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Ace Hardware earns two distinctions

BY HBSDEALER Staff

Ace Hardware won two distinctions recently: top honors for customer service from Corporate Research International (CRI) for the 13th consecutive quarter; and fifth place on the Franchise Times 200 (FT200), an annual list that ranks franchise systems based on worldwide sales.

CRI ranked the Oak Brook, Ill.-based co-op No. 1 in the home improvement retail category for the second quarter of 2008 based on the results of its “Real People Ratings” consumer opinion survey. CRI, a market research firm specializing in mystery shopping and customer satisfaction surveys, compiles each quarter’s survey via RealPeopleRatings.com. The company sends quarterly online opinion polls to its pool of mystery shoppers, who rate their perception of each business’s customer service on a scale from one to 10, with 10 being the highest rating.

“Ace stores are committed to being ‘the helpful place’ in every community they serve, and ranking first for the 13th consecutive quarter reflects their dedication to always go the extra mile for customers,” said Ray Griffith, president and CEO of Ace Hardware.

Other first-place customer service winners include Chipotle Mexican Grill in the fast food category, Olive Garden in the full-service restaurants category, Speedway in the convenience stores category, Dick’s Sporting Goods in the sporting goods category, Best Buy in the electronics category and Nordstrom in the department stores category.

The 2008 FT200, published in the October issue of Franchise Times, indicates that the 4,630 Ace store locations domestically and abroad generated $12.5 billion in retail sales during 2007. Ace has held the fifth-place position since 2006 and was the only non-quick service restaurant or convenience store to rank in the top five. (McDonald’s, 7-Eleven, KFC and Burger King held the other four positions.)

“The superior sales and customer service performance of Ace locations throughout the world truly speaks to the strength of Ace’s brand power and our successful business model — even in this difficult economic climate,” Griffith said.

Franchise Times is a news and information source for franchise owners, operators and senior executives of multi-unit franchise companies.

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Spectrum Brands plans to exit fertilizer category

BY HBSDEALER Staff

Spectrum Brands, a leading manufacturer of lawn and garden products, pest control products, pet supplies and other consumer goods, will stop making fertilizer and several other products in its Home & Garden Business segment in an effort to stem losses. The Atlanta firm announced the decision as part of its fourth-quarter 2008 results, which posted a net loss of $492.6 million, compared to a loss of $333 million for the same quarter of 2007.

Sales for the quarter, which ended Sept. 30, 2008, were $706.5 million, a 7.2 percent increase over the prior year, after excluding the Canadian division of the Home & Garden Business segment, which the company sold in November 2007.

Year-end figures showed a loss of $931.6 million for 2008, compared to losses of $596.8 million in fiscal 2007. Annual sales for fiscal 2008 were $2.68 billion, a 4.8 percent rise over fiscal year 2007 sales of $2.56 billion.

In a prepared statement, the company said it decided to exit the manufacture of fertilizer, potting soil, mulch and grass seed because they had become “a drag on profitability.” The sluggish housing market, tight inventories at retailers, low levels of foot traffic and unprecedented commodity costs — particularly DAP and potash — all worked against the company’s efforts to boost margins, it said. Spectrum also tried to sell this segment of the business, in part or whole, but failed. “The company believes these attempts were unsuccessful due to the current credit market environment,” Spectrum said in its statement.

Spectrum also has exclusive private-label manufacturing agreements with national retail chains, including the Vigoro brand at Home Depot, Sta-Green at Lowe’s and Expert Gardener at Wal-Mart. A Spectrum Brands spokesperson could not comment on whether the company would end these particular partnerships.

Spectrum’s Home and Garden Business will continue to manufacture a number of other products, including outdoor and indoor insect control products, insect repellants and rodenticides. Continuing brand names include Spectracide, Cutter, Hot Shot, Repel, Garden Safe and Schultz.

Spectrum Brands also makes Rayovac batteries, Remington electric shavers, Tetra aquarium supplies and other consumer products.

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NLBMDA calls for housing stimulus

BY HBSDEALER Staff

The National Lumber and Building Material Dealers Association (NLBMDA) is calling on Congress to take bold action before the end of the year to boost the housing market.

Specifically, the NLBMDA seeks an extension of the Home Buyer Tax Credit for primary residences purchased between April 2008 and December 2009, to up to 10 percent of the home price up to a maximum of $22,000, depending on geography. In addition, buyers should have access to discounted 30-year fixed-rate mortgage financing that would encourage eligible home buyers to enter the market.

The organization pointed to the success of a similar credit plan in the 1970s.

“In 1975, Congress passed a short-term home buyer tax credit for all new homes, coupled with subsidized mortgage rates,” said NLBMDA president and CEO Michael O’Brien. “This stimulus jump-started the depressed housing market then, and the effects continued long after the measure expired. We believe Congress must once again take bold action to restore consumer confidence in the market.”

The NLBMDA is also urging Congress to extend bonus depreciation and increased Section 179 expensing provisions for at least one year. The move would promote investment during the current economic downturn, according to the group. The Economic Stimulus Act signed into law in February temporarily created a 50 percent depreciation bonus and increased the amount that small businesses can expense under Section 179 to $250,000, but those provisions are due to expire at the end of 2008. Additionally, the NLBMDA is asking Congress to extend net operating loss (NOL) carryback provisions from two years to five to allow building material dealers to discount current losses against past profits.

“Taken together these proposals will go a long way toward reviving the housing economy, which is key to overcoming our current economic crisis,” said O’Brien. “We are calling on all our members to contact their members of Congress to urge quick action.”

The NLBMDA believes that its housing stimulus proposal will create much-needed jobs. Almost 85,000 jobs have been lost in the past two months in the construction industry alone, mostly in specialty trades related to home building, according to the industry group.

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