DISTRIBUTORS/CO-OPS

In Houston, Ace recaps a strong 2013

BY HBSDEALER Staff

Houston — Ace executives took the stage to deliver rousing speeches at the General Session of the Ace 2014 Spring Convention & Exhibits, congratulating retailers on a strong 2013 and outlining the co-op’s vision for 2014 and beyond.

Ace even had a proprietary rock ‘n’ roll theme song dedicated to its strategic initiative, "20/20 Vision," which added a spirited component to a slide show presented at the session. "The view is worth the climb," crooned the singer.

The company looked back at the recent Emery-Waterhouse acquisition, the roll-out of new B2B wholesaling program The Supply Place, the launch of the Ace-Valspar Paint Studio, the Helpful 101 customer service certification program, exceeded sales and profitability goals, and Ace’s 90-year-anniversary.

CEO John Venhuizen pointed out that the Emery Waterhouse acquisition benefits retailers in at least three ways: via financial benefits, the addition of new SKUs, categories and suppliers, and a generally lower cost of goods thanks to combined buying power and price synchronization. A handful of products will even realize double-digit cost reduction by March 1st, he said.

EVP, CFO and "chief hero officer" Bill Guzik — who Venhuizen introduced by way of an anecdote in which an 18-year-old Guzik made headlines after he brazenly went after a robber in a parking lot — pointed out that same store sales exceeded Ace’s goal by 1.3%, marking a 4.3% increase for the co-op in 2013.

"This was the best performance we’ve had this century," said Guzik. "And it didn’t just come from price inflation — it came from having more customers in our stores."

The Supply Place itself generated small business revenue growth of 7.3%.

Additionally, Ace’s bottom-line profitability came in at $104.5 million, exceeding its target of $100 million. Worldwide total store count performed similarly, weighing in at 4,829 (compared to a goal of 4,742). At a 102-store net growth rate, it was "a number we haven’t seen in decades," said Venhuizen.

Finally, Guzik highlighted Ace’s strengthening debt-to-equity ratio, which fell from 96 cents of debt for every dollar of equity to a mere 58 cents in two years.

One thing that didn’t go quite as planned was the launch of ACENET, Ace’s product management platform, which is now slated for a third-quarter release. According to Guzik, it was a case of "biting off more than we can chew" and the ephemeral nature of "bleeding-edge technology."

What else is on tap for 2014? For one, Ace plans to ramp up its advertising and media budget by 30%. Financial goals for the co-op largely match 2013 goals at a 3.0% increase in same-store sales, 5.2% for wholesale, and a $100 million bottom-line profitability, with net store growth of 25 domestic and 40 international stores.

Ace’s John Surane, executive VP of marketing, merchandising and sales, stressed the importance of getting at least 3,000 more retailers to be certified in Helpful 101, as well as rolling out Helpful 201. Additionally, a greater focus on Ace’s digital presence — including an in-store pickup feature on Ace’s website — is of paramount importance, he said..

All in all, it’s about "productive paranoia," as he put it. "We better be paranoid, or a little bit scared. The market is not getting any easier, and in fact, we expect it to be fierce. [Our competitors] are trying to do the things we do best, and if we’re not cognizant, they will get better than us."

Venhuizen put it this way: "The number one best thing we can do for our stores is to give them lower costs to deal with the behemoths like Lowe’s and Home Depot…the heart of Ace beats big, and it beats strong," he said, citing a 60% increase in donations for the Ace Foundation and its continued support for the Children’s Miracle Network. "And in my view, we’re just getting started."

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

POLLS

How much credit should be given to the co-op business model for the success of the independent hardware and building supply dealer over the last half century?
DISTRIBUTORS/CO-OPS

True Value partners with Boys & Girls Clubs

BY HBSDEALER Staff

Atlanta – Before the True Value Reunion here, Brent Burger spent some quality time with kids from an Atlanta area Boys & Girls Club. On Saturday afternoon, he announced a national partnership between True Value and the youth organization. 

“True Value Foundation’s mission is to provide resources to improve the lives of children in the communities we serve,” said Brent Burger, True Value Company board of directors chairman and True Value Foundation president. “Our partnership with Boys & Girls Clubs of America is a natural fit. It unites our retailers around a common philanthropy, and provides them with an opportunity to engage with local Clubs and give back in a variety of ways.”

During the first year of the partnership, True Value Foundation will support Boys & Girls Clubs of America, headquartered in Atlanta, by piloting local retailer engagement activities. 

In 2015, the foundation will roll out system-wide tools to connect additional True Value retailers with local Boys & Girls Clubs for volunteer and fundraising opportunities. The partnership kicked off at True Value’s Reunion in Atlanta with a community service project where retailers were paired with local Club youth for activities and mentoring at an Atlanta-area Boys & Girls Club.

“At True Value, we’re committed to the communities we serve and to the local hardware entrepreneur. Boys & Girls Clubs of America positively influences the lives of our future entrepreneurs and business leaders every day,” said John Hartmann, True Value Company president and CEO. “On behalf of True Value and our retailers, we’re honored to work with such a highly regarded, high-impact organization. True Value strongly encourages its retailers and associates to commit to creating opportunities for our country’s youth through this partnership.” 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

POLLS

How much credit should be given to the co-op business model for the success of the independent hardware and building supply dealer over the last half century?
DISTRIBUTORS/CO-OPS

True Value looks to transform

BY HBSDEALER Staff

Atlanta – An information-packed general session here at the True Value Reunion included up-close interviews with a new slate of senior executives and an update on the co-op’s long-running strategic planning effort.

And there was also a little comedy on the stage, as actors impersonated shoppers experiencing BBTSD, or “big box traumatic stress disorder.”

True Value CEO John Hartmann, at his second “Reunion,” – the new term for the co-op’s twice-yearly market and convention – described 2014 as a “transformational year” for the co-op. 

Expected to play a role in that transformation is a co-op-wide strategic planning process, in which the co-op has been engaged for several months. The results of the process will be released at the group’s Fall Reunion in October. 

“We’re not building something to collect dust on a shelf, I can promise you that,” Hartmann said. “This will be an execution plan with a focus that will improve performance.”

Stating the importance of transparency to the co-op’s strength, Hartmann shared some numbers. Gross billings reached $1.9 billion in 2013, about the same as 2012. Comp-store retail sales grew 2.1%, and wholesale comp-store sales increased 2.4%, on a gross-billing basis.

The co-op will deliver a patronage dividend of $54.3 million, he said.

Regarding store acquisition and attrition, Hartmann shared that True Value Company welcomed 139 stores to the co-op, while 137 stores left True Value last year. Of the new stores, 41 were brand new, and 98 were converted from other co-ops or buying organizations. However, not counted in the above math is the number of stores that simply closed during the year.

Hartmann revealed some results from the strategic planning survey that was sent out to members late last year.

With the survey showing that members purchase about 75% of their products through True Value, Hartmann encouraged members to buy through the co-op. If members’ increased warehouse purchases by 5%, the patronage dividend would increase by 25%, Hartmann stressed. 

Hartmann emphasized the message that True Value is committed to improving. “Are we satisfied with our performance? Are we satisfied with our competitive position? Are we absolutely sure we have a sustainable business model? I can provide one simple answer – no we are not.”

During a series of on-stage interviews with the new slate of True Value executive, senior VP and Chief Merchandising Officer Ken Goodgame, earned spontaneous applause when he said: “When I was at Black & Decker, just beginning in the business, True Value was the big dog. We want to return True Value to the top spot with a sense of urgency.”

Goodgame, who came to True Value from a similar position at Ace, was one of three new senior leaders introduced on stage. He was joined by Abhinav Shukla senior VP and COO; and Tim Mills the company’s new senior VP of growth.

Shukla was most recently with AlixPartners, where he focused on global supply chain and performance for Fortune 500 companies. Mills was most recently VP and general manager for the Power Solutions division of HD Supply. 

 

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

TRENDING STORIES

POLLS

How much credit should be given to the co-op business model for the success of the independent hardware and building supply dealer over the last half century?