Another American icon has fallen victim to the Biden economy. True Value, the 75-year-old hardware giant, filed for Chapter 11 bankruptcy on Monday, signaling the latest casualty of a sluggish housing market, high mortgage rates, and inflation that continues to cripple businesses across the country.
The Chicago-based company, with 4,500 independently-owned retailers, announced it is seeking to sell the business to rival Do it Best, a move they claim is necessary to “maximize value” and keep their operations afloat. Do it Best, a Fort Wayne, Indiana-based wholesaler, has agreed to purchase True Value for $153 million in cash, according to court filings.
Chris Kempa, CEO of True Value, expressed the company’s difficult decision in a statement: “After a thorough evaluation of strategic alternatives, we determined that the sale of our business was the path forward to maximize value and best serve our retail partners and other stakeholders into the future.” In simple terms, the housing market collapse left the company with little choice.
True Value’s struggles reflect the broader impact of an administration whose policies have driven mortgage rates through the roof and made homeownership a distant dream for many Americans. When people can’t afford to buy homes, they aren’t building, renovating, or furnishing homes either — leaving companies like True Value stuck in the fallout.
The once-booming housing market has hit a standstill under the pressure of rising interest rates. Lumber and building materials, which hardware stores like True Value depend on for much of their business, are in less demand. Not even industry giants like Home Depot and Lowe’s have been immune to the downturn, as homeowners and contractors pull back on projects.
Meanwhile, discount retailers like Walmart and Target are benefiting as cash-strapped Americans seek out lower prices on necessities, leaving stores like True Value in the dust. Even home furnishing retailers like Big Lots and LL Flooring are facing similar struggles, recently filing for bankruptcy as well, as homeowners cut back on discretionary spending.
Dan Starr, CEO of Do it Best, sees an opportunity in the crisis. His company, a member-owned hardware and lumber wholesaler, reported nearly $5 billion in sales last year and is poised to absorb True Value into its operations. “Do it Best has a proven track record of driving profitability through the most efficient operations in the industry,” Starr said in a statement. “This acquisition, if consummated, would provide True Value and independent hardware stores the strongest opportunities for growth for years to come.”
True Value’s sale is expected to be completed by the end of the year, assuming no better offers come through. For the thousands of independent hardware stores that rely on True Value, the hope is that Do it Best can guide them through these turbulent times and restore some stability.