DISTRIBUTORS/CO-OPS

Valspar patiently awaits profits from Ace deal

BY HBSDEALER Staff

Paint giant Valspar has every intention of profiting from its move to acquire the Ace Hardware private-label paint business, it just hasn’t happened yet.

Valspar executives walked analysts through the plan during the company’s third-quarter conference call. The analysts seemed highly interested in Valspar’s seven-month-old relationship with Ace. 

"The rollout of our new private label and branded programs with Ace Hardware are on plan," CEO Gary Hendrickson said. "We will start shipping Valspar-branded paints to Ace during the fourth quarter, and we are currently tracking ahead of our internal placement targets for this initiative." 

Late last year, Ace and Minneapolis-based Valspar worked out a long-term deal, under which Valspar will manufacture and supply Ace-branded paint products to Ace dealers. The companies also announced that Valspar had acquired Ace Hardware’s paint manufacturing assets, including two manufacturing facilities located near Chicago. 

During this week’s conference call, Hendrickson said the deal is not making money yet on the private label side of the Ace deal, as Valspar works to retool the facilities and infrastructure that deliver the paint. But regardless of the branded Valspar business side of the transaction, the private-label Ace deal will eventually result in positive metrics for the paint company, he said. 

"We didn’t sell our souls to the devil on the private-label business to win a contract on the branded business," Hendrickson told investors.

Hendrickson was asked to update exactly how many Ace stores had the Valspar brand, but he declined to talk about it and will continue to remain silent on the question "probably for a couple of quarters," he said. 

CFO James L. Muehlbauer said Valspar remained "very confident" in the model for its Ace business. "When we get that work done this year, we’ll have a cost structure that allows us to make a nice margin on the private-label business," he said.

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Westlake Ace opens store No. 86

BY HBSDEALER Staff

Lenexa, Kan.-based Westlake Ace Hardware will open its newest store — store No. 86 — in West Plains, Mo., Aug. 16.

The new Westlake Ace Hardware will serve as the anchor for the West Plains Marketplace shopping center. The new location marks the second store incorporating Westlake’s new store design and layout that uses construction materials and a design approach intended to provide an organic and modern feel, more natural light from garage-style doors and skylights, a wood and metal facade, and polished concrete floors.

“We are very excited to open this new store in West Plains and bring this community our unique, customer-focused retail experience,” said George Smith, CEO of Westlake Hardware. “We are confident consumers in the West Plains area and throughout southern Missouri will appreciate our diverse selection of high-quality products, and the friendly and knowledgeable service that has been our hallmark for decades.”

The new store is located at 1401 Mitchell Rd. in West Plains, Mo. 

With stores in Missouri, Kansas, Nebraska, Iowa, Oklahoma, Texas and New Mexico, Westlake Ace Hardware received the 2011 HCN Retailer of the Year Award. The chain was purchased in 2012 by Oak Brook, Ill.-based Ace Hardware, which expressed plans to operate the chain, its largest co-op member, as a standalone company. 

The store will carry traditional hardware, such as fasteners, tools, paint, plumbing and electrical supplies, and a large range of lawn and garden products. Westlake also offers a variety of wild bird, pet and patio products, and is known for its assortments of BBQ grills, sauces, rubs and accessories in the communities it serves, according to the press release announcing the opening. 

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True Value hardware store count lowered

BY Ken Clark

The latest financial release from Chicago-based True Value Co. showed the co-op’s approximate store count down by 100 stores compared to previous recent press releases.

In the boilerplate description of the company at the bottom of the release announcing second-quarter results, the co-op described its footprint as “approximately 4,500 independent retailer locations worldwide.” 

That figure is down from 4,600 used in a May press release. Early in 2012, True Value described its footprint as 4,650 retailer locations. 

However, the co-op said revenue from new stores in the second quarter exceeded lost revenue from terminated stores. The co-op posted a revenue of $422.5 million in the period ended June 29, up 1.0% compared to the same quarter last year.

Asked for details about the stats, a spokeswoman for the co-op said the 4,500 figure should have been used in previous press releases. It reflects “the total number of identities that operate under the True Value Co. co-op banner,” said a spokeswoman. These include Grand Rental Station, Taylor Rental and Party Central. 

She did not share the co-op’s current store count, but In the True Value’s 2012 annual report, the co-op said its total number of participating stores at the end of 2012 was 4,569, compared to 4,645 at the end of 2011, a decrease of 0.8%. 

A slight decline in the number of hardware stores reflects industry trends. The total number of retail DIY outlets, according to estimates from the North American Retail Hardware Association (NRHA), is about 19,920 – a figure that could rise or decline depending on the definition of a “DIY outlet.” The NHRA figure has been slowly declining since 2001, when it stood at 20,400 hardware stores, and projections are for a net loss of about 10 stores per year over the next four years. 

The “Big Three” national hardware cooperatives differ in their approach to revealing the number of their member locations. 

Oak Brook, Ill.-based Ace Hardware shares the metric on a quarterly basis. In May, Ace said it added 21 new domestic stores in the quarter ended March 30, while terminating 19. The net gain of 2 stores inched Ace’s domestic store count up to 4,106. In the same quarter last year, Ace had 4,077 retail outlets in the United States, showing an increase of 0.7%.

Like True Value, Fort Wayne, Ind.-based Do it Best Corp. doesn’t release store count details in its public reports. Do it Best describes its footprint in general terms as “more than 4,000 member-owned locations in the United States and 53 foreign countries.”

 

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