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Inventory Finance Firms See Business Conditions Improving

NEW YORK — Electronics and appliance
dealers are beginning to find
their financial footing as the recession
and attendant credit crunch continue
to ease.

That’s the word from the industry’s
two leading floor-planning firms, Capital
Solutions and TCF, which have a
unique, insider’s view of retailer and
vendor finances and operations.

Their take on marketplace conditions


How’s business been for you?

Jeffrey Malehorn, president/CEO,
Capital Solutions for the Home Product
Industry (CSHPI), formerly GE Capital

Business has been steadily
increasing of late. We did see a decline
in inventory financing through 2008 to
2009 as dealers worked to control their
inventories. Manufacturers and distributors
look to us to establish predictable
cash flows and reduce costs related to
administering open accounts.

Jim Hentz, corporate development
executive VP, TCF Inventory Finance:

Our business is doing very well. We
bought a couple of more portfolios, including
a joint venture with Toro. We
closed 2009 with $500 million in assets,
and our lawn and garden acquisitions
have propelled that to $750 million
in assets in the first quarter of
2010. Our electronics and appliance
business is up between 15 percent and
20 percent, as our dealer count expands
and existing dealers grow with us.

The good news for us is that we’re improving
our share. Retailers don’t want
to put all their eggs in one basket.


How are CE and majap dealers
faring? Have they found their financial


In general, our customers
are faring very well. The independent
dealer channel is proving to be nimble
and able to adapt to economic changes.
Manufacturers are supporting extended
financing terms and dealers are doing a
better job of stocking the right products
to support their businesses in a recovery.


Sales were generally down
about 20 percent last year, and the retail
markets are still sluggish. It’s important
for retailers to take out enough
cost to off set the declines, but you can’t
reduce your obligations on certain fixed

The larger, regional retailers have
had the most difficulty in 2009 through
2010, while the smaller dealers are more
agile — they can react quickly to market
trends and take out variable expenses.

The buying groups are also seeing
some comeback. Sales are up about 10
percent in 2010, representing a 50 percent
recovery. They help even the playing
field for smaller dealers, and business
for them is getting back on track.
I’m cautiously optimistic that dealers
are getting stronger financially. Their
business plans look sounder, and we
saw improvement in the first quarter
over 2009.


Has the credit crunch eased,
and is inventory financing more readily
available for retailers?


While the market has seen a
consolidation of financing sources, we are
now hearing from dealers that there’s adequate
liquidity for their inventory needs.
From CSHPI’s point of view, we have
consistently provided inventory financing
support to the dealer channel throughout
all economic cycles. To manage liquidity,
we are working closely with dealers to
take advantage of vendor program support
and longer payment terms.


Manufacturers have been extending
terms out a little longer to encourage
retailers to buy more. Currently
we’re seeing 180-days-free floor plans,
although in general the trend has been
to discourage long-term buys, and to
not try to load up dealers on inventory,
by shortening up terms. This helps retailers
get faster turns. Seeing a cement
floor in a dealer’s warehouse is exciting.


How would you describe retailers’
and distributors’ inventory positions?
Bloated? Lean?


Higher-end products are
turning slower in many areas of the
country. We are seeing more interest in
inventory finance programs from manufacturers
who want to support their
retailers, help level set stocking levels
and build account loyalty.

We will continue to work with our manufacturer
customers to develop innovative
financing programs that allow smart
growth for their distributors and dealers.