Ace Hardware Reports Record Third Quarter 2020 Results

Ace Hardware Corporation reported record third quarter 2020 revenues of .0 billion, an increase of 30.7 percent, from the third quarter of 2019.

Ace Hardware Corporation reported record third quarter 2020 revenues of $2.0 billion, an increase of 30.7 percent, from the third quarter of 2019.

ACE HARDWARE HIGHLIGHTS

– Record third quarter revenues of $2.0 billion, an increase of 30.7 percent from last year

– U.S. same-store-sales up 28.9 percent; Acehardware.com revenues up 221 percent

– Record third quarter net income of $98.7 million, an increase of 63.1 percent from last year

– Accrued patronage dividend to shareholders of $263.8 million, an increase of 66.9 percent from the first nine months of 2019

– Ace ranked 5th in Franchise Times top 200

Ace Hardware Corporation (“Ace” or the “Company”) today reported record third quarter 2020 revenues of $2.0 billion, an increase of $470.4 million, or 30.7 percent, from the third quarter of 2019.  Net income was $98.7 million for the third quarter of 2020, an increase of $38.2 million from the third quarter of 2019.

“A 221% increase in our digital business and same-store sales growth of 28.9% fueled record revenue and earnings in an environment that continues to be very difficult and demanding for both our customers and our associates,” said John Venhuizen, President & CEO.  “I want to genuinely thank the Ace team for their gutsy performance, their servant hearts and their exceptional fulfillment of their essential calling.”

The 28.9 percent increase in U.S. retail same-store-sales during the third quarter of 2020 reported by the approximately 3,300 Ace retailers who share daily retail sales data was the result of a 12.3 percent increase in same-store transactions and a 14.8 percent increase in average ticket.  The heightened importance of both convenience and safety, coupled with the shift in consumer discretionary spending from sectors such as travel and entertainment into home preservation, have distorted demand and driven much of the growth within Ace stores in the U.S.

Revenues

Consolidated revenues for the quarter ended September 26, 2020 totaled $2.0 billion.  Total wholesale revenues were $1.81 billion, an increase of $410.4 million, or 29.2 percent, as compared to the prior year third quarter.  Wholesale merchandise revenues to new domestic stores activated from January 2019 through September 2020 contributed $50.7 million of incremental revenues during the third quarter of 2020, while wholesale merchandise revenues decreased $10.1 million during the third quarter due to domestic stores whose memberships were cancelled.

Wholesale merchandise revenues to comparable domestic stores increased $365.1 million for the quarter.  Increases were seen across nearly all departments with grilling, paint, and lawn and garden showing the largest gains.

The Company’s Ace International Holdings, Ltd. (“AIH”) subsidiary had a $19.2 million decrease in wholesale revenue from the third quarter of 2019.  This was primarily the result of a $17.5 million decline in sales to AIH’s two largest customers, both of which experienced extensive store closures during the quarter.  Ace Wholesale Holdings LLC (“AWH”) had a $6.0 million increase in wholesale revenues versus the third quarter of 2019.

Total retail revenues for the quarter were $186.3 million, an increase of $60.0 million, or 47.5 percent, as compared to the prior year third quarter.  Retail revenues from Ace Retail Holdings LLC (“ARH”) were $179.8 million in the third quarter of 2020, an increase of $58.8 million, or 48.6 percent, from the third quarter of 2019.

The Westlake Ace Hardware (“Westlake”) chain experienced a 28.3 percent increase in same-store-sales while the Great Lakes Ace Hardware, Inc. (“GLA”) chain grew same-store-sales by 40.5 percent in the quarter.  The eleven new California stores opened by Westlake in 2019 contributed $19.7 million of the increase.

Westlake and GLA together operated 194 stores at the end of the third quarter of 2020 compared to 183 stores at the end of the third quarter of 2019.  Retail revenues from Ace Ecommerce Holdings LLC (“AEH”) were $6.5 million in the third quarter of 2020.  This was an increase of $1.2 million, or 22.6 percent, from the third quarter of 2019.  New customer acquisitions drove the increase during the third quarter.

Ace added 43 new domestic stores in the third quarter of 2020 and cancelled 22 stores.  The Company’s total domestic store count was 4,585 at the end of the third quarter of 2020 which was an increase of 57 stores from the third quarter of 2019.

On a worldwide basis, Ace added 46 stores in the third quarter of 2020 and cancelled 29, bringing the worldwide store count to 5,403 at the end of the third quarter of 2020.

Gross Profit

Wholesale gross profit for the three months ended September 26, 2020 was $242.2 million, an increase of $58.9 million from the third quarter of 2019.  The wholesale gross margin percentage was 13.4 percent of wholesale revenues in the third quarter of 2020, up from 13.1 percent in the third quarter of 2019.

The increase in the wholesale gross margin percentage was due to the increased volume, which lead to higher vendor funds earned.

Retail gross profit for the three months ended September 26, 2020 was $86.7 million, an increase of $29.7 million from the third quarter of 2019.  This increase was the result of the 48.6 percent increase in ARH revenues.

The retail gross margin percentage was 46.5 percent of retail revenues in the third quarter of 2020, an increase from 45.1 percent in the third quarter of 2019.  For ARH, retail gross profit is based on the Company’s wholesale acquisition cost of product, not ARH’s acquisition cost which includes a markup from the Company.

Expenses and Other

Wholesale operating expenses increased $26.1 million, or 19.8 percent, from the third quarter of 2019.  The increase is due to higher distribution costs resulting from higher wholesale revenues and an increase in advertising expenses.

As a percentage of wholesale revenues, wholesale operating expenses decreased to 8.7 percent of wholesale revenues in the third quarter of 2020 from 9.4 percent of wholesale revenues in the third quarter of 2019.

Retail operating expenses increased $10.9 million, or 21.4 percent, from the third quarter of 2019. This increase was primarily due to expenses related to the eleven new California stores and expenses incurred related to the pandemic.  Retail operating expenses as a percentage of retail revenue decreased to 33.2 percent of retail revenues in the third quarter of 2020 from 40.3 percent in the third quarter of 2019.

Retail pre-opening expenses decreased $1.8 million due to expenses related to the eleven new California stores which opened in 2019.

Balance Sheet and Cash Flow

Receivables increased $87.0 million from the third quarter of 2019 due to higher sales volumes and an increase in vendor rebates receivable.

Inventories increased $122.9 million from the third quarter of 2019 due to the intentional build-up of cleaning supplies and other COVID-19 products as well as power tools to support increased demand.

Long-term debt, including current maturities, decreased $294.8 million versus the third quarter of 2019.  At the end of the third quarter, long-term debt consisted of $6.6 million outstanding on the Westlake credit facility and $26.3 million owed to former retailers.

About Ace Hardware

Ace Hardware is the largest retailer-owned hardware cooperative in the world with more than 5,400 locally owned and operated hardware stores in approximately 70 countries.  Headquartered in Oak Brook, Ill., Ace and its subsidiaries operate an expansive network of distribution centers in the U.S. and have distribution capabilities in Ningbo, China; Colon, Panama; and Dubai, United Arab Emirates. Since 1924, Ace has become a part of local communities around the world and known as the place with the helpful hardware folks. For more information, visit acehardware.com or newsroom.acehardware.com.

In 2020, Ace ranked “Highest in Customer Satisfaction with Home Improvement Retail Stores” according to J.D. Power, thirteen out of the last fourteen years.

Source: https://www.prnewswire.com/news-releases/ace-hardware-reports-record-third-quarter-2020-results-301175384.html

US Corporate Giants Strengthen Bonds with Vietnam Amid Historic Delegation

TOP 10 THINGS YOU NEED TO KNOW TO SUCCESSFULLY FRANCHISING IN VIETNAM AND SOUTHEAST ASIA

Empower Young Minds with Helen Doron Education Group: The Ultimate Education Franchise Opportunity