Handy Hardware enters Chapter 11
Shortly after closing its new distribution center in Meridian, Miss., Handy Hardware Wholesale filed for Chapter 11 in hopes of reorganizing and re-emerging by early summer 2013.
Wells Fargo Credit is providing $30 million in Debtor-in-Possession financing for the co-op.
In a prepared statement, Handy President Tommy Schifanella said: “Chapter 11 reorganization was not Handy’s preferred option but it was the only option whereby Handy could provide financial stability over the short term for vendors and suppliers to ensure the continued flow of product to Handy’s Member Dealers — without the risk or uncertainty of non-payment.”
Handy members own 1,300 store locations in 14 states.
The company’s Spring Market, slated for Jan. 31-Feb. 2, will proceed as planned, with town hall meetings arranged to discuss details of the reorganization.
Handy said it has been unable to reach a negotiated settlement agreement with its real estate lender, Capital One National Association. “Handy will continue to work towards a settlement but intends to use the reorganization process to bring a structured conclusion to this relationship,” according to a statement released late Friday.
The statement announcing the Chapter 11 filing also elaborated on the Dec. 31 closing of the co-op’s Meridian distribution center, which was built in 2010 and contains 460,000 sq. ft. of distribution space. This Meridian facility was developed to help the co-op expand operations into the East and Southeast markets. However, Handy incurred more than $30 million of debt in connection with the building and operation of Meridian. Due to operational snags and the economic environment at the time of opening, Meridian was unable to grow fast enough to cover its costs, the company said.
Ace adds instant savings to rewards
Oak Brook, Ill.-based Ace Hardware launched Instant Savings, a program for Ace Rewards members that allows them to receive instant discounts at the register.
“We have made it even easier for our customers to shop with Ace by delivering more value and convenience for them,” said John Surane, senior VP merchandising, marketing, advertising and paint. “We constantly look for ways to add value for our customers, and Instant Savings is a major new exclusive benefit to our Ace Rewards loyalty program that does just that.”
With the launch, Ace Rewards customers no longer have to redeem rebates through the mail and wait the four to six weeks it typically takes for those to be processed.
To receive Instant Savings offers, customers must simply present their Ace Rewards card at checkout or ask the cashier to lookup their Ace Rewards number by providing their phone number or last name and five-digit zip code.
The program is free for consumers. It will continue to provide exclusive member benefits, such as 10 points for every $1 spent, a $5 Reward for every 2,500 points earned, money-saving coupons and sale reminders, along with helpful tips and content.
With Valspar, Ace shakes up its paint department
Ace Hardware Corp.’s paint program is going through a major makeover with Valspar stepping up as a supplier and taking over the co-op’s paint manufacturing facilities.
Ace and Valspar announced a long-term deal, under which Valspar will manufacture and supply Ace-branded paint products to Ace dealers. The companies also announced that Valspar has acquired Ace Hardware’s paint manufacturing assets, including two manufacturing facilities located near Chicago.
Minneapolis-based Valspar will also make available to Ace dealers a comprehensive line of Valspar-branded paints.
The announcement made no mention of Benjamin Moore, a paint brand which has long had a close relationship with Ace. In an article last month at homechannelnews.com, Benjamin Moore senior VP strategy and retailing Edward Klein told HCN that his company wanted to stay with its “selective distribution” business model. Ace, on the other hand, “[wanted] a national brand that they could sell in all their stores.”
With Valspar, Ace says its dealers can expect quality and performance from Ace-branded paint products while also benefitting from Valspar’s color expertise, enhanced sales support for retailers and a competitively priced product assortment.
Introduction of Valspar paint products is expected to begin in the fall of 2013. Ace will retain ownership of its existing paint brand trademarks, including Clark+Kensington and Ace Paint, but Valspar will manufacture Ace’s product lines exclusively for the retailer.
“Ace Hardware is pleased to enter into a long-term supply relationship with Valspar,” said Ray Griffith, chief executive officer, Ace Hardware Corporation. “Our relationship with Valspar will allow Ace to create an enhanced customer experience that generates more paint sales for our valued owners. We have ambitious goals for our paint category, and this step puts Ace on the path to growing market share in liquid paint and increasing revenue opportunities for all Ace retailers.”
The companies said Valspar will immediately begin manufacturing and distributing Ace’s existing portfolio of Ace-branded paint products. Over the next year, Ace and Valspar will collaborate with retail owners to enhance their paint departments, according to Ace.
Valspar Chairman and CEO Gary Hendrickson, chairman and chief executive officer of Valspar added: “This new business also positions Valspar well for further growth as the U.S. housing market continues to recover.”