Coming to Afghanistan: Ace stores
Ace Hardware International Holdings has teamed up with Safi and Safi Enterprises to bring Ace stores to Afghanistan.
As a part of the development plan, Safi and Safi will open a minimum of 15 Ace Hardware stores in the next 10 years.
Ace Hardware in Afghanistan will more closely resemble a “big-box” store as opposed to Ace Hardware’s traditional convenience format. Building materials, electrical panels and scaffolding, as well as hand tools and household items will be found in the store, including many international name brands. Additionally, up to 40% of the products sold will be locally procured in an effort to support Afghan industry and offer competitively priced local products and materials, according to the release announcing the deal.
The license agreement was signed in December at the Ace Hardware International Middle East North Africa (MENA) regional headquarters at Dubai Airport Free Zone (DAFZ).
“At Ace Hardware International, we consistently provide our international retail licensees with ideal retail success elements, starting with a globally recognized brand, operational flexibility, market exclusivity and a global distribution network. I am excited to welcome Safi and Safi into our Ace family,” said Alberto Vidal, Ace Hardware International business development director.
After receiving corporate training in the United States, country manager Abdul Safi and managing owner Najib Safi are preparing to open their first store in Mazar-e Sharif. The Safis have opened offices, a warehouse facility and plan to open a second store in Kabul later this year.
The team at the Ace MENA regional headquarters provides Safi and Safi, along with other Ace retailers in the region, the ability to purchase product categories specifically tailored to international retailers from nearby suppliers, and distribute these items without the hassle of shipping through U.S. territories. This service dramatically shortens lead times, provides overall easier access to inventory and lowers the cost of goods.
Ace reports uptick in revenues
Oak Brook, Ill.-based Ace Hardware reported first-quarter revenues of $923.2 million, up 1.7% from the same quarter in 2012.
Net income of $4.4 million was down from $10.2 million earned in 2012.
"While our first-quarter results are down compared with the prior year, both revenues and net income were ahead of plan," said John Venhuizen, Ace CEO. "The first quarter of 2012 was an extraordinary quarter because of the unseasonably warm spring weather with revenues up $54.2 million, or 6.3%. Our expectations were that this was unlikely to recur in 2013, and we planned accordingly."
Venhuizen replaced Ray Griffith as CEO at the end of March.
The December acquisition of Westlake Ace Hardware, the 85-store Midwest chain, resulted in a reduction of reported wholesale revenues, as wholesale revenues from Ace to Westlake — a total of $18.9 million for the first quarter of 2013 — are now eliminated.
Ace’s balance sheet also reflects the acquisition. It now includes $74.4 million of Westlake inventory, $19.7 million of property and equipment, $23.1 million of goodwill and other intangibles, and $39.0 million of acquisition debt.
The co-op’s wholesale revenues of $883.4 million were down 2.7% compared to the same quarter last year. Comparable-store wholesale merchandise revenues declined 2.2%. The co-op said "approximately half of this decline was in the lawn & garden categories where the unseasonably cold spring weather in 2013 compared to the unseasonably warm spring weather in 2012 negatively affected demand."
Ace added 21 new domestic stores and cancelled 19 domestic stores. The new store count at the end of the first quarter is 4,106.
Do it Best reveals best sellers and opportunities
Indianapolis — Speaking to the collected body of Do it Best Dealers during the co-op’s Merchandising Market Preview here, Steve Markley described light bulbs as a high-interest, high-reward category.
He encouraged dealers to visit the GE booth, as well as that of new vendor TCP. Vendors and Do it Best executives say that as more options — and more questions — hit the light bulb category, the more the hardware store format will benefit. If they have the right products and the right product knowledge, light bulbs can result in big gains.
Markley also pointed to the fastest growing categories for the Fort Wayne, Ind.-based co-op year-to-date. They are:
• Patio fans and heaters, up 113%;
• Audio components, up 54%.
• Oscillating tool accessories, up 46%;
• Janitorial supplies, up 21%;
• Pond and fountain supplies, up 21%; and
• Food/snacks/beverages, up 20%.
In the area of light bulbs, where LEDs are increasingly a factor, Markley said the business has evolved beyond the obligation to meet efficiency regulations. "It’s about the opportunity," he said. "It’s there for you to pick up business and pick up market share. Make sure you have the right product and make sure your staff understands the opportunities."
Markley also pointed to a new "price-buster" program inspired by member demand for super low price discounts throughout the year. "We have the price buster promotion coming out on a monthly basis," he said. "These are Sneak-Peek type discounts on items we store in our RSC."
Sneak Peek is the term for the co-op’s 90-minute special-discount buying frenzy the night before the show officially opens. Some products are discounted more than 50%.
Markley said response to the program has been encouraging. "Look for that to grow."