Ice melt strategy: buy early
Two winters ago, the ice melt situation was a logistical challenge of the highest order. Last year, the flow of ice melt improved, but not by much.
At the Do it Best May Market here, the topic of ice melt distribution rose again, with some mixed views about the degree of expected shortages in the future. But there was a consistent piece of advice: buy early.
“We already know that in October and November, people will be scrambling,” said John Wesolowski, senior VP of Milazzo Industries, based in Pittston, Pennsylvania.
He pointed to reasons that will work against the smooth shipment this upcoming winter. One is the diversion of liquid brink to the hydraulic fracturing fields in gas fields around the country. Another is the labor unrest in Israel, where significant quantities of magnesium chloride are harvested. Both materials factor in ice melt products, according to Wesolowski.
Basic road salts will probably fare better than more effective DIY ice melt products, Wesolowski said. But his advice is simple: buy early.
That advice was echoed during the co-op’s Merchandising Market Preview. Lawn & garden buyer Gary Loosle said last season was the second consecutive winter of record sales for ice melt. And while manufacturers will be better prepared for preseason orders, the time to buy is now in order to capture the best deals.
Several companies had deals at the market, including Milazzo. Compass Minerals (formerly North American Salt), Kassouni, ES Deicing and Dando.
According to Milazzo’s Wesolowski, the business has changed over the years to require a degree of advanced planning and purchasing. “People used to say, ‘Put me down for 25 loads, I’ll let you know when I want them,’” Wesolowski said. “Those days are long over.”
Do it Best enters 55th country
Do it Best Corp. announced an agreement with its newest overseas affiliate to develop its first locations in Saudi Arabia.
The agreement provides Saudi Arabia-based Albawardi Group exclusive development rights in the country and will lead to Attken Do it Center locations throughout the nation. It also makes Saudi Arabia the 55th country in which Do it Best Corp. members operate independent home improvement stores.
“Albawardi Group is the perfect partner for us to enter this promising, underserved market,” said Do it Best Corp. President and CEO Bob Taylor. “Like our many other members throughout the world, they recognize a strong demand among consumers for a recognizable brand, and they value a co-op partner that offers them unparalleled flexibility, scalability, affordability and customizability to tailor their business to their market.”
As its worldwide presence has grown, Do it Best Corp. also continues to enhance its internationally focused programs and services, including an increase in its foreign-to-foreign product distribution and customizable store design options, the co-op said. This year also marks the first time an international member — Michael Cohen of Panama Do it Centers in Panama — has been selected to serve on the co-op’s board of directors.
“The demand for U.S.-style retailing is very strong in many countries around the globe,” added Tom Barfell, director of international sales and business development for Do it Best.
Mishal Albawardi of Albawardi Group said: “We are very excited to work with Do it Best Corp. and bring this recognizable brand to the people of Saudi Arabia. And we know this partnership will only grow as they continue to enhance their internationally-focused programs and services for their worldwide affiliates.”
Ace scores double-digit growth in Q1
Oak Brook, Illinois-based Ace Hardware Corporation reported first-quarter 2015 revenues of $1.2 billion, an increase of 10.0% from the first quarter of 2014. Net income was $29.9 million for the first quarter of 2015, an increase of 22.5%.
"I want to thank the entire Ace enterprise for delivering record first-quarter revenues and net income for the second consecutive year," said John Venhuizen, president and CEO, Ace Hardware Corp. "Our strategic acquisitions, new stores and an impressive 9.2% increase in retail same-store-sales fueled the double-digit growth."
Ace added 33 new domestic stores in the first quarter of 2015 and canceled 32 stores. This brought the company’s total domestic store count to 4,252 at the end of the first quarter of 2015, an increase of 32 stores from the first quarter of 2014.
The 9.2% increase in retail same-store sales reported by the approximately 3,000 Ace retailers that share daily retail sales data consisted of a 5.3% increase in customer count and a 4.2% increase in average transaction size, the company said. Increases were noted across all departments with paint, lawn and garden, auto and outdoor living, tools and electrical showing the largest increases.
Excluding the impact of non-recurring Paint Studio revenues in 2014, wholesale merchandise revenues to new domestic stores activated in 2014 and the first quarter of 2015 contributed $64.8 million in incremental revenues during the quarter, while wholesale merchandise revenues decreased $9.5 million due to canceled stores.
Retail revenues from Ace Retail Holdings — consisting of Westlake Ace Hardware — were $46.3 million in the first quarter of 2015. Same-store sales growth drove the increase of $2.6 million or 5.9% from the first quarter of 2014. With increases in nearly all departments, nursery and landscape, paint, electrical and barbecue had the largest increases.
Debt increased $65.7 million versus the first quarter of 2014 as a result of additional borrowing on the company’s revolving credit facilities. The increase in debt was primarily due to the increase in receivables and inventories, growth in the paint business through significant investment in The Paint Studio initiative and an increase in the wholesale distribution network through the acquisition of distributor Jensen-Byrd Co. in the fourth quarter of 2014.
The acquisition contributed $25.2 million towards an increase in inventory and $21.1 million toward an increase in receivables.