Ace Hardware net income up 11.7 percent in Q2
Ace Hardware released its second-quarter results, reporting net income of $33.4 million, up 11.7 percent from the $29.5 million reported last year. Total revenues for the Oak Brook, Ill.-based co-op were down 2.6 percent to $1.067 billion.
“Although top-line revenues declined, we saw an improvement in sales trends from the second quarter, particularly in the latter half of the second quarter,” said Ace president and CEO Ray Griffith. “
Merchandise sales from Ace’s international business continued to be strong and contributed $6.5 million in incremental sales, up 13.5 percent compared with 2007. This number was driven by increased sales to existing stores in the Middle East, sales to new stores in the Caribbean and sales growth from foreign-to-foreign wholesale operations.
Ace added 27 new stores and cancelled 49 stores in the second quarter, which brought the company’s total store count to 4,594 compared to 4,630 at the end of fiscal year 2007.
On a category basis, domestic revenues were negatively impacted by declines in the tools, paint, plumbing and electrical categories and were partially offset by a sales gain in lawn and garden.
Operating expenses decreased $9.1 million, or 10 percent, to $82.5 million in the second quarter of 2008 and, as a percentage of revenues, decreased from 8.36 percent to 7.73 percent.
The decrease in operating expenses was primarily a result of a reduction in incentive compensation and profit sharing expenses of approximately $6 million, the co-op said, and lower distribution costs of $4.2 million due to tight expense control and lower volume at Ace’s Retail Support Centers (RSCs).
“We made good progress in reducing our expenses in the second quarter in light of the challenging economic environment,” Griffith said. “We continue to review our cost structure and will be making the necessary adjustments to deliver strong profitability while continuing to invest in and drive the Ace brand.”