September 1, 2015
Last weekend, I was lucky to meet Dan, a retired, former executive of Sherwin Williams at a backyard summer party. For years, Dan ran plants and also had significant jobs in sales and distribution overlapping the era of Jack Breen, the beloved CEO who engineered the company’s growth from 1979 to 1999.
Naturally, I couldn’t wait to ask him the question that pops into my head every time I see a Sherwin Williams 18-wheeler with that hideous “Cover the Earth” logo. You’ve all seen it – A SWP can that spills red paint all over the globe. “Do you know why, in this age of sustainability and environmental concern, SW hasn’t retired that logo?” I asked him.
He explained how he’s been asked that question many times and always gives the same reply. Here’s Dan’s interpretation:
Before Jack Breen came on board in 1979, SW actually retired the logo and sales declined. Jack decided to bring it back. The rationale was that it was one of the most recognized brand marks in the world and considered one of the company’s most valuable assets. Then, sales began to grow on a record course.
“Was it just the logo?” I teased. He replied how it was more about the internal attitude of the company that changed. Jack made it clear that SW was going to grow and that they would grow based on a heritage that started in 1866 in Cleveland. They wanted to be the market share leader in North America and then become one of the top companies in coatings and paints in the world. Jack set in motion a plan to improve efficiency, improve output, acquire gems like Dutch Boy, and reduce debt to zero. He did all of it and set the company on a very good course.
So, I did my own homework. Dan’s story was right, even though it left out a few important elements. First, Sherwin Williams had a strong commitment to R&D and to market research. They were the first to see the trend in home and commercial construction to new exterior and interior surface materials. Fewer homes would need paint because they would be constructed with aluminum siding and pre-coated durable shingles that would not need Joe Homeowner to go out and repaint every 7 years.
SW went hard into the industrial coatings market to diversify the company while pushing tirelessly to build its own retail stores so that they could deliver the best expertise and service to consumers and contractors. The brand continues to build today and has over 4,500 corporate-owned stores even while they are rolling out a new line of solutions through Lowe’s Home Improvement stores this year.
Next, I checked the financials going back 30 years. Holy Cow! (I’m a Yankee’s fan and once met Phil Rizzuto). On August 1, 1985, SW’s share price was $37.12 and its dividend was less than 3 cents. On August 3, 2015, its share price as $255.81, an increase of 689%. Its dividend also increased 24 times over that period. The majority if Wall Street analysts covering SW have a “buy” or “strong buy” on the stock.
Then, I checked the annual report and looked for evidence of the SW posture towards sustainability. They have a corporate video on the latter and have defined sustainability as a combination of:
What I found most intriguing was how they defined Pride as a sustainability strategy. SW celebrates its people and challenges them to find ways to advance their leadership today so that the pride of the brand will establish a strong and better future for the generations of SW employees that follow.
So, what is really in that “Cover the Earth” logo? I think there is lot of pride embedded in it. The employees wear that logo proudly and the Sustainability Video kicks off with the logo and ends with employees standing around it.
I give SW a lot of credit for standing on its pride and heritage. However, I still hate the logo and so do many other people with whom I have chatted. It’s anachronous and too inward-facing. Consumers are not getting it and millennials will rebel as they form households.
I don’t think a change is in the near future under current leadership (the CEO is 58). But I predict that SW will, in fact, update its logo under the next CEO.
In the meantime, can’t they just change the color of the paint that drips all over the earth from red to green?
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