McNulty Arranges Takeover Deal, Continues Fast Pace : HomeClub Chief a Man on the Go

Times Staff Writer

When HomeClub’s pending $151-million acquisition by Zayre Corp. was announced Tuesday, HomeClub’s 39-year-old founder and president, Robert McNulty, wasn’t taking any time to congratulate himself.

After an all-night negotiating session Monday at HomeClub’s Fullerton headquarters in which the company’s directors voted unanimously to recommend the takeover to shareholders, McNulty went briefly to his Rolling Hills home to change clothes and shower. Then he headed to Gardena to give a pep talk to employees at a new outlet opening there Saturday.

By Wednesday, McNulty--who started the discount home improvement chain just two years ago and stands to make a $6.5-million profit on his stock and options--was back to business, with only a folded blanket in his office to remind him of the marathon negotiations.


McNulty said 65 employees own stock in the company, and most are excited by their potential gains from the proposed swap of their shares for Zayre stock. “There is a secretary out there who is going to go out and buy a condominium,” he said.

But McNulty, a high school dropout who as a boy lived for a time in a government housing project, said he has no intention of cashing in the Zayre stock that he would receive or slowing his pace at HomeClub, where he said he regularly puts in 90- to 100-hour workweeks. “It (the sale) is not going to change anything,” he contends.

As part of the agreement--which still must be ratified by HomeClub’s shareholders at a meeting to be held in January--McNulty and his key staff members will stay on for another three years to run the company. McNulty said he gets along with Zayre President and Chief Executive Maurice Segall, whom he called “a spark plug” and “our kind of guy.”

It is typical of McNulty’s driven style and decisiveness, his associates say, that his negotiations with Segall, which began only 10 days ago, came quickly to a climax. McNulty said he feels no compunction about turning over ownership of the firm that he founded with his buddy, 33-year-old George Handgis, to another corporation.

He said HomeClub’s initial public offering of stock last month to raise expansion capital was disappointing, and Segall offered another source of funds. “It takes deep pockets to play the game,” he said.

From the time it obtained its initial $4.5 million in start-up funds from venture-capital investors, HomeClub has been in “an uphill struggle,” McNulty said. He recalled that some industry observers had contended that HomeClub’s concept of using a membership club to sell plumbing, building and other home improvement items at bargain prices would never catch on.


But McNulty said he wasn’t intimidated. Rudolph Hirsch, executive vice president, describes McNulty as “a bumble bee who doesn’t know the weight of his body is too heavy for his wingspan. Not knowing that, he just keeps flapping his wings faster and keeps flying.”

For instance, McNulty said that, when HomeClub opened its first two warehouse outlets in Fountain Valley and Norwalk, some competitors who were much larger at the time threatened to cut off their business to vendors who supplied the upstart firm. Framed on a wall in McNulty’s office is a letter from a vendor rejecting HomeClub’s business.

Despite some dire predictions, HomeClub has grown from two to 15 stores, with three more stores scheduled to open within the next three weeks and 18 more planned to open next year. For the six months ended July 28, the company reported net income of $1.7 million on $90.5 million in sales.

Nationwide Expansion Plan

McNulty said that he and Segall share a goal of expanding the company, which now is concentrated primarily in California, into a national organization with consistent growth of about 25% a year.

The biggest hurdle to overcome, McNulty said, will be to find enough managers and other employees who understand the home improvement center business.

McNulty’s associates attribute much of the success of HomeClub to McNulty’s “hands-on management” and ability to hire and motivate good workers, partly through monetary incentive programs for new ideas and increased profits.


McNulty said he always expected to be a success in business, even when he dropped out of high school in the 11th grade and hitchhiked around the country for a year, taking on odd jobs.

“I think my biggest strength is my desire to win. It has always been that way,” he said.

After joining the Navy and serving in Vietnam, McNulty started in the home improvement center industry as a salesman at a National Lumber store in Wilmington. Later, after building a store for another lumberyard owner, he went to work as a buyer for Ole’s Home Centers. At the age of 27, he moved to Angels Home Center in Los Angeles, where he was general merchandise manager in charge of a staff of buyers and advertising personnel.

In 1976, McNulty founded his own company, Western Home Improvement Center, which he sold to W. R. Grace in 1980. Just before founding HomeClub, he was president of Neiman-Reed’s Lumber City in the San Fernando Valley.