Janmar Coatings

Group 6

Janmar Coatings Case Study

Janmar Coatings, Inc., based in Dallas, Texas, is a privately held corporation that markets its architectural paint coatings and sundries (brushes, rollers, paint removers) in over 50 counties in Texas, Oklahoma, New Mexico, and Louisiana. The company produces and sells architectural paint under their brand name. They also operate a large original equipment manufacturing coatings division. The company divides into the Dallas-Fort Worth (DFW) metropolitan area and the non-Dallas-Fort Worth area. The 11 county Dallas-Fort Worth area is the major business and financial center. Their mission is to increase profit in the non-DFW and DFW category. In 2004, industry sales grew to $16 billion, with Janmar’s sales at $12 million. The net profit for the company before taxes was $1,140,000. Dollar sales had increased at an average annual rate of 4% per year over the past decade. Paint gallonage, however, had remained stable over the past 5 years. Ronald Burns said, “We have been very successful in maintaining our margins even with increased research and development, material and labor costs, but I’m afraid we’re approaching the threshold on our prices.” As a result, Janmar was now the highest-priced paint in their service area. In 2004, there were 60% net sales for paint cost of goods sold, including freight prices. Janmar is present in 200 independent stores, lumberyards, and hardware outlets. Retail outlets outside the Dallas-Fort Worth area with paint and sundry purchases exceeding $50,000 annually carry only the Janmar product line. There are 80 stores (40%) located in the Dallas-Fort Worth area, 66 of which carry 2-3 competing brands. Burns discussed the DFW outlets and the effect of multiple lines has been to cause a decline in gallonage volume. The non-DFW outlets, by comparison, have grown in gallonage volume. “When you combine the two, you have stable gallonage volume,” remarked Burns. Janmar employs 8 sales representatives, all...