Let Me Get the Door
I spent last week in the company of independents: retailers, manufacturers and distributors of paint who coalesced in the Midwest, some to receive bad news and others to recover from it. A pilgrimage that stretched from Cleveland to Chicago which left little time for sightseeing, sans a stop at the Forest City’s monument to ignominy. An Insta which was hard to resist.
Informing one of the groups were industry briefings I’m not generally privy to from Stamford, including an update from TiO2 producers that are “rightsizing” their capacities. Reducing them to meet lower demand for architectural coatings, cuts which signal that demand may be declining for several years, the realization of Sherwin-Williams CEO Heidi Petz’s forecast for softer for longer demand in architectural coatings. A condition we should all prepare to suffer, though most I met last week were not seeing those impacts yet. Rather, most shared that they were maintaining their volume in a challenging economy, with industrial manufacturers faring better than that.
Yet neither declining demand nor rampant inflation—which is expected to continue for the foreseeable future—was compelling enough to be THE topic of conversation, an honor which was reserved for the circumstances at Do it Best (DiBCo). While the co-op gathered for their fall market in Indianapolis, the only meeting of independents last week that I was not invited to.
Though you might still say I was in attendance.
At the meeting DiBCo CEO Dan Starr told his members that he agrees with my assessment: that the co-op’s paint offering is hardware’s worst, which Starr promised to fix with new products from Sherwin-Williams. Which Starr hopes to make available by January of 2028, for anyone who sticks around that long, which according to Starr’s own records many won’t. Making his words immediately irrelevant for much of the room, appropriate status considering the folly of his belief that Sherwin-Williams was the right choice to align with independents.
In the fiscal year ended June 30, 2026, DiBCo paid out more than $40 million to buy back stock from members exiting the group, bringing to $120 million the amount they paid out over the last three years. A run on equity by members dissatisfied with the Frankenstein Starr built from the remains of United and True Value Hardware. Plus his abysmal decision to invest in Nation’s Best Hardware, only telling his members after committing $39 million of their funds to a partnership with a private equity syndicate. Feeling like a betrayal to many I spoke with, perhaps explaining an antipathy for Starr which seems prevalent in this group.
Since handing those dollars to Nation’s Best in two tranches, one in 2020 and another in 2025, Do it Best has had to write down their equity from $39 million to just $11.85 million. A 70% reduction in an era otherwise known as bountiful for this segment, though not for Nation’s Best which has suffered three consecutive years of reduced earnings. Which have dropped so low that last year Nation’s Best sent its benefactor DiBCo just $194,000. On sales of $374 million, a net return on sales of just .052%, a small fraction of what would be considered average.
Those gambits have left the cooperative deeply in debt, with lease liabilities approaching half a billion dollars and term and revolving loans totaling more than $155 million. Which DiBCo was carrying at rates above 6% when their fiscal year ended on June 30th, though that is likely up 50 basis points since then and seems likely to rise further throughout next year. Raising interest expense beyond the $22 million DiBCo spent last year, which includes interest on an interest-only loan for $100 million, due in full come October of 2029. Monies which the co-op has not accrued and seems unlikely to earn between now and then, creating a debt-cliff likely to leave the fate of Starr’s co-op in another person’s hands.
In the coming weeks I plan more coverage of Do it Best, including a podcast with deeper analysis of the co-op’s financials. Which benefited this year from the lease-sale of the Cary plant to Sherwin-Williams and the Montgomery, Alabama distribution center to an unnamed purchaser. Those transactions adding $60 million to DiBCo’s coffers, representing more than 75% of last year’s member rebate. Rabbits that Starr won’t have to pull out of the hat next year, raising doubts about his ability to survive it. With that infamy proper penance for inviting Sherwin-Williams into a space reserved for independents.
Allow me to get the door.
