Payless Cashways Explained

Payless Cashways, Inc.
Type:Public
Fate:Liquidated
Founder:Sanford Furrow
Location City:Kansas City, Missouri[1]
Location Country:United States
Industry:Retail
Products:Building materials and home improvement products

Payless Cashways was a building materials retailer based in Kansas City, United States. The company primarily operated during the 1980s and 1990s, and is considered among the first national chains to implement the DIY strategy. The company experienced financial difficulties during the late 1980s.

Payless Cashways differed from modern home improvement retailers in that they utilized a fully functional outdoor lumber yard. Customers would purchase materials inside the store and upon payment, would drive their vehicle into the lumber yard area and give their order ticket to an attendant. Prior to filing for bankruptcy protection, Payless Cashways operated 194 stores across 22 states.[2]

History

Sanford "Sam" Furrow founded his business in 1930 with the purchase of a lumberyard in Pocahontas, Iowa that was in default on its loans, along with his sons and business partner John Evans. He then bought two other lumberyards in the same financial position. The original yard was named Kiefer-Wolfe Lumber Company, which was soon renamed Pocahontas Lumber Store. The company grew, and Sam Furrow and John Evans split the company. Sam and his sons began operating on "cash-and-carry", able to offer lower prices than when taking on the risk of contractors buying on credit. The company eventually adopted the Payless Cashways name, but new locations were added using Furrow's due to trademark issues in Texas, Oregon, Missouri, Kansas, Oklahoma, California, and Indiana. (For example, in Indiana, Payless was a grocery chain). By 1981, the company was the 5th largest in the industry.

In 1983, Payless Cashways purchased the Sacramento, California–based Lumberjack Stores Inc for $26.3 million (~$ in).[3] [4] In the following year, Payless Cashways purchased the Somerville, Massachusetts–based Somerville Lumber & Supply Company for $12 million in stock.[5] [6] In 1986, Payless Cashways purchased the Saint Paul, Minnesota–based Knox Lumber Company for an undisclosed amount.[7] [8]

Payless Cashways was taken private in 1988, but didn't see any profits the five years it was private.[9]

Payless Cashways faced their first major challenge in 1988, when they were the target of a leveraged buyout led by Asher Edelman and Sutherland Lumber.[10] The company also received a takeover bid from The Ward White Group, a British company which operated a similarly named retailer in Britain.[11] [12] In response to the takeover attempts, Payless Cashways repurchased the company's 33.6 million outstanding shares at $27 per share, totaling $909 million.[13] The Payless Cashways stock buyback left them saddled with massive debt that stopped their expansion.[14] The retailer's stagnation caused them to be left behind by the big box home centers such as Builders Square, HomeBase, and later the emerging Home Depot and Lowe's chains.[15] The company struggled through the nineties with moderate successes and recurrent failures and never regained the momentum of their first wave of expansion. In July 1997, Payless Cashways filed for Chapter 11 bankruptcy protection. The last straw for Payless Cashways was the burst of the dot com bubble that left many banks unwilling to help the company continue its operations. The company was ordered to be liquidated by the United States bankruptcy court of Western Missouri on September 10, 2001, by coincidence the day before the September 11 attacks.

Names Operated Under

Payless Cashways operated stores under a variety of banners, usually with one banner per given area. They were:[16]

See also

Notes and References

  1. Web site: Form 10-K November 30, 1996 . . Payless Cashways . November 30, 1996.
  2. Web site: Payless Cashways Files for Chapter 11 Protection. New York Times. 3 May 2012. 22 July 1997.
  3. News: Payless Cashways Inc. To Buy California Firm . . December 14, 1982 . 21 . Payless Cashways Inc. said it agreed to buy Lumberjack Stores Inc., a closely held retailer, for $26.3 million. . .
  4. News: Payless Cashways Foresees An Upturn Following 'flattish' Year And Slow Start With Capital Lumberjack Stores . . September 18, 1984 . AA7 . Marguaret . Peterson . subscription . Payless Cashways, corporate parent of Lumberjack Stores, Monday acknowledged it has had problems in taking over the Sacramento chain, faces new high-volume, warehouse competitors and generally is having a very flattish year... The fast-growing Payless has 147 stores operating under five names in 17 states, will open 20 more stores in 1984 and plans another 20 in 1985, he said... Payless, which acquired Lumberjack for $26.2 million in January 1983, found it wasn't easy as a formally organized, public company to mesh with a privately held firm whose personnel had an informal outlook, said Tom Stanton, Western regional vice president... The 15-store Lumberjack chain faces a new California competitor in Home Club, a high-volume warehouse operation which plans next spring to open a 100,000-square-foot outlet in Sacramento. That is four times the size of a typical Payless Cashways outlet..
  5. News: Payless Cashways Gets Definitive Pact to Buy Somerville Lumber . . March 12, 1984 . 18 . . Payless Cashways Inc. said it reached a definitive agreement to buy Somerville Lumber & Supply Co., a closely held Somerville, Mass., concern, for about $39 million in stock. . .
  6. News: Payless Cashways Closes Somerville Lumber Purchase . . April 4, 1984 . 46 . . Payless Cashways Inc. said it completed its acquisition of Somerville Lumber & Supply Co. of Somerville, Mass., for about $12 million in stock. . .
  7. News: Payless Cashways agrees to buy Knox Lumber stores . . August 21, 1986 . 01M . Neal . St. Anthony . subscription . Payless Cashways, Inc., the Kansas City-based building-material retailer, has agreed to buy St. Paul-based Knox Lumber Co., which only four months ago was purchased from another corporate parent. Terms of the deal, which should close in October, weren't announced following the signing of a letter of intent Wednesday... Payless, founded in 1930, operates 169 stores in 19 states in the Midwest, Southwest and on the Pacific Coast. The company, which is listed on the New York Stock Exchange, had net income of $38 million on 1985 sales of $1.4 billion..
  8. News: Knox chief executive replaced as ownership changes hands . . October 28, 1986 . 10B . Neal . St. Anthony . subscription . Payless Cashways, Inc., announced Monday that it has completed its acquisition of Knox, which had become an independent only six months ago. Knox will be operated as a Payless subsidiary and retain the Knox name... Knox operates six Twin Cities stores, and a seventh is scheduled to open in Blaine next year. Knox also runs stores in Duluth; Sioux Falls, S.D.; Fargo, N.D., and Billings, Mont. Its headquarters and distribution center are in St. Paul's Midway district..
  9. Web site: Payless Cashways, Inc. - Company Profile, Information, Business Description, History, Background Information on Payless Cashways, Inc.
  10. Web site: Edelman Group Lifts Payless Stake. New York Times. 3 May 2012. 24 May 1988.
  11. Web site: Payless Cashways Attracts Foreigner. New York Times. 3 May 2012. 9 July 1988.
  12. Web site: British Company Seeks Payless Data. New York Times. 3 May 2012. 12 July 1988.
  13. Web site: Management Buyout Is Approved at Payless. New York Times. 3 May 2012. 1 July 1988.
  14. Web site: Two Furrow Stores to Close. Austin Business Journal. 3 May 2012. 10 September 2011.
  15. Web site: Home Depot Vs. Lowe's. Money Magazine. 3 May 2012. 1 March 1999.
  16. Web site: Payless Cashways, Inc. - Company Profile, Information, Business Description, History, Background Information on Payless Cashways, Inc.

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