Joanna Gaines makes a deal with Ace
Ace Hardware Corp. added some TV personality power to its paint offering through a partnership with Magnolia Home by Joanna Gaines Paint. The product launch is described as an Ace exclusive in the home improvement category, and the brand’s first-ever paint partnership with a hardware co-op retailer.
Joanna Gaines and her husband Chip earned home improvement fame over the past several years as stars of the television show “Fixer Upper.”
“Joanna is a force within the décor and design space and we are delighted to bring her durable, on-trend paint collection to our customers,” said John Venhuizen, president and CEO, Ace Hardware Corporation. “We believe customers will value the combination of Ace’s service and convenience coupled with Magnolia’s inspirational color collection.”
The interior paint line is available through acehardware.com and some 500 Ace stores nationwide. The 150 colors embrace the concept of “modern farmhouse” style and reflect Gaines’ personal design philosophy. Within the larger collection, 25 of the 150 colors make up the “Market Collection”; an assortment of Gaines’ favorite colors specifically inspired by her life in Waco, Texas.
Magnolia Home by Joanna Gaines Paint is described by Ace as “a premium, stain-blocking interior paint and primer in one that is durable and easy to maintain. The 100% acrylic formula from the KILZ Brand delivers excellent stain blocking, hide and coverage.”
A gallon will carry about a $44 price tag. Eight-ounce samples of the colors can also be purchased for $8.
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Seen and heard at the Ace show
Dallas — There was plenty of talk of overarching strategy and disruptive competition at the Ace Hardware Convention and Exhibits in Dallas from March 15 to 17. There was also a lot of tire kicking, aisle surfing and product demonstrating on the exhibit floor.
While Ace executives kicked off the market with a detailed overview of strategies to succeed in the new retail environment, the show floor educated and entertained. The co-op’s Famous For 4 categories — paint, grills and outdoor power equipment, home preservation and Christmas lights and gifts — received extra emphasis on the show floor.
Educational sessions ran continually and focused on topics from “What’s New with AceHardware.com” to “Tools to Help You Coach Your Team More Effectively.”
A new convention wrinkle took the form of Experience Zones, areas of concentrated product knowledge in the middle of the show floor’s main aisle. These zones focused on cleaning products, tools, paint, electrical & plumbing and lawn and garden.
Dealers in attendance were encouraged to bring their expertise to the forefront. “That’s what entrepreneurism is all about,” said executive VP John Surane, during the co-op’s general session. “Think about what you’re famous for, build on that, and be famous in the communities you serve.”
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Fighting words from Ace and True Value
First came the blockbuster announcement from True Value concerning its plan to sell a controlling interest in the Chicago-based company. Then came the analysis on web bulletin boards and intranets.
And then the gloves came off.
One of the most recent shots fired in the co-op structure debate comes from Ace Hardware Executive VP and CFO William Guzik, who sought to point out some major differences between True Value’s recent deal with ACON Investments, and Ace’s 2007 plan to convert from a co-op to a c-corp. Guzik was responding to a post by True Value CEO John Hartmann, in which Hartmann said the current True Value’s plan and the old Ace plan are essentially the same.
Not true, Guzik wrote, in a letter to Ace members that was reposted on a popular industry bulletin board.
“Yes, Ace did consider a conversion from a co-op to a c-corp in 2007. And yes, it would have resulted in an elimination of patronage dividends in exchange for traditional corporate dividends and a floating stock price that would have resulted in retailers sharing in the growth of the company through increases in stock price. But Ace never considered a sale of the company and giving up control of your future to an outside group.”
Guzik called Hartmann’s note an attempt to confuse two issues: conversion from a co-op to a c-corp, and the sale of a company to outside investors.
“True Value is giving up control of the company to a private equity firm,” Guzik wrote. “We all know what private equity firms do.”
The post-announcement discussion of the True Value deal also raised the history of past accounting transgressions experienced by both co-ops – in terms that can be described as less than generous.
In his March 16 post defending the True Value-ACON Investments deal, Hartmann wrote that the Ace plan to convert “failed miserably because of a $150 million accounting error. We don’t have any accounting errors and this isn’t the merger from two decades ago either – we are returning money to our members, not destroying it.”
Guzik responded: “Hartmann’s reference to our accounting error is also a cheap shot. He fails to mention that True Value had its own $131 million accounting error a few years earlier. And how have each of us done since then? Since our accounting error, Ace has grown from a company with $3.9 billion in sales and $174 million in members’ equity, to over $5 billion in revenue and $550 million of members’ equity that consistently pays out over $150 million in annual patronage dividends.”
Guzik concluded his note: “Don’t let Hartmann’s distortion of the truth or HBSDealer’s headline this week that ‘In the True Value deal, echoes of a derailed Ace plan’ fool you.”
True Value has not immediately responded to a request for a comment on Guzik’s letter.
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