Ask Sherwin-Williams!

Recently, my mother told me she was tired of reading about Dan Calkins, THE old lady reminding me that, “Dan Calkins may not think you’re so funny anymore.”

A point Dan has already made.

But when a blog about Sherwin-Williams needed less than a week to become my number one for the year, I though maybe it’s time I started listening to my mother?

On Wednesday Sherwin-Williams released their earnings for the second quarter of 2022, causing the stock of the world's largest paint maker to drop more than 15%.

Sherwin-Williams chief executive John Morikis did his best to put a positive spin on the paint maker’s woes. THE executive sharing with the financial analysts on a webcast earnings announcement that, “while the company is not satisfied with the results during the quarter” they expect a “stronger showing during the year’s second half.”

And while there are signs of strength in Sherwin’s business, the company’s coil and package coatings division continues to run up record profits, the company’s trouble in the architectural coatings segment remain persistent.

Their announcement of an anemic 9.2% growth in revenue, made up mostly of price inflation and pandemic related surcharges.

Despite finally, having plenty of paint to sell.

On the call Sherwin shared that while some stubborn shortages persist, particularly in alkyds, the shelves at most stores are now filled with enough Pro-Mar and Super Paint to meet current demands. The company's investment in 50,000,000 gallons of additional manufacturing capacity paying some early dividends.

Only in America

Sherwin-Williams additionally reported that sales from The Americas Group (TAG), which includes the sales from their nearly 5,000 retail locations, were up 8.1% for the quarter.

The increase, lower than the current rate of coatings price inflation, meaning that gallon volume of architectural paints at Sherwin-Williams' North American stores were flat for the first half of the year.

Or perhaps, even down.

The results looking even worse for Morikis and the Sherwinettes when juxtaposed to the rate of growth in gallon volume in THE independent channel, over that same span.

#Dan and his dealers continue to enjoy the pandemic-fueled increase in demand for coatings, and the changes in consumer behavior which have overwhelmingly favored locally-owned retailers.

And it’s not just fewer gallons spinning in the shakers at Sherwin-Williams stores which has the company concerned. Sherwin additionally reported that their Consumer Brands Group (CBG) is losing market share.

The DIY brands of Sherwin’s CBG: Valspar, Cabot, Minwax, Thompson’s et al. reporting flat revenue despite the high inflation and a 43% decrease in profit margin. Morikis agreed that CBG had a “very difficult quarter,” an understatement made to hide shifting demand in the DIY segment this division serves. Away from the big boxes to independent paint and Ace retailers, who continue to outperform.

Providing at the very least a nice bump in business for the independent channel, leaving time to tell if this becomes a trend.

Held in Contempt

Included in the brands of Sherwin’s Consumer Brands Group is Pratt & Lambert. The architectural paint brand founded in Buffalo, New York in 1849 which Sherwin-Williams acquired in 1995.

It’s through their recent treatment of the Pratt & Lambert brand that Sherwin-Williams shows their contempt for the independent channel. By refusing to give any priority to the needs of Pratt & Lambert dealers while setting their manufacturing schedule in times of shortages, the company makes clear that they don’t value their relationships with independent paint retailers.

This text from a dealer telling the story.

Remarking on the troubles in Sherwin's Consumer Brands Group Morikis stated that the company will, “continue to review our portfolio of brands” to ensure that they offer the opportunity for “above average market growth.”

The CEO's statement prompting me to reach out to the company looking for word of their plans for Pratt & Lambert paint, and dealers of the brand.

But just because you ask Sherwin-Williams, doesn’t mean they’ll answer!

#AskSherwinWilliams #SherwinWilliams