Ace Reports Record Revenue for 2021
Ace Hardware Corp. has reported record fourth quarter 2021 revenues of $2.1 billion, an increase of $14.2 million, or 0.7 percent, from the fourth quarter of 2020. Fiscal 2021 consisted of 52 weeks compared to 53 weeks in fiscal 2020. Excluding the 53rd week in fiscal 2020, revenues in the fourth quarter increased $114.1 million, or 5.8 percent, from the fourth quarter of 2020. Net income was $9.3 million for the fourth quarter of 2021, a decrease of $33.8 million from the fourth quarter of 2020.
Full-year revenues were a record $8.6 billion, an increase of $831.5 million, or 10.7 percent, from 2020 revenue (an increase of $931.4 million or 12.2 percent excluding the 53rd week in fiscal 2020). Net income for fiscal 2021 was $330.0 million, an increase of $13.1 million, from fiscal 2020.
“In comparison to 2019, total revenue increased 38.6% and net income is up 129.8%,” said John Venhuizen, president and CEO. “This transformational surge in business is driven by two-year stacked comp growth of 34.4%, digital growth of 279% and the opening of 407 new stores globally over two years.”
“My sincere thanks and gratitude to our helpful heroes to whom all the credit goes for serving so well in a very difficult environment,” said Venhuizen.”
The 6.9 percent increase in retail same-store-sales during the fourth quarter of 2021 reported by the approximately 3,400 Ace retailers from whom we secure daily retail sales data was the result of a 10.5 percent increase in average ticket, partially offset by a 3.3 percent decrease in same-store transactions.
Consolidated revenues for the fourth quarter ended January 1, 2022 totaled $2.1 billion. Total wholesale revenues were $1.9 billion, an increase of $12.9 million, or 0.7 percent, as compared to the prior year fourth quarter. Increases were seen across several departments with outdoor power equipment, holiday and plumbing showing the largest gains.
The Company’s Ace International Holdings, Ltd. subsidiary experienced a $1.6 million decrease in wholesale revenue versus the fourth quarter of 2020 and Ace Wholesale Holdings LLC reported a $9.9 million decrease in wholesale revenues from the fourth quarter of 2020.
Total retail revenues for the fourth quarter were $204.9 million, an increase of $1.3 million, or 0.6 percent, as compared to the prior year fourth quarter. Retail revenues from Ace Retail Holdings LLC (“ARH”) were $185.9 million in the fourth quarter of 2021, an increase of $8.7 million, or 4.9 percent, from the fourth quarter of 2020. This increase was largely driven by new stores added by the Westlake Ace Hardware and Great Lakes Ace Hardware, Inc. chains since the fourth quarter of 2020. Westlake and GLA together operated 210 stores at the end of the fourth quarter of 2021 compared to 202 stores at the end of the fourth quarter of 2020.
Retail revenues from Ace Ecommerce Holdings LLC were $19.0 million in the fourth quarter of 2021. This was a decrease of $7.4 million, or 28.0 percent, from the fourth quarter of 2020, driven by a decrease in new customer acquisitions and a reversal of the 23.9 percent pandemic-related increase in the prior year.
Ace added 182 new domestic stores in fiscal 2021 and canceled 78 stores. This brought the company’s total domestic store count to 4,751 at the end of fiscal 2021, an increase of 104 stores from the end of fiscal 2020. On a worldwide basis, Ace added 206 stores in fiscal 2021 and canceled 86, bringing the worldwide store count to 5,583 at the end of fiscal 2021.
Wholesale gross profit for the three months ended January 1, 2022 was $187.7 million, a decrease of $15.8 million from the fourth quarter of 2020. The wholesale gross margin percentage was 10.1 percent of wholesale revenues in the fourth quarter of 2021, down from 11.0 percent in the fourth quarter of 2020. The decrease in the wholesale gross margin percentage was primarily due to a decrease in vendor funds earned and an increase in LIFO expense which was driven by increased vendor prices.
Wholesale gross profit for fiscal 2021 was $932.6 million, an increase of $53.5 million from fiscal 2020. The wholesale gross margin percentage was 12.0 percent of wholesale revenues in fiscal 2021, a decrease from the fiscal 2020 gross margin percentage of 12.5 percent.
Wholesale operating expenses increased $24.1 million, or 14.2 percent, from the fourth quarter of 2020. The increase is due to increased healthcare costs and an increase in advertising expenses. As a percentage of wholesale revenues, wholesale operating expenses increased to 10.4 percent of wholesale revenues in the fourth quarter of 2021 from 9.2 percent of wholesale revenues in the fourth quarter of 2020.
Wholesale operating expenses increased $56.8 million, or 9.1 percent, in fiscal 2021 as compared to fiscal 2020. The increase is due to higher distribution costs resulting from higher wholesale revenues, an increase in advertising expenses, increased healthcare costs, and an increase in lease expense driven by additional warehouse space to support increased demand. As a percentage of wholesale revenues, wholesale operating expenses decreased slightly to 8.8 percent in fiscal 2021 from 8.9 percent in fiscal 2020.
Retail operating expenses increased $16.8 million, or 6.6 percent, in fiscal 2021 as compared to fiscal 2020. This increase was primarily driven by expenses related to the new stores opened in 2020 and 2021. Retail operating expenses as a percentage of retail revenue decreased to 33.2 percent in fiscal 2021 from 33.7 percent in fiscal 2020.
Inventories increased $91.3 million from the prior year end due to the intentional build-up of grilling, electrical accessories and outdoor power equipment to support increased demand. Long-term debt, including current maturities, decreased $20.8 million versus the fourth quarter of 2020. At the end of the fourth quarter of 2021, long term debt consisted of $4.9 million outstanding on the Westlake credit facility and $30.8 million owed to former retailers.
