Eye on the weather, Do it Best sees opportunity
Indianapolis — Bob Taylor has a good memory for weather conditions.
Back in March, the Do it Best Corp. CEO flew out of Fort Wayne, Ind., with the thermometer reading 14 degrees. On exactly the same day the year before, traveling to the same business event, the temperature was a balmy 83 degrees.
"Comparatively, we’ve been challenged," he said, during an interview here at the Do it Best May Market at the Indiana Convention Center. While the Pacific Northwest and Texas have glided through the spring selling season, much of the country has not.
For instance, Taylor said the family-run Taylor Do it Centers in coastal Virginia were down about 25% in March. The good news is that thanks to an improved April and May, the stores have made up for the decline.
"The nice thing is, it is starting to come back," he said. "I’m glad we had at least a few good weeks of weather so everybody came in a good mood. Dealers are positive, and they’re looking for new items and new opportunities."
One of those opportunities is in the lighting aisle, as game changers such as CFLs and, more recently, LEDs, bring unheard-of technology, efficiency and price points to the equation.
"The lighting piece I think is one of those areas for independents to kind of recapture a bigger segment of that business than what they traditionally had," he said.
The regulatory environment adds another piece to the lighting puzzle.
"You already lost the 75 watt and 100 watt bulbs," Taylor said, referring to federal efficiency standards. "You’re going to be losing the 60- and 40-watt bulbs. And unless you have some giant back room somewhere stocked with all that stuff, you’re going to have to make some significant changes to your business."
No longer a "commodity category," he said, the bulb aisle gives the independents "a great chance to remerchandise that category, educate your staff and capture a bigger segment of that business. And I think it’s going to be a more profitable business, too."
On the LBM side, even when the ramp-up in commodity prices and lumber are stripped out of the equation, Do it Best is seeing gains — up 13% year-to-date in lumber and up about 10% in panel products.
"To me that’s a really good indication of that slow but steady improvement in the housing market," Taylor said.
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.