Payless Cashways Inc., the parent company of the three Hugh M. Woods stores in Colorado Springs, announced on Monday that it would close 22 stores nationwide in an effort to reduce its debt by $60 million.
The company, which also operates stores under the flags of Payless Cashways Building Materials, Furrow Building Materials, Lumberjack Building Materials, Knox Lumber, and Contractor Supply, had outstanding debt of $378.5 million as of August 2000. The company filed for bankruptcy protection in 1997, and its reorganization efforts since have focused on courting professional contractors as clients, rather than do-it-yourself homeowners.
Betty Hillyard, a spokeswoman for PCI, said the Colorado Springs stores would not be affected. We dont have any (stores) in Colorado that were closing, she said.
In keeping with its new strategy, the company also announced on Monday the opening of five new stores geared toward the professional builder or contractor. The stores, known as PCI Builders Resources, include one in Denver.
Still, PCI has substantial financial obstacles to overcome. Its Sept. 25 quarterly filing with the U.S. Securities and Exchange Commission reported a 20.4-percent decline in net sales from the same period of 1999. Same-store sales decreased 18.6 percent. On Sept. 29, PCIs stock price hit its 52-week low, trading at $1.16 per share.
The company cited a decrease in the price of lumber and wallboard and its restructuring as the primary causes of the same-store sales decreases. Restructuring included not only the change in marketing but also a shift in product mix to higher margin items, and the elimination of unprofitable products and relationships.
Hillyard denied rumors that PCI had a deal pending to sell the Hugh M. Woods line to Lowes, one of its primary competitors. Though Lowes Web site states that the company is in the midst of its most aggressive expansion plan ($2 billion nationwide) in (the) companys history, opening more than one store every week, Lowes officials would not comment on whether a deal was pending with PCI.
Jule Eller, a spokeswoman for Lowes, said that despite its April 1999 acquisition of Eagle Hardware & Garden, it typically does not seek mergers or buyouts.
We like to grow our stores organically, Eller said. We have a prototype of a store of about 150,000 square feet, and we like to use that footprint.