Three days after a snow and we were 70 degrees. At 70 degrees in southwest Arkansas, weeds are growing strong. By the end of February, we were backed up about one week; by the end of March, two weeks. Outlook was good, economy was picking up, and people were spending somewhat better than 2010. We were getting plenty of rain, and by May, we were backed up about three weeks on four-stroke repair. Mower sales were good, and handheld sales were above average. On May 17, we had a decent rain that would be our last until September. No rain and temps running between 100 and 110 degrees brought our lawn equipment sales and repair to a complete halt. We toughed it out through the end of the year with less than 50 percent of our normal sales. The very drought that ended our mower season helped our chain saw and related sales due to the extreme numbers of dead trees that had to be cut. Four-stroke repairs for the year were just 600 units, while two-cycle repair was at 1,200 units.
Not a total loss for the year, but 2011 was our second dry year in a row. We have high hopes for 2012. We are adding on storage space. New signs have been bought, and as soon as it warms up enough, we are going to paint and brighten up our existing buildings. There is always hope with the beginning of a new year. Here’s to 2012 being the best year ever!
— David C. Taylor, owner
The Place Nashville, Inc.
Nashville, Ark.

2011 was a pretty good year — the best since 2007. All categories were much more erratic than usual from month to month, but all finished up from the previous years. Still, there seems to be a lack of confidence and stability that won’t go away until this President does!
2012 is going to be a great year. If you’ve weathered the last few years, you just have to BELIEVE.
— Bill Valliant
Fayette Mower
Fayetteville, Ga.

Business in 2011 was way down from 2010 because we had our biggest snowstorm ever in February 2010. If I compare it to a normal year like 2009, we were up 12 percent. This winter has been very mild and slow, so I am using the time to prepare for the spring rush. I always feel if the showroom is clean, equipment displayed and priced, signs made, promotions in place, sales personnel educated, and our website updated, that it will be a good year. So with that being said, I think 2012 will be better than last year.
— Sally Miller, president
Dobosh Center
Pittsburgh, Pa.

2011 was a very challenging year, flat compared to 2010. Expectations for 2012? Please advise…have no clue!
— Ernie Butitta, president
K&D Rent-All & Hardware, Inc.
Baton Rouge, La.

Our business was down 15 percent. If we don’t get better seasons in 2012, business will be down even more. We are still in a drought and have been all year of 2011. However, commodity prices are up, so that much looks much better.
— Loretta Miles
Miles Tractor Co.
Baxley, Ga.

My outlook for 2012 is somewhat jaded as 2011 was a bit down from 2010, which was down from 2009, partly to do with lack of snow in the Toronto area for three winters now. Also, given the fact that our biggest line has opened more locations in our surrounding area and the largest one in our city being 1 mile away from us; however, this was not due to agreements from companies that have designated a manufacturer to be their preferred brand, rather accordingly it was to “steal” sales away from their major competitor. I feel it is like 1970/1980s all over again with the manufacturers setting up dealers on top of each other in a bid to gain market share. And this is the same company that talks about advantages of single-line dealers while they themselves set up whom they feel without consideration to trade area or future health of their established suppliers. Hence, I feel my business will be the causality once the dust settles, whether or not people are drawn to what I call “small box store” locations that have very large showrooms with more and more product lines with handheld becoming a side line so-to-speak against the backdrop of large equipment.
So for 2012, I see a struggle to keep my current customers, and hopefully, the new ones will not be caught like a deer in the headlights of the small promises of these new small boxes.