LESCO, Inc. has made significant changes to its 2003 sales and earnings projections.
The manufacturer of green industry products recently announced an anticipated net sales growth of 3 to 4 percent this year, a drop from the original forecast of a 6- to 8-percent increase.
“Lawn care research indicates that the industry is growing to 5 percent and our lawn care sales were up 5 percent through May,” observed Micheal DiMino, president and CEO.
And, looking ahead to the rest of the year, lawn care sales for the green industry manufacturer are expected to increase 5 to 6 percent over last year’s figures. Service center comparable sales are expected to jump 6 to 7 percent. The company’s total net sales reached $511.7 million in 2002.
During the first five months of the year, LESCO opened 17 new service centers. Through May 2003, sales figures for new service centers exceeded the company's new store model by more than 20 percent. Yet, LESCO continues to expect a loss from new centers of approximately $0.15 per share.
“Our model, particularly our service center model, continues to perform, even in less than favorable economic conditions,” DiMino described. “Our challenge is to open additional service centers in the right locations, source and deliver product to maintain margin and continue to reduce leveragable expenses, particularly warehouse and general and administrative expenses.”
The company's 2003 expense budgets were based on sales growth of 6 to 8 percent vs. the currently forecasted sales growth of 3 to 4 percent.
As a result, LESCO will pursue cost-cutting action including reductions in sales and corporate staff, resulting in an annualized reduction of expenses of roughly $4 million. LESCO is also evaluating opportunities to reduce warehouse and delivery costs.
The company expects 2003 earnings per share to register in the $0.15 to $0.20 range. Earnings per share, without the anticipated $0.15 loss per share from new service centers, will be in the range of $0.30 to $0.35. Earnings per share for 2002 on a GAAP basis were a loss of $2.06. Excluding charges for inventory markdown, asset rationalization, severance, early retirement of debt, gain on sale of assets and cumulative effect of accounting change, earnings per share were a profit of $0.70.
The author is Assistant Editor-Internet of Lawn & Landscape magazine and can be reached at aanderson@lawnandlandscape.com.