Do it Best President and CEO Dan Starr outlined strategic growth initiatives during his president’s address to shareholders.
In his president’s address to shareholders—during Do it Best’s Fall Market in Indianapolis—Do it Best President and CEO Dan Starr talked about three universal truths: leveraging the partnership with the co-op, being fresh and relevant, and embracing risk. What follows are excerpts from his presentation.
“After coming off a year of unprecedented events in 2020 and 2021… resulting in what can only be described as exploding sales, we endured a very different year last year. We saw non-related product costs skyrocket. I made the promise to return to a stronger, more profitable year in 2023. In fact, we beat that projected net profit goal by 2 percent, ending the year with $176.3 million in net profit.
We closed the year with nearly $4.8 billion in topline sales, that was actually down 14 percent from the prior year. Warehouse sales increased by 2.4 percent, our directs were off by 2.4 percent and lumber was down nearly 42 percent after experiencing volatile pricing last summer and through the fall. We expected much of that and planned for it. We exceeded our projections and we’ll deliver the second-highest rebate in our history—$152 million, up 18 percent over last year, with $106 million in cash. That’s the first time we’ve crossed $100 million in cash.
One thing we did not expect was the Federal Reserve’s quick and aggressive action raising interest rates. Since March of last year, the Fed raised rates 11 times—a grand total of 525 basis points. That action produced exactly what the Fed wanted. It quickly slowed the economy, especially impacting housing and new construction. We also saw big shifts in consumer spending, moving away from retail and especially larger-ticket items.
Our results for the year weren’t going to hit our goals due to a number of those economic factors. So, we had to make some quick changes. Here’s what we knew:
• Sales were trending flat or down headed into spring;
• wage and non-wage inflation was running about 4.25 percent; and
• we knew we could not compromise on strategic investments critical in the next year and beyond—those included investment in expanded warehouse capacity, new member growth, a new ecommerce platform and a massive IT infrastructure change.
Our game plan needed to change going into the second half of the year. We needed to focus on these things:
• Execute aggressively on our strategic initiatives and growth investments;
• Productivity gains—we needed to find ways to be more efficient, particularly in our distribution centers;
• Operating expense—reduce, delay or eliminate costs where we can.
It took a lot of hard work and difficult decisions, but I’m proud to share with you that though our sales overall were down, our net profit was up.