Click here to view the 2012 Replacement 100.
When Tammy Whitworth took over as CEO of Window World, following the untimely death of her husband a little more than two years ago, she made few, if any, big changes. “New CEOs think they need to come in and demonstrate their value by bringing about revolutionary change,” she says. Not so, in this case.
What Whitworth opted for instead were tweaks and adjustments to a business model that aims its combined price and product offering at a demographic that simply doesn't want to pay a lot for windows.
The biggest change she made, in October last year, was to turn the dealer network into a franchise operation. Today, Window World not only remains the biggest home improvement company in America — topping our list of the Replacement 100 for the fourth time — it has also demonstrated an ability to outlast both imitators and competitors. Whitworth says the formula that works for Window World is locations that are “locally owned and nationally supported.” (Read an interview with Whitworth.)
WINDOW MARKET SEESAW If anything, our list of the home improvement industry's largest companies shows how tough it is to build forward momentum in a lackluster economy. Consumer confidence remains hobbled by high unemployment and continuing tight credit. When you add the sales of all these companies together and divide for an average, that average — $22,860,000 — isn't far removed from the 2010 Replacement 100 average, which was $22,810,000. Eliminate the top two companies, Window World and Champion Window, and the average sales for the remaining 98 companies are $16,634,703, compared with $19,389,554 last year.
Sales averages reflect flat-lining at many companies. Comparing 2010's “Average Revenue Per Salesperson” finds it down considerably in 2011: from $759,164 to $551,316.
Since windows are the most popular product carried — 84% of these businesses sell windows — many experienced a sales hangover from the previous year. In the second half of 2010, consumers in many areas scrambled to find a company to install their windows before the $1,500 tax credits from the stimulus bill expired.
But that “salmon run” of window sales in 2010 also took future customers out of the market.
On the West Coast, Dial One Windows, a Renewal by Andersen affiliate in Orange County, Calif., proved among the exceptions. Sales grew 26% in 2011. Apart from new lead sources and weather that forced many homeowners to replace old wood windows, owner Charles Gindele says some of that had to do with the fact that the lift provided by tax credits was regional. “We didn't have the big spike that a lot of other parts of the country had,” he says. “We had some, but it didn't move the needle as much as it did on the East Coast and in the Midwest.”
According to the American Architectural Manufacturers Association, the window industry group, window sales fell 9% in 2011, the direct result of the tax credit going away. Companies focused exclusively on window products were particularly vulnerable. To get an idea of the size of the hit, Champion Window, the second largest company on the Replacement 100 list, posted $317 million in sales for 2010. That dropped in 2011 to $261 million.
NEW LIGHT ON LEAD SOURCES Products that cater to homeowner needs rather than wants are the thing these days. “If you need a roof, you need a roof,” says Bert Lebhar, president of Atlantic Remodeling, in Maryland, where 67% of sales are roofing. Roofers live on rain, something the Mid-Atlantic states have seen comparatively little of in the last 12 months. Lebhar says that his company's sales were flat in 2011 compared with the prior year, though profits were “up significantly,” which he attributes to having hired a CFO. Having just opened its fifth office, Atlantic Remodeling has set out to increase its sales 50% this year.
