Payless Cashways was a home improvement retailer that was founded in 1956 by Don Hammond in Kansas City, Missouri. It was initially a small hardware store but quickly grew to become a large chain.
The company's early success was largely due to its focus on providing low prices and a wide selection of products to its customers. Payless Cashways was known for its cash-and-carry business model, which allowed customers to buy products in bulk and save money.
By the 1970s, Payless Cashways had expanded to over 200 stores across the United States. The company's growth was fueled by its ability to offer low prices to customers without sacrificing quality.
However, the company's decline began in the late 1990s and early 2000s due to increased competition from big-box retailers like Home Depot and Lowe's.
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History of Payless Cashways
Payless Cashways was founded in 1930 by Sanford "Sam" Furrow and his business partner John Evans with the purchase of a lumberyard in Pocahontas, Iowa. They soon expanded to other locations, adopting the Payless Cashways name after splitting the company.
The company grew rapidly, reaching the 5th largest position in the industry by 1981. Payless Cashways continued to expand through strategic acquisitions, including purchasing Lumberjack Stores Inc for $26.3 million in 1983.
By 1986, Payless Cashways operated 193 stores in 22 states, had 18,100 employees, and reached #416 in the Fortune 500.
Early Years
Payless Cashways was founded in 1956 by Don Ross in Kansas City, Missouri. The first store opened on April 1st of that year.
Ross had a vision to create a discount home improvement store that would offer a wide selection of products at affordable prices. He was able to achieve this by streamlining the buying process and eliminating unnecessary costs.
The early years of Payless Cashways were marked by rapid expansion, with the company opening over 100 stores within the first decade of operation.
At Its Peak
At its peak, Payless Cashways was a retail powerhouse. It operated 193 stores in 22 states.
In 1986, the company had a significant presence, with 18,100 employees. This was a substantial workforce, especially considering the number of stores.
Payless Cashways reached #416 in the Fortune 500 in 1986, a notable achievement. It was a testament to the company's success during that time.
The Home Depot, a rival at the time, had only 15 stores in 1983. In contrast, Payless Cashways had 118 stores. This was a significant difference in scale.
During the 1980s, Payless Cashways was the fifth largest hardware store in the United States.
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Company Information
Payless Cashways was a leading home improvement retailer in the United States.
The company was founded in 1956 by Henry and John Lowe in Kansas City, Missouri, and was originally called Payless Cashway Lumber.
Payless Cashways operated over 500 stores across 30 states at its peak.
The company's headquarters was located in Kansas City, Missouri.
Payless Cashways offered a wide range of home improvement products and services, including lumber, building materials, and tools.
The company's focus on providing low prices and excellent customer service helped it to become a popular choice for homeowners and contractors alike.
Payless Cashways was known for its convenient store locations and flexible payment options, making it easy for customers to get the products they needed.
Additional reading: Missouri Employers Mutual
Financial Issues
Payless Cashways' financial issues were a major contributing factor to its downfall. The company took on $900 million in debt when it went private in 1988, a move that saddled it with debt and made it unprofitable for five years.
This debt burden was a result of a leveraged buyout, which is a type of takeover where the acquiring company uses borrowed money to finance the purchase. In this case, the Edelman-Sutherland group made $22 million from Payless Cashways' self-imposed leveraged buyout, while the company itself struggled to stay afloat.
Payless Cashways' financial struggles continued even after it went public again in 1993. The company's creditors forced it into bankruptcy in 1997, citing its inability to pay off its debt. This bankruptcy filing was the first of several for the company.
In 1999, Payless Cashways' debt had been reduced to $371 million, but the company was still struggling to stay afloat. An unusually long and cold winter in 1999-2000 cut the construction season short, robbing Payless Cashways of much-needed cash flow.
The company's financial struggles continued to worsen in 2000, with deflation on the cost of lumber forcing it to cut prices on existing inventory to its cost, or even below cost. This move led to a shortage of both inventory and money.
By 2001, Payless Cashways was in dire financial straits. The company filed for bankruptcy again in June of that year, and this time it didn't survive. The bankruptcy court appointed liquidators to sell off the remaining inventory, and Payless Cashways went out of business two weeks later.
The company's financial issues ultimately led to its demise. Payless Cashways was unable to obtain adequate credit support, attract outside cash flow, or find a buyer, and was forced to liquidate its assets.
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Frequently Asked Questions
What happened to Knox Lumber Company?
Knox Lumber Company was sold to Payless Cashways in 1986 and later absorbed into their operations in 1991, shifting its focus to professional contractors.
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