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Wolseley joint venture to axe a third of workforce

Stock Building Supply, the spun-off Wolseley US arm, is likely to lose almost half its outlets and a further 2,200 jobs as part of the recovery plan, according to documents submitted as part of its Chapter 11 bankruptcy filing.

Wolseley joint venture to axe a third of workforce

Stock has closed about 165 branches since 2006 and since filing for Chapter 11 bankruptcy has made plans to close nearly 150 more.

In May, Wolseley sold the division to a joint venture majority-owned by Gores, the Los Angeles-based private equity group, and kept a 49% stake in the company.

Based on previous court filings, Stock has projected net sales will slide from $5.29 billion in the year ended July 31, 2006, to $3.46 billion in the 12 months ended July 2008, to roughly $2.11 billion this financial year and then to $1.02 billion in 2010, with losses likely to continue until 2013, when it might make £35m in profit.

Wolseley’s spun-off US building materials arm, Stock, plans to close almost half of its outlets and will be loss-making until 2013 even if it doubles its revenues during the period, according to court documents relating to Stock’s Chapter 11 bankruptcy hearing.

However, the expected four-year climb back to profitability is an indication of the depth of problems within the business.

Stock is the secondlargest builders’ merchant in the US but lost £511m in the six months to the end of January. Bringing it back to profit will involve leaving large parts of the Midwest and south-west US, where the housing market has been hardest hit. All operations in the states of Illinois, Indiana, Colorado, and Nevada, and half of its branches in Florida, will be closed.

Prosalesonline.com a US business website, has a map and spreadsheet of outlets likely to be closed.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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