Ace Hardware reports record Q3 results
New store growth and digital sales are highlights of the co-op’s third quarter
Oak Brook, Ill.-based Ace Hardware reported $1.43 billion in third quarter revenues, up 6.3% from the same quarter last year. That record figure was fueled by new store growth, comp-store sales growth and a big jump in e-commerce.
The hardware industry’s largest retailer co-op also reported a third-quarter decline in net income, the result of higher expenses including those related to tight labor market and employee turnover at warehouses. Net income was $36.3 million for the third quarter, down from $53.8 million in the third quarter of 2017.
Read the full press release here.
“Strong new store growth, increased same-store sales, and a 35% increase in acehardware.com revenues helped us realize a healthy 6.3% increase in revenues during the third quarter,” said John Venhuizen, President and CEO. “However, we are not immune to the pain of the tight labor market. Expanded product assortment, higher inventory and increased warehouse employee turnover drove expenses up and profits down for the quarter.”
During the quarter, the co-op pushed its total, worldwide store count to 5,210 – 4,449 in the United States. Ace added 50 new domestic stores in the third quarter and cancelled 24 stores. Compared to the third quarter of 2017, Ace’s has added 83 stores in the U.S.
The company said its wholesale operating expenses increased $13.2 million, or 11.4%, from the third quarter of 2017. The increase includes higher payroll expenses from prior year to support higher revenues and lower distribution center productivity due to high employee turnover, labor costs incurred to setup the new Fredericksburg center while shutting-down the Prince George facility. Higher advertising expenses also factored.
Retail revenues from Ace Retail Holdings – essentially the co-op owned Westlake Ace Hardware –were $79.0 million in the third quarter, up 20.6%. The increase was the result of new retail stores added since the third quarter of 2017. ARH operated 122 stores at the end of the third quarter of 2018 compared to 108 stores at the end of the third quarter of 2017.
Venhuizen also highlighted the efforts to perform in extreme weather conditions. “I’d like to thank the entire Ace team for their heroic efforts to get products to our retailers that were affected by the devastation of hurricanes Florence and Michael.”
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