True Value 2011 Annual Report Download - page 3

Because a cookie-cutter approach isn’t what our retailers need to win with customers
and grow their business, during 2011 we introduced customizable format options for
our retailers, based on their market needs. Our small-store concept now makes DTV and
the commensurate return on investment achievable for even more True Value stores.
Each decision we make ladders back to the end goal of growing and investing in our
collective business and attracting a wider customer base.
2012 OUTLOOK
We embark on 2012 with a renewed sense of confidence and optimism. As we continue
partnering with our retailers toward the pursuit of consistent, profitable growth and
increased productivity, we need to remain steadfast in our efforts to drive down costs and
to invest in our future.
To continue on the path ahead, during 2012 we will focus on:
» Growing retail comp store sales by 2 percent by engaging more retailers in marketing
and multichannel tools, lowering our cost of goods and continuing to deliver on fill rates
» Expanding our DTV adoption and footprint by adding another 100 stores and 1.1 million
square feet of selling space
» Growing our business by looking at more aggressive opportunities to drive profitability
and productivity, such as the Benjamin Moore paint bill-through program, and investing
in the new Farm and Ranch category with more than 1,000 SKUs out of warehouse
» Delivering a consistent patronage dividend to our shareholders for the sixth consecutive year
» Supporting and strengthening the independent garden center retailer through Home &
Garden Showplace and its alliance with Master Nursery Garden Center
As independent business owners, we control our own destiny — and True Value is committed
to empowering our retailers and associates to do just that. With the hardware industry
predicted to grow between 2 and 3 percent over the next year, working together we
believe 2012 can be a year of growth and accomplishment. We are eager to continue
our partnership with the men and women of True Value who work each day to drive retail
success in communities across the country and around the world.
Thank you for your business.
Sincerely,
Brian A. Webb
Chairman
Lyle G. Heidemann
President and Chief Executive Officer
During the past year we:
» Reduced our liability inventory to 4.7 percent from 7.3 percent — a level deemed
“excellent” by industry standards — thereby improving our gross margin
» Provided $17.1 million in loans and credits for DTV growth and expansion in 2011
WINNING AT RETAIL
Driving foot traffic to your store is at the center of everything we do at True Value. It’s the
goal behind the solutions we offer to deliver an unmatched in-store and online experi-
ence. And winning with the ever-savvy customer is bulletproof when delivering on each of
the five key retail principles:
» Promotion: Expanded our digital presence through TruSites, a mobile portal and Google
Places; launched a national gift card program with nearly 1,500 participating stores;
expanded e-commerce with 2,000-plus signed and 1,800 certified locations
» Place: Invested in DTV projects, including the new 5,200-square-foot store format, as well
as providing support and financing for more than 86 new, remodeled, expanded or
relocated stores during 2011 — giving retailers the flexibility they need to differentiate
from the competition
» People: Continued to invest in True Value’s people by providing 5,000 retail participants
with nearly 20,000 hours of education and training online, in-store, regionally, or at the
Fall and Spring Markets
» Product: Completed line reviews in 26 categories to keep retailers up to date in key
lines such as faucets, which jumped 8 percent in retail sales in 2011. Continued to invest
in True Value private brands such as EasyCare, Green Thumb, Master Mechanic and
Baypointe, to provide retailers with differentiated, high-quality and profitable products
» Price: Continued to deliver everyday competitive and special event pricing. Rolled back
retailer costs on more than 550 items by an average of more than 9 percent on top sellers
representing more than 20 million units annually; offered tiered pricing on over 2,000
items in categories including ice melt and electrical fittings
PROFITABLE GROWTH
True Value is proving itself a company to invest in, work for, partner and do business with —
descriptors synonymous with an organization that is growing profitably. A testament to
the viability of our growth trajectory is our Destination True Value store format. We added
more than 1 million square feet of new DTV store space in 2011 — a 13 percent increase
over 2010. And DTV stores are not only outperforming non-DTV stores, they’re also
significantly outperforming the industry and the economy.
ANNUAL REPORT 2011 0302 TRUE VALUE COMPANY
INCREASE IN DTV SQUARE FOOTAGE OVER 2010
13%