Ace Hardware Reports Fourth Quarter and Full Year 2018 Results

Ace Hardware Corporation (“Ace” or the “Company”), the largest retailer-owned hardware cooperative in the world, has reported record fourth quarter 2018 revenues of $1.39 billion, an increase of $74.4 million, or 5.7 percent, from the fourth quarter of 2017. Net income was $25.2 million for the fourth quarter of 2018, an increase of $11.0 million from the fourth quarter of 2017.

Full year revenues were a record $5.7 billion, an increase of $328.6 million, or 6.1 percent, from 2017 revenue. Net income for fiscal 2018 was $128.2 million, a decrease of $19.2 million, from fiscal 2017. This decrease was due to warehouse expansion costs, lower Retail Support Center (“RSC”) productivity, and increased marketing and advertising expenses. The Company also incurred increased intangible asset amortization related to the final accounting valuation for Ace Ecommerce Holdings LLC (“AEH”) which was formed in the third quarter of 2017 for the acquisition of The Grommet on September 30, 2017.

“Strong new store growth, increased same-store sales, and a 43 percent increase in acehardware.com revenues helped us realize a healthy 5.7 percent increase in revenues during the fourth quarter,” said John Venhuizen, President and CEO. “The 6.1 percent full year growth fueled our $142 million dividend distribution to shareholders. While still meaningful, this is a reduction from last year driven by our expanded assortment, higher inventory and lower RSC productivity which drove expenses up and profit down for the year.”

The 1.3 percent increase in retail same-store-sales during the fourth quarter of 2018 reported by the approximately 3,000 Ace retailers who share daily retail sales data was the result of a 2.3 percent increase in average ticket, partially offset by a 1.0 percent decrease in same-store transactions. The 2.3 percent increase in retail same-store-sales for the full year was the result of a 3.3 percent in average ticket, partially offset by a 0.9 percent decrease in same-store transactions.

Fiscal Year

Consolidated revenues for fiscal 2018 totaled $5.7 billion, an increase of $328.6 million, or 6.1 percent, as compared to the prior year. Total wholesale revenues were $5.3 billion, an increase of $250.4 million, or 4.9 percent, as compared to the prior year. Increases were noted across all departments with paint, grilling, power tools, lawn and garden and electrical showing the largest gains.

Wholesale merchandise revenues from new domestic stores were $154.4 million in fiscal 2018. This increase was partially offset by a decrease in wholesale merchandise revenues of $40.9 million due to domestic store cancellations. Wholesale merchandise revenues to comparable domestic stores increased $115.3 million in fiscal 2018 compared to fiscal 2017. The Company’s AIH subsidiary and AWH subsidiary collectively contributed $18.3 million of incremental revenue in fiscal 2018.

Total retail revenues were $375.4 million, an increase of $78.2 million, or 26.3 percent, as compared to the prior year. Retail revenues from ARH were $329.7 million during fiscal 2018, an increase of $54.1 million or 19.6 percent. The increase was the result of new retail stores added during 2018. Retail revenues from AEH, which was formed in the third quarter of 2017 for the acquisition of The Grommet on September 30, 2017, were $45.7 million during fiscal 2018.

Ace added 174 new domestic stores in fiscal 2018 and cancelled 116 stores. This brought the Company’s total domestic store count to 4,476 at the end of fiscal 2018, an increase of 58 stores from the end of fiscal 2017. On a worldwide basis, Ace added 257 stores in fiscal 2018 and cancelled 125, bringing the worldwide store count to 5,253 at the end of fiscal 2018.

Source : Insight DIY Team and Ace Hardware

Image : Susan Montgomery / Shutterstock.com

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