Coast Business Overview

Business Profile

Coast is a leading independent supplier of major household appliances and accessories. Headquartered in Vancouver, British Columbia, Coast sells to developers and builders of multi-family and single-family housing, and to retail customers.

Coast’s sales are almost evenly divided between developer and builder customers, and retail customers. Coast currently operates 15 stores across the four western provinces and one store in the Greater Toronto Area of Ontario, as well as a network of warehouse distribution centres strategically situated to serve these locations.

The Industry

Canada’s major household appliances industry serves a large and growing market, with annual sales of approximately $3.3 billion.

Well-established industry trends that management believes will continue to drive strong consumer spending on major appliances include:

Favourable demographics and population growth
New housing starts and resale activity
Expanding house sizes
Home renovation activity
Heightened focus on the family and home living environment
Increasing prominence of major appliances in the home
Ongoing product innovations
Continuing shift to more energy-efficient appliances

Track Record

Coast has a track record of strong financial performance extending back to the inception of the business in 1978. Despite economic fluctuations, Coast has maintained a steady and stable growth trajectory.

Competitive Advantages

Coast enjoys a number of sustainable competitive advantages that managemen believes will enable it to continue to grow sales and cash flows.

Focused Product Category

Coast’s singular focus on major household appliances means it can offer customers the convenience of one-stop shopping for all of their major appliances needs. Coast is able to optimize sales revenue through cross-selling and cross-promotion between major household appliance categories.

Wide Selection of Recognized Brands

Coast sells more than 30 brands of major household appliances. Most competing retailers offer a much narrower selection.

Superior Value Offering for Developers and Builders, and their Customers

Coast has tailored its wholesale operations to meet the needs of the residential construction and renovation industry. Unlike other major appliance wholesalers, Coast provides developers and builders with just-in-time delivery and installation. Its inventory management system is specifically designed to accommodate the typically staggered and irregular construction schedules of residential developers and builders.

Due to its size and strong relationships with its suppliers, Coast is also able to provide long-term contractual purchase commitments. In contrast, the few appliance manufacturers who still sell directly to builders and developers usually require them to take delivery of a large quantity of products at one time, and on shorter lead times.

Product Presentation in Showrooms

Each of Coast’s 16 store locations feature showrooms with working designer kitchens that showcase a full complement of brand names and products. Customers can “test drive” and easily compare a wide range of models at various price points.

Experienced, Knowledgeable Sales Force

Coast has dedicated sales teams focused on growing its business in both the wholesale and retail markets.

In selling to developers and builders, Coast concentrates on establishing close working relationships. Its sales associates function as part of the development team and often visit customers at their office or job-site to help determine their exact requirements. Coast then schedules delivery and installation in step with planned completion dates.

When selling to retail customers, Coast focuses on educating them about the differences between appliance models, helping them choose the right solution for their budget, size of home and lifestyle.

Strong Supplier Relationships

With 16 stores, Coast enjoys substantial purchasing power. Coast also benefits from strong, collaborative supplier relationships, forged over the course of many years of continuous business. Coast regularly undertakes joint initiatives with suppliers, such as combined promotions and product launches, co-development of products and exclusive product offerings.

Experienced Management Team

Coast’s senior management team is set apart by the depth and diversity of its collective knowledge and experience,and the long-standing commitment of individual members.

President and CEO Blain Lawson, is an experienced business leader with more than 20 years of senior retail management experience and a demonstrated ability to manage rapid growth. Prior to assuming the leadership of Coast in January 2007, Mr. Lawson was with the Hudson’s Bay Co. for 18 years. At the Bay, he headed up that company’s largest strategic initiative, Hbc Home, and its fastest growing division, Home Outfitters.

Vice President and CFO Jack Peck, a Chartered Accountant, joined Coast in 2005, bringing 20 years experience as a Chief Financial Officer with both publicly-traded and large privately-held companies.

William Smith, Vice President, Sales & Marketing – Multi-Family, joined Coast as its second employee in 1978.

Steve Raben, Vice President, Sales & Marketing – Single-Family, has been with Coast since May 1990.

Growth Strategy

Coast’s growth strategy is threefold:

Build on strong market position in Western Canada and explore additional growth opportunities in the Ontario market
Increase sales from existing stores
Continue to enhance profitability

1. Build on strong market position in Western Canada and explore opportunities to expand presence in Ontario

Founded in 1978, Coast originally operated exclusively as a wholesale supplier to developers and builders in Western Canada, later broadening its focus to include the retail market, and establishing stores in all major Western Canadian markets. In January 2009, Coast expanded geographically into Ontario, acquiring the assets and business of independent Greater Toronto Area (GTA) appliance dealer Morley’s Appliance Centre.

To strengthen its leading market position in Western Canada, Coast has been relocating some of its existing stores to higher-traffic areas, a proven sales enhancement strategy. Over the long term, Coast will concentrate on increasing its presence in Ontario, and specifically the GTA, which represents Canada’s largest market. In particular, Coast believes that its full-service approach to meeting the needs of developers and builders will allow it to grow its business in the contract sector.

2. Increase sales from existing stores

In addition to relocating a number of existing stores to higher-traffic areas, Coast is boosting sales performance by continuing to enhance the appeal of its showrooms as a destination point for retail shoppers. Coast is also capitalizing on its growing consumer profile by building on the strength of its sales force, and by tailoring its product offerings to meet regional preferences and demands.

3. Continue to enhance profitability

To enhance profitability, Coast has increased its focus on innovative, higher-margin products. To optimize efficiency and continue to increase inventory turns, it has refined its inventory management processes and system. Finally, Coast is continuing to streamline non-selling functions.