True Value looks to transform
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.
Ace Hardware acquires Emery-Waterhouse
Ace Hardware Corp. announced today that it has acquired Emery-Waterhouse, the Portland, Maine-based distributor of hardlines products for independent lumber, paint, industrial and hardware outlets.
“The acquisition of Emery-Waterhouse serves as a tremendous catalyst to leverage wholesale purchasing power,” said John Venhuizen, president and CEO, Ace Hardware. “We are confident that both Ace retailers and Emery-Waterhouse customers will benefit from the additional scale and expanded assortments.”
Emery will do business as an independently operated, majority-owned subsidiary of Ace Hardware, with the Emery-Waterhouse brand continuing operations as a separate business.
Emery’s leadership team — including CEO Steve Frawley and COO Don Dickson — will remain in place, as it provides wholesale distribution services to independent retailers, according to the announcement. Emery-Waterhouse’s longtime majority owner, Charlie Hildreth, will continue to have a presence in the organization.
“As a leader in the hardlines wholesale distribution industry, aligning with Ace Hardware — the nation’s largest convenience hardware leader at wholesale and at retail — simply makes good business sense,” said Steve Frawley, CEO of Emery-Waterhouse. “Knowing that we are part of a changing and consolidating industry, this is the right decision for Emery-Waterhouse and our customers.”
Emery is one of nine regional-distributor members of Distribution America. It remains unclear how the Ace acquisition will affect Emery’s participation with DA.
In the announcement, Ace emphasized that Emery was a “profitable” business.
Venhuizen described the acquisition, financial details of which were not immediately disclosed, in terms of industry leadership.
“My belief continues to be that Ace has two options as our industry evolves and consolidates: We can do nothing and hope the chips fall our way, or we can participate as a leader to shape our industry for the long-term benefit of Ace shareholders. … Our board of director’s and officer team’s preference is to lead.”
Ace points to strong sales and earnings
Oak Brook, Ill.-based Ace Hardware Corp. reported total fiscal 2013 revenues of $4.2 billion, an increase of 8.2% over the previous year.
“2013 was a record year for the company," said John Venhuizen, Ace president and CEO. “We outperformed our operating plan, exceeding $4 billion in consolidated revenues and $100 million in net income for the first time in our history.”
Net income was $104.5 million for fiscal 2013, an increase of $22.7 million, or 27.8%, compared with $81.8 million in fiscal 2012.
The results for fiscal 2013 included a charge of $6.2 million related to the estimated costs to close the Toledo, Ohio, Retail Support Center (RSC), while fiscal 2012 included a charge for the loss on the early extinguishment of debt of $19.9 million.
The results for fiscal 2012 also included a $7.0 million gain on the sale of paint assets, net of acquisition and disposition costs.
Total revenues for the fourth quarter of 2013 were $1.0 billion, an increase of 12.1%. Net income was $23.4 million for the fourth quarter of 2013, an increase of 4.5% from the $22.4 million earned in 2012.
“Ace retailers also had a very good year,” continued Venhuizen. “Comparable-store retail sales were up 3.5% in the fourth quarter and up 4.3% for the year, with 75% of retailers surveyed reporting record net profits.”
The December 2012 acquisition by Ace of WHI Holdings Corp., the indirect owner of the 85 store Westlake Ace Hardware retail chain, resulted in the consolidation of WHI’s financial statements into Ace’s financial statements for 2013. This affects the comparability of the 2013 and 2012 financial statements and results in a reduction of reported wholesale revenues, as wholesale revenues from Ace to WHI are now eliminated. This elimination totaled $83.7 million in wholesale revenues for all of 2013 and $21.6 million for the fourth quarter of 2013.
Ace added 152 new domestic stores and canceled 85 domestic stores in fiscal 2013 for a net increase in store count of 67. This brought the company’s total domestic store count to 4,171 at the end of 2013.