The road ahead
Mapping routes for growth in a recovering economy
- April 29, 2011
Unemployment is starting to slip. Payrolls and consumer spending are inching higher. The long-awaited recovery from the worst recession in 70 years appears to be gaining steam.
Companies throughout Virginia are mapping routes for growth, considering a wide variety of options including expansion, acquisitions and the introduction of new products and services.
To get an idea of how the changing economy might affect state companies, Virginia Business looked at the growth strategies of three major corporations that were dramatically affected by recession in different ways: Henrico County’s Genworth Financial Inc., Chesapeake-based Dollar Tree Inc. and Advance Auto Parts Inc. of Roanoke.
Genworth suffered huge mortgage insurance losses as a result of the near-collapse of the national housing market. Its stock fell to less than $1, causing more than a few analysts and investors to worry it would follow Richmond-area neighbors Circuit City and LandAmerica into insolvency.
The company battled back, selling assets, cutting payroll and re-paying debt to regain the confidence of regulators, lenders and customers. Nonetheless, continuing losses from its mortgage insurance operations have caused investors — some of them quite vociferous — to call for the company to split itself up.
Dollar Tree, on the other hand, continued to thrive during the recession, aggressively building more stores and expanding its product lines to attract an increasing number of middle-class customers to a wide variety of low cost household goods.
Tight family budgets also benefitted Advance Auto, which saw an uptick in the number of motorists who used to trade-in their aging vehicles opt for replacement parts to keep their cars on the road a few years longer.
Both companies now face the same challenge: Will their newest customers remain thrifty, or resume their former shopping habits now that their paychecks are growing?
— The Editors
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