Ace Hardware reaches record Q4 sales
Profits for the final quarter of 2019 are impacted by mounting charges and costs.
Ace Hardware Corporation reported fourth quarter 2019 revenues hit a company record of $1.5 billion, a 6.1% increase from the fourth quarter of 2018.
Total wholesale revenues for the quarter were $1.3 billion, an increase of 4 percent, as compared to the prior year fourth quarter. Increases were noted across all departments, with grilling, outdoor power equipment and hand and power tools showing the largest gains.
Retail revenues for the quarter were $142.2 million, up 30.8%. Retail revenues from Ace Retail Holdings LLC were $121.4 million in the fourth quarter of 2019, an increase of 44.7%.
But the Oak Brook, Ill.-based hardware cooperative reported a net income of $3.5 million for the quarter of 2019, falling $21.7 million from the fourth quarter of 2018. Included in the results are pre-tax charges of $8.5 million for a non-cash goodwill impairment charge related to The Grommet, $5 million for the write-down of inventory related to the transition to the Benjamin Moore paint program, $2.5 million for retail pre-opening costs related to new Westlake stores in California, and $1.2 million for severance related costs.
Full-year revenues were a company record $6.1 billion, up 6.2% from 2018 revenue.
Net income for fiscal 2019 was $140.4 million, an increase of $12.2 million, from fiscal 2018. The increase was primarily due to higher revenues and additional vendor funds earned, partially offset by the paint inventory write-down, retail pre-opening costs associated with 11 new Westlake stores in California and a non-cash goodwill impairment charge, the company said.
Ace added 168 new domestic stores in fiscal 2019 and cancelled 88 stores. This brought the company’s total domestic store count to 4,556 at the end of the fiscal year, an increase of 80 stores from the end of fiscal 2018.
On a worldwide basis, Ace added 208 stores in fiscal 2019 and cancelled 95, bringing the worldwide store count to 5,366 at the end of fiscal 2019.
The bottom line: Ace Hardware enjoys record revenues for the fourth quarter and 2019, but mounting charges stager profits for the final period of the year.
What the CEO said: “I’m delighted to report record revenue that exceeded $6 billion for the first time in Ace’s history,” said John Venhuizen, Ace Hardware president and CEO. “Our best-ever sales and dividend payments to shareholders were largely driven by 208 new store openings across the globe, a 59% increase in our acehardware.com business and solid same store sales growth of 2.8% from our very talented local Ace owners across the U.S.”
“Our Ace Wholesale Holdings and Ace Ecommerce Holdings (The Grommet) businesses however, struggled to achieve their revenue targets. Both businesses posted large losses in 2019. While our plans call for significant improvements in these businesses going forward, the facts are that they were a meaningful drag on an otherwise stellar year for the company.”
Company info: Ace Hardware’s full fourth quarter 2019 and year-end results can be read here.
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