The fortunes of Searcy’s Ridout Lumber Co. and homebuilders are thoroughly intertwined. About 90 percent of sales at the 10-store chain can be attributed to its professional contractor clientele.
Even before the official start of the Great Recession in 2008, revenue slippage at Ridout was heralding the coming change.
With revenue of $258 million, 2005 was a record year for Ridout. It remains a pinnacle of fiscal achievement 10 years down the road.
Revenue at the largest family-owned lumber company in Arkansas built back to $220 million in 2014. Ross Ridout, vice president and general counsel, attributes much of the sales recovery to being a survivor and picking up market share from companies, both big and small, that fell by the wayside.
Along the way, Ridout had to reduce its workforce by about 20 percent, adjusting labor costs to waning sales. A staff of 420 in 2005 now numbers 340.
“Housing was the biggest part of the mortgage crash,” Ridout said. “It’s been a very slow crawl out of that for a lot of reasons.”
Easy funding drove the real estate market to unrealistic levels during the boom. Tighter financing has restricted the housing market in the aftermath, making speculative homebuilding a rarity. Custom homes and presold houses dominate the residential market.
By Ridout’s reckoning, two homebuilders in Searcy have the financial wherewithal to bring spec homes on line these days. Ten years ago, there were as many as 20.
“Some people believe it will never be at that level again,” Ridout said. “There’s some validity to that.”
The company rode the wave of overbuilding in northwest Arkansas, but when the bubble burst, the company’s other less dramatic markets provided welcome stability.
“The good news is we’re geographically diverse enough that we didn’t have all our eggs in that basket,” said Ridout, 46.
February was the worst month for Arkansas housing starts in a rocking 2005 but was still nearly double that of February 2015. Building permits issued for privately owned, single-family homes in the state numbered 788 in February 2005 compared with 420 a decade later, according to stats tracked by the Federal Reserve Bank of St. Louis.
“People say the housing market has recovered,” Ridout said. “That’s just not true. I’m hoping that some of this propaganda [about an improved homebuilding market] comes true, and we’ll be ramping up.”
While the lumberyard with its stacks of wood products remains an iconic image, the big contributors to company profitability are windows, doors, cabinets, floor covering and the related service and installation.
“Nobody makes money selling sticks,” Ridout said of lumber.
The company cracked into the top 100 sellers of flooring materials in 2012, according to the national trade journal Floor Focus.
The $14 million registered in flooring sales and installation reflected Ridout’s diversification, but the No. 100 ranking was probably inaccurate due to survey shortcomings.
“We still appreciated the attention,” Ridout said.
The configuration of the company’s footprint has shifted over the years as new locations were opened and others were closed.
Ridout made unsuccessful forays into Fort Smith and Pine Bluff. Older stores opened by the Ridout family in Blytheville, Forrest City and Wynne closed as sales faded.
The company has been a fixture in Searcy for more than 40 years. But Ridout Lumber started as a business several years earlier in Brinkley.
The 1971 launch was an outgrowth of a side venture of the corporate patriarch, Homer Ridout (1916-99): selling plywood and paneling out of the back of a grocery store his family ran.
The success with its limited product lineup prompted the Ridouts to fully expand into the building materials business and follow up with a gradual rollout of new locations.
A generation later, Ross Ridout is among a half-dozen family members employed at the company.
His father, Wayne, 71, leads Ridout Lumber as CEO. His mother, Robbye, works with the company’s insurance, financing and employee benefits.
His sister Kari Rockwell works with the benefits program for builders. His sister Kristen Smith works with corporate payroll, human resources and accounts payable. Her husband, Kirk, is a lumber buyer.
Homer Ridout was something of an entrepreneurial legend locally. Though legally blind, he was known for his business savvy and his insight into people.
Ross Ridout said his grandfather understood what it took to be successful in the service business and the importance of an owner being a fixture at the office.
That legacy has continued into the third generation at Ridout Lumber.
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