LESCO Opens Six New Locations

CLEVELAND - In markets where it has service centers, LESCO is known by lawn and landscape professionals as the place they drive into and pick up just about any turf care product they need. The beginning of April also brings this service center concept to six new areas, with LESCO's first new service center openings in five years. The new facilities are located in:

Haverhill, Mass. – approximately 35 miles north of Boston
Brunswick, Georgia – approximately 75 miles south of Savannah, Ga.
Douglasville, Georgia – approximately 20 miles west of Atlanta
Lawrenceville, Georgia – approximately 32 miles northeast of Atlanta
Arvada, Colorado – approximately 10 miles northwest of Denver
North Aurora, Illinois – approximately 40 miles west of Chicago

“In 2002, our store assets, that is our service centers and Stores-on-Wheels, had a total return on invested capital (ROIC) over 30 percent," stated Michael DiMino, LESCO's president and chief executive officer. "Our historical experience of significant sales growth and high returns from store locations is the catalyst for our recently announced new store opening strategy. Our goal is to return LESCO’s ROIC to a level greater than 10 percent within the next three years. We will achieve that goal by investing in new stores while limiting investment in leverageable areas such as warehousing, general and administrative expenses.”

LESCO previously announced its intention to open 20 to 25 new service centers during 2003, and DiMino expects to see new store openings continue into the future. “In order to maximize the long-term value inherent in the LESCO model, we have to open additional service centers,” DiMino told investors during a conference call in February, noting that the company’s analysis illustrates that the market can support more than 500 new stores to go along with the 233 LESCO currently operates. “We should always have a group of stores entering their third year of operation. In the third year, stores become profitable and defray the costs of additional new stores. Unfortunately, LESCO has not opened new stores since 1998, and for the next two years we will have to pay for store openings through the sacrifice of short-term earnings.”

“It’s no secret we can grow in the South and West,” DiMino continued. “Plus, there are plenty of opportunities for us to get more market share in cities and states that we’re already in. So, make no mistake about it that we’ve got a multi-dimensional strategy where we have to go in and dominate certain markets by adding stores and achieving saturation and we also have to go in places we don’t exist.”

DiMino said the key is the company’s willingness to invest in this growth plan, which he called a “conservative” plan. “We do have to invest in ourselves to grow,” DiMino explained. “We have a lot of information that indicates that the marketplace is ready for us to add stores, both from the customers’ perspective and well as the net numbers. It’s there for us to grow, and we’re going to do that this year.”

The author is Editor/Publisher for Lawn & Landscape magazine and can be reached at bwest@lawnandlandscape.com.