WCM Stock in Focus | Sherwin-Williams

A key focus of the WCM Quality Global Growth portfolio is to find quality global companies with durable, strengthening economic moats and corporate cultures aligned to this growth. An example of a company that demonstrates these characteristics is Sherwin-Williams.

With over 5,000 stores in North America alone, Sherwin Williams aims to be the largest paint and coatings manufacturer and retailer in the world.

In our latest Stock in Focus, Brian Huerta of WCM Investment Management explains how its ‘go the extra mile’ culture has contributed to its strong success, especially in the recent crisis.

Tom Hickey (TH):  Hello and welcome to this Stock in Focus update with WCM Investment Management. My name is Tom Hickey and with me today from WCM is Brian Huerta. Good day Brian.

Brian Huerta (BH): Hi Tom.

TH: Today we’re talking about Sherwin-Williams. Can you tell us a bit about what that company does?

BH: Sherwin-Williams is one of the largest or, is the largest paint and coatings manufacturer and retailer in the world. In North America they have nearly 5,000 stores. Their focus is a little bit different. They focus on the professional contractor. And we think they’re going to continue to benefit from a couple of things:

  1. The consolidation of some of the Mom and Pop paint stores that you often see in your neighbourhood.
  2. Also, that trend towards ‘Do-It-For-Me’ as oppose for, as oppose to ‘Do-It-Yourself’. People are outsourcing and having other people do their big work around the house.

And so, we think they stand to benefit from that trend.

TH: And how did the company fit into the WCM investment criteria of having an expanding economic moat?

BH:  Well, first it’s a very sales-oriented culture. It is right by design that they have these stores. They do it for a couple of reasons:

  1. It helps protect the brand and pricing. Not having that paint at different retailers or able to control that element of price and distribution.
  2. By focusing on the professional contractor, they’re able to get a lot of feedback from them. So, they know how to improve the product and develop relationships more importantly with this important part of their customer base.

TH: You touched on the culture there. What is the culture like at the company and how does that support that competitive advantage?

BH: It’s one of the strongest cultures that we know and own at WCM. The employee turnover’s incredibly low. People often start right out of college and they are there for 20, 30, sometimes 40 years.

As I mentioned, it’s a little bit of ‘go the extra mile’ culture. We recently had a conversation with the CEO and asked him a little bit about what the company is doing in light of the crisis. He said so many of his sales associates are stepping up.

‘They’re delivering paint to contractors on their way home. They’re staying late in the evening for contractors to pick up the paint. They know that their customers, the contractor, every hour matters. They don’t want to miss a deadline. They need to make money. They need to keep their commitments to their customers.’

It’s that type of culture that really shines and that enables them, we think, to continue to outdo their competition.

TH:  Fantastic Brian. Thanks for joining us.

BH: Thanks for having me Tom.

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