Losing Sleep

A new college football season began on Saturday allowing me to distinguish between weekends and weekdays for the first time since my summer of laze began.

Sherwin-Williams and Ace Hardware reported their second quarter financial results recently with the former losing market share to the latter in the DIY coatings segment, which is only part of the story.

On a webcast with financial analysts Sherwin-Williams chief executive Heidi Petz boasted of her company’s “strong financial condition,” using a presentation which displayed just enough information to make that seem plausible.

Though I doubt that any of my finance bros fell for the ruse.

As evidence of their strength Petz boasted Sherwin’s current cash position of $269 million, enough to fill the cash registers at her 5,000 locations with singles, fives and rolled coins but hardly evidence of financial strength to a company with more than $23 billion in annual sales.

Under that same heading Sherwin also presented their near-term debt maturities, which total $2.65 billion in the coming 15-months.  Curious evidence while proffering financial strength, though perhaps Petz is confident she can refinance that debt at a lower rate and save Sherwin millions. Actions which seem plausible until you read the appendix and discover that the average rate on that debt is just 3%. 

Lop off four zeros and the simplification brings an easier focus to the picture at Sherwin, their $23 billion in sales reduced to just $2.3 million.  About the sales of an average paint dealer. A dealer who would be saddled with more than a million in debt, 25% of which will need to be repaid or refinanced in the next 15-months. Hardly circumstances which define a strong financial position.  

And the $26,000 this dealer would have in the bank would do little to alter that perspective.   

Of note in the Ace results beyond their expanding market share in the DIY segment was their meteoric growth in online sales, up 18% in the second quarter after increasing 35% in Q1.    

And while same-store transaction count was down 2% the net result for Ace was a 4% increase in sales with profits rising that same rate.  Extraordinary results for the dealer-owned coop despite what CEO John Venhuizen described as a “confounding” macro-economic environment. 

Venhuizen also addressed tariffs stating that they “will” increase the cost of goods in the coming months, costs which will be “passed through to consumers” by Ace and Ace dealers. As for predicting the rate of that inflation Venhuizen demurred and was “unable to determine” the ultimate cost of those tariffs.

But with tariffs exceeding 50% on products imported from China and India, countries which combine to account for more than half of the US market in hardware and tools, I’m expecting that inflation to be significant. 

Blissful Insomnia

Back to school, temperate weather and the last days of long sunshine collaborate to make fall paint’s busiest season each year, a rhythm I no longer participate in since selling my stores now six-falls ago. 

With no counter to labor behind I’ll instead spend my time chasing a consultant’s nirvana: the ideal amount of work (and income) committed for the next two-years, leaving me free to explore other realms beyond work.      

In pursuit of that goal I signed a new engagement last week, one obligating two-weeks of work which in semi-retirement will take 52-weeks to complete.  With that i dotted I’ll spend the remains of summer extending the laze, as I seek to fill in my calendar for the coming two years.

An opportunity made possible by the limited number of hours I intend to sell rather than any groundswell for my services. 

Another benefit of that limitation is that the work I’m considering checks all the right boxes, each being engaging endeavors working for organizations and individuals whom I hold in some esteem.   

That affect plus the prospects of a life so well planned kept me up several nights last week, anticipation for the possibilities to blame for my insomnia.  Because if I can nail this all down I know what comes next and it’s worth losing sleep over. 

And while I can’t share that news now, this is where you’ll read it!