Haines expands into sundries

HICKSVILLE, N.Y.—J.J. Haines, the industry’s largest distributor, not only expanded by purchasing supplies and sundries wholesaler Allied Products, the acquisition opens up a whole new avenue of business opportunities.

“Our businesses are complementary,” noted Bruce Zwicker, Haines’ president and CEO, “but different.”

Allied is a 72-year-old distributor of flooring-related supplies
and sundries. Based in Baltimore
like Haines, the company ope
rates 11 locations through
out Maryland, Pennsylvania,
Virginia and North Carolina
while also servicing Delaware, areas of New Jersey and West Virginia, and Washington D.C. The company employs 44 people, of which all have been retained by Haines, including its owners and senior management, and has annual sales revenues in excess of $10 million.

“Together, we are a great combination of complementary businesses that make money and can improve together,” Zwicker said, telling FCNews “there is a perfect overlap geographically. We service the same areas so there are tremendous opportunities to better service both our customers and attract new ones.”

While the two companies share territories and a philosophy of providing quality products with professional service, Zwicker said Allied will be run as a separate entity for several reasons. “Most importantly, they operate a different business model than we do. Being a distributor of sundries is really different than selling floor coverings.”

Like most floor covering distributors, he explained, Haines does offer some supplies such as adhesives and moldings but “we do not sell tools, tack strip and so on. Plus, we both sell to flooring dealers, but they sell installers we don’t.”

Zwicker added, “We have big warehouses that we ship from every day. They also ship products from their warehouses, but in addition they have lots of customers come to their locations and buy from the counter. It’s similar to a plumbing supply store.”

John Coakley, Haines’ CFO, said keeping the businesses separate also “ensures our floor covering customers and suppliers are not subject to much change at all.”

Zwicker said over time there will be some integration in terms of the products and services offered but right now it is too early in the process, as both companies need to fully understand each other. “All of Allied’s suppliers have expressed interest in doing business with Haines and our suppliers have done the same regarding Allied. Our phones have been off the hook in terms of how supportive everyone has been.”

He noted the driver is what the customer wants. “And that’s a key reason for not wanting to make any immediate changes. Haines doesn’t fully understand the supplies and sundries side of things, so there is a learning curve. That is why we are grateful Allied’s management team is staying on.”

There will be some immediate changes but they are related to back office activities. “We will be looking at everything, but the top two things on the list are improving its computer system and inventory management.”

The Allied purchase is part of Haines’ growth strategy to diversify into a complementary business platform. “We have been pursuing acquisitions the last few years,” Zwicker said, “but have had a hard time finding sellers. Our overall expansion strategy was to stretch into the Southeast, which we did in 2007 with the purchase of Wheeler, and has since been followed by opening warehouses in North Carolina and Georgia. That was all growth for our floor covering business. In supplies, we plan on growing with a similar combination of acquisition and internal growth.”

He added Haines is in an “excellent” financial position. “We are under leveraged and have a great balance sheet.”

But before the company can begin its expansion in the supplies and sundries business, Zwicker concluded, “our first priority is to learn the business. Regardless of the product, our main goals are to be the best distributor we can be for the sake of our customers, suppliers and employees.”