With heavy investment in its Paint Studio and a corresponding media blitz to promote it, wholesale sales at Ace Hardware Corp. jumped double digits in the second quarter, the co-op reported Wednesday morning.
Ace reported wholesale revenues were $1.25 billion, an increase of 14.1% as compared to the prior-year quarter. The co-op said increases were noted in virtually every department, with the paint, electrical, and lawn and garden categories showing the largest increases. The company has remodeled and re-equipped over 3,300 stores as part of the new Paint Studio initiative, which contributed meaningfully to second-quarter wholesale revenues and record retail sales in May.
Based on POS data from the 3,100 Ace retailers who transmit it to headquarters, same-store sales were positive 3.6%. For the first half of 2014, same-store-sales at these stores were up 4.2 percent.
Record revenues, which include sales of corporate-owned stores, increased 13.4% to $1.33 billion. Net income of $66.5 million increased 57.2% from last year.
“Companies our size and age do not grow double digits by accident,” said John Venhuizen, Ace president and CEO. “It’s only through a thousand points of disciplined execution from great people that results like this occur.”
Retail revenues from Ace Retail Holdings (“ARH”) were $79.7 million in the second quarter of 2014. This is an increase of 2.6% from the second quarter of 2013, which resulted from increases across nearly all departments, with lawn and garden and tools showing the largest increases. During the second quarter of 2014, same-store sales at ARH were up 3.5% versus the prior year and are up 5.7% for the first half of 2014.
Ace added 43 new stores and cancelled 44 stores in the second quarter of 2014 for a net decrease in store count of 1. This brought the company’s total global store count to 4,877 at the end of the second quarter of 2014, an increase of 136 stores from the second quarter of 2013.
“It’s a privilege to work with such a dedicated and effective team,” continued Venhuizen. “For 90 years now, we’ve taken a stand for the small, mostly family-run businesses who duke it out every day with many of the biggest, most well-funded companies on Earth. Our exceptional small business owners have once again generated record financial results by consistently delivering award-winning service to their neighbors.”
The company said its debt increased by $91.4 million compared to the second quarter of 2013, the result of factors including the addition of Valspar-branded inventories to all of its Retail Support Centers, and the acquisition of Emery-Waterhouse in the first quarter of 2014.
Investments made by the company since the second quarter of 2013 have also led to an increase in equity of $60.6 million, Ace said.