spinoff to success
Barnett Inc. has long been a fast-growing company. Now free from its parent, the hardware distributor can shine.
By Shailaja Neelakantan
(This article appeared in Forbes in November 1997).
CALL IT A JEWEL IN A JUNKYARD. Barnett Inc. was part of wholesale distributor Waxman Industries. Through its mail-order catalogs Barnett distributes plumbing, electrical and hardware products--such stuff as faucets, showerheads and paintbrushes--to small and midsize contractors. It has long been profitable. Says Barnett Chief Executive Officer William Pray, "We were growing 15% a year for five years running, even under Waxman. But most of our cash flow went to our parent."
On its own since its April 1996 IPO, Jacksonville, Fla.-based Barnett is busting out all over. "Now we are finally able to act on our growth strategy, which we developed years ago but weren't able to implement."
In the last fiscal year Barnett added 1,800 new items to the product line, hired more telesales support staff and stepped up mailings. When the company went public, it was mailing 2.5 million fliers a year; in fiscal 1997 it mailed 4.5 million.
The mailings obviously paid off. Barnett has increased its customer base by 13,000, to 51,000. "Fliers are critical to us," Pray says. He plans to increase their number to 7 million in the next fiscal year and to tap into new markets, such as hotels, hospitals and schools.
Barnett's customer retention rate is remarkable--84%, versus the direct-mail industry average of 65%. Telemarketers are normally a fickle bunch, but Barnett's tend to stay because they earn higher-than-usual commissions.
"This is a highly energetic, highly focused company," says Jeffrey Germanotta, analyst at Robert W. Baird in Milwaukee.
"You could say Barnett has an edge because of its national distribution network, favorable pricing and customer orientation."
Barnett's earnings rose 68% in 1996, to $12 million from $7.2 million. Sales rose 26%, to $160 million from $127.4 million.
But how many faucets do Americans need? Barnett's brass has thought of that. They are expanding overseas. International sales last year were 6% of revenue; this year they should be 10%.
"Our strategy is a successful one," says Pray. "All the expansion is from our cash flow. We have no debt."
By Shailaja Neelakantan
(This article appeared in Forbes in November 1997).
CALL IT A JEWEL IN A JUNKYARD. Barnett Inc. was part of wholesale distributor Waxman Industries. Through its mail-order catalogs Barnett distributes plumbing, electrical and hardware products--such stuff as faucets, showerheads and paintbrushes--to small and midsize contractors. It has long been profitable. Says Barnett Chief Executive Officer William Pray, "We were growing 15% a year for five years running, even under Waxman. But most of our cash flow went to our parent."
On its own since its April 1996 IPO, Jacksonville, Fla.-based Barnett is busting out all over. "Now we are finally able to act on our growth strategy, which we developed years ago but weren't able to implement."
In the last fiscal year Barnett added 1,800 new items to the product line, hired more telesales support staff and stepped up mailings. When the company went public, it was mailing 2.5 million fliers a year; in fiscal 1997 it mailed 4.5 million.
The mailings obviously paid off. Barnett has increased its customer base by 13,000, to 51,000. "Fliers are critical to us," Pray says. He plans to increase their number to 7 million in the next fiscal year and to tap into new markets, such as hotels, hospitals and schools.
Barnett's customer retention rate is remarkable--84%, versus the direct-mail industry average of 65%. Telemarketers are normally a fickle bunch, but Barnett's tend to stay because they earn higher-than-usual commissions.
"This is a highly energetic, highly focused company," says Jeffrey Germanotta, analyst at Robert W. Baird in Milwaukee.
"You could say Barnett has an edge because of its national distribution network, favorable pricing and customer orientation."
Barnett's earnings rose 68% in 1996, to $12 million from $7.2 million. Sales rose 26%, to $160 million from $127.4 million.
But how many faucets do Americans need? Barnett's brass has thought of that. They are expanding overseas. International sales last year were 6% of revenue; this year they should be 10%.
"Our strategy is a successful one," says Pray. "All the expansion is from our cash flow. We have no debt."
posted by Shailaja at 5:16 AM
