True Value 2007 Annual Report Download - page 4

2 | 2007 ANNUAL REPORT
TRUE VALUE COMPANY
SHAREHOLDER LETTER TO MEMBERS
At True Value, we’ve put retail at the heart of everything we do and the results are exciting. This was a banner year
for the co-op. We tightened the retail focus that will take this company into the future and launched our new store
format – Destination True Value. Keeping a constant eye on our vision, “to help every True Value be the best hardware
store in town,” we proved that new ideas, enthusiasm and cooperation will lead us to growth and success.
Based on your feedback, we’re transforming the way we conduct
business and serve our retailers. We’re honing our mission as a
world-class wholesaler with a strong retail focus, growing profi t-
ably. We’re providing solutions and delivering products, programs
and services with retail knowledge and insight at the core. Thanks
to your efforts, we’ve built a solid foundation and can turn our
focus to growth – both at the retail and wholesale levels.
Financial results for 2007 were solid given the slowing economic
climate. Revenue was down 0.5 percent to $2,040.6 million and net
margin totaled $63.8 million. Excluding $9.9 million of non-recurring
gains reported in 2006 related to litigation reserves and benefi t
plans, net margin increased $0.9 million in 2007. Our total year-end
debt continued to decline to the co-op’s lowest level since 1979.
IMPROVING RETAIL SUPPORT
Operational improvements and effi ciencies are key to co-op and
member success. It is also crucial that we provide our retailers with
the right products at the right price, and, that we’re easy to do
business with. We understand that taking the cost out of doing
business is a top priority. In the past year, we:
> Conducted product line reviews to continue to help update assort-
ments and improve member sales and margins; we reviewed 24
product categories in 2007
> Continued the simplifi ed ordering rollout, adding features that
increase order visibility and consolidate order types to even our
inventory receipts and cash fl ow
> Created simplifi ed invoicing to provide enhanced access to and
visibility of statement charges
> Reduced transportation and distribution expenses to plan by $3.1
million to be returned to you in this year’s patronage dividend.
BUILDING RETAIL STRENGTH
To help our retailers better serve their customers, we must build
new retail capabilities and competencies that will make us smarter
providers of retail support and solutions. We’ve tightened our focus
on the “Five Ps”:
> Place: With Destination True Value, the co-op provides members
with a fl exible format, adaptable store layouts and a clear set of
retail standards to ensure every store is clean, well-lit, well-stocked,
easy to navigate and offers customers a quick in and out. Inventory
productivity, visual merchandising and IT solutions help retailers
deliver a compelling shopping environment.
> People: Providing friendly, knowledgeable, well-trained associ-
ates. The co-op offers educational courses and tools, as well as
HR management, recruitment and retention solutions.
> Product: Offering a wide variety of national, regional and
private label-branded products, effectively merchandised into
planogram assortments that help maximize the sales and margins
of our geographically diverse membership.
> Promotion: Building consumer awareness of the True Value
brand and providing effective local marketing solutions that
drive traffi c, sales and loyalty. The co-op provides members
with regionalized circulars, loyalty marketing through True Value
Rewards® and the Marketing Planning Tool to build annual
marketing plans.
> Price: Demonstrating a value benefi t, the co-op provides mem-
bers with retail price intelligence. This includes suggested
retails on stock warehouse products, highly visible item listings
on Membersonline and the Margin Enhancement Program that
helps members create a competitive local pricing strategy.