Ace Hardware net income up 11.7 percent in Q2
Ace Hardware released its second-quarter results, reporting net income of $33.4 million, up 11.7 percent from the $29.5 million reported last year. Total revenues for the Oak Brook, Ill.-based co-op were down 2.6 percent to $1.067 billion.
“Although top-line revenues declined, we saw an improvement in sales trends from the second quarter, particularly in the latter half of the second quarter,” said Ace president and CEO Ray Griffith. “
Merchandise sales from Ace’s international business continued to be strong and contributed $6.5 million in incremental sales, up 13.5 percent compared with 2007. This number was driven by increased sales to existing stores in the Middle East, sales to new stores in the Caribbean and sales growth from foreign-to-foreign wholesale operations.
Ace added 27 new stores and cancelled 49 stores in the second quarter, which brought the company’s total store count to 4,594 compared to 4,630 at the end of fiscal year 2007.
On a category basis, domestic revenues were negatively impacted by declines in the tools, paint, plumbing and electrical categories and were partially offset by a sales gain in lawn and garden.
Operating expenses decreased $9.1 million, or 10 percent, to $82.5 million in the second quarter of 2008 and, as a percentage of revenues, decreased from 8.36 percent to 7.73 percent.
The decrease in operating expenses was primarily a result of a reduction in incentive compensation and profit sharing expenses of approximately $6 million, the co-op said, and lower distribution costs of $4.2 million due to tight expense control and lower volume at Ace’s Retail Support Centers (RSCs).
“We made good progress in reducing our expenses in the second quarter in light of the challenging economic environment,” Griffith said. “We continue to review our cost structure and will be making the necessary adjustments to deliver strong profitability while continuing to invest in and drive the Ace brand.”
RONA sees a 7 percent decline in net income
Boucherville, Quebec-based retailer RONA, one of Canada’s largest retailers of building materials and home improvement items, saw net income drop 7 percent to C$80.1 million (US$75.2 million) from C$86.2 million in the year-ago period.
Consolidated sales increased slightly to C$1.473 billion from C$1.469 billion in the same period last year. Same-store sales fell 4.4 percent.
New acquisitions contributed heavily to sales, the company said, noting that consolidated net sales would have declined by 2.9 percent if not for the contributions of those companies: Noble Trade, Dick’s Lumber, Centre de Renovation Andre Lessard and Best-MAR. Rona also said it is boosting promotions and service to attract customers.
“Sales generated by new stores opened in the last 12 months could not compensate for the decline in same-store sales, which decreased by 5.8 percent in the first half of 2008, excluding the 0.5 percent decline in the price of forest products,” the company said.
The company said a large part of its strategy will be to continue recruiting independent dealers. The retailer announced 12 new franchisees yesterday and said it has added 21 independent dealers so far this year.
Valspar sees dip in third-quarter earnings
Paint and coatings giant Valspar, which sells an exclusive line of interior and exterior paints in Lowe’s stores, saw net earnings drop 23.8 percent from the year-ago quarter, to $47 million from $58.2 million in the same period last year. Sales rose 7.1 percent to $957.7 million from $893.5 million in the prior-year period.
“Results for the quarter were in line with our expectations,” said William Mansfield, Valspar chairman and CEO. “Strong results from our international businesses, new business and pricing helped to partially offset the impact of substantially higher raw material costs and the weak U.S. economy.”
Looking ahead, the company anticipates ongoing pressure on raw material costs and continued weakness in the U.S. economy.
“We remain focused on improving our competitive position,” said Mansfield. “We are moving forward with restructuring actions to further improve the efficiency of our business, implementing additional price increases and continuing to invest in our brands.”
Valspar is based in Minneapolis.