Ace Hardware Reports Record Q3 Revenue Despite Decline in Net Income

Ace Hardware Corp. announced record third-quarter revenues of $2.4 billion, a 2.8 percent increase from the same period in 2023. Despite this growth, net income fell 23.8 percent to $99.0 million, attributed to higher planned expenses as the company invests in its supply chain and digital marketing to support future growth.

“In this challenging environment, it’s encouraging to report growth in new stores, digital business, and overall revenue,” said Ace President and CEO John Venhuizen. “While I’m never pleased to report a decline in net income, this result was aligned with our strategic plan.”

Revenue Breakdown

• Wholesale Revenue: Totaled $2.1 billion, a 2.7 percent increase, driven by gains in grilling, power tools, and outdoor power equipment. New store activations since January 2023 contributed $57.6 million in incremental revenue, while store closures resulted in a $7.2 million decrease.
• Retail Revenue: Increased by 4.4 percent to $203.4 million, bolstered by new stores under Westlake Ace Hardware and Great Lakes Ace Hardware, which contributed $12.1 million in incremental revenue. However, both chains experienced slight same-store sales declines—1.9 percent and 1.7 percent, respectively.

The company’s domestic store count reached 5,093 at the end of Q3, reflecting the addition of 150 stores compared to 2023. Worldwide, Ace operates 5,973 stores.

Gross Profit Margins

• Wholesale Gross Profit: Declined $5.8 million to $313.1 million, with the margin dropping to 14.6 percent from 15.2 percent last year. This decrease was driven by lower product gross profit rates and reduced LIFO income compared to Q3 2023.
• Retail Gross Profit: Rose by $5.0 million to $94.8 million, with the margin improving to 46.6 percent from 46.1 percent, attributed to higher revenues from new stores.

Increased Operating Expenses

Ace’s strategic investments led to higher operating expenses:

• Wholesale Operating Expenses: Increased 15.5 percent to $231.1 million due to expanded marketing efforts and costs related to retail support centers.
• Retail Operating Expenses: Grew by 5.8 percent to $75.0 million, primarily due to expenses associated with new store openings.
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Inventory and Debt Management

The company reported a $57.0 million reduction in inventories, reflecting efforts to optimize stock levels. However, long-term debt increased by $91.0 million, largely due to borrowing under revolving credit facilities.

Strategic Focus Amid Challenges

Ace Hardware’s continued growth in revenue, despite a decline in same-store sales and net income, underscores its focus on strategic investments aimed at long-term sustainability. The company is leveraging digital marketing and supply chain improvements to enhance customer experiences and drive future growth.