Catch a Falling Starr
I was not expecting the news that Sherwin-Williams acquired the former True Value manufacturing facility in Cary, Illinois, to be a story of great consequence, unaware of the unique role that facility played in our segment until that agreement was announced.
Since that time, I’ve been hearing from independent manufacturers, retailers and distributors seeking guidance on replacing their accidental vendor. Most possessing a view on Sherwin’s proximity similar to that of Benjamin Moore CEO Dan Calkins, who ended that company’s relationship with Do it Best/True Value (DiBCo) when the relationship with Sherwin was announced. All who made contact were considering alternatives to Cary now that Sherwin is in place, with most already seeking alternatives for True Value Paints, plus the array of private-label products Cary was toll manufacturing for independents. Making this event significant in our space, explaining the ongoing coverage and my sudden curiosity in Do it Best, the cooperative of independent hardware retailers which until recently I gave very little thought.
Still unclear is the imperative for this move, which DiBCo CEO Dan Starr announced last week would be expanded to include brushes and rollers. Putting the co-op’s management perpendicular to their members’ values, likely explaining the volume and passion on this issue. With that fallout collaborating with the digital era to make finding new sources fast work, including one insider who shared DiBCo’s financial results for the previous five years—which read like Starr’s reasons to sell his soul to Sherwin. In a desperate endeavor to save the core Do it Best dealers, which for 10-years under Starr has seen market share erode. Leaving Starr willing to take on the more than a quarter of a billion in debt to acquire hardware cooperatives United and True Value in 2024, and sweating pallets that the added sales will be enough to fix his ills. Which they won’t be and Starr knows it, justifying this bad deal at least to Starr, as Sherwin likely stuffed a few dollars into DiBCo’s coffers as an enticement to sign. Enough to convince Starr it was worth the risk of a seat in Sherwin’s vice, where he’s more likely to get crushed than held in place.
Starr’s tenure may be the end of all three co-ops, which in addition to the quarter of a billion in debt took on nearly half a billion in lease liabilities, with the total debt costing members $23 million in interest each year before a single rebate gets paid, propping up Starr more than supporting Do it Best members who got nothing in this deal. Which at some point will lead them to question their CEO, and they should fact check him when they do. Because according to those documents Starr told members he was acquiring True Value to “vertically integrate” the co-op’s newfound manufacturing capability, just months before announcing he had leased the plant to Sherwin-Williams.
Which seems closer to a Gassenheimer than a change of heart.
You won’t be hearing from me next week, to allow me to complete a project nine months in the making. So we’ll all have to wait to learn what’s prodding Starr’s desperation, though it likely has something to do with the nosedive in his core Do it Best business over the last five years, an era of outstanding prosperity for other independents. A picture of futility at Do it Best that Gemini needed fewer than 1,000 words to paint.
“Using these documents net out both the United and True Value mergers to reflect the underlying DiB sales and report them for all years available. Further, report each year in constant dollars, net of inflation marked to the first year of data.”
This week on my podcast series Boycott Sherwin-Williams is a new episode detailing what I learned about DiBCo beforereceiving these documents, analyzing that group’s earnings for the last ten years and now nine months. Which is how long things have been going bad at Do it Best, though that’s probably just a coincidence.
See you in two weeks.
