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Ace Hardware Reports Record Revenues for Fiscal 2019

John Venhuizen
John Venhuizen»

Ace Hardware Corp. has released its 2019 Annual Report, which contains detailed financials for the co-op. Total domestic revenue increased 7 percent to $6.07 billion for the year, while retail same-store sales increased 2.8 percent. Net income was $140.4 million for 2019.

Total patronage distributions to shareholders increased 28 percent to $182.2 million; a record for the company and the largest dividend in the industry

President John Venhuizen noted that during 2019 Ace finished the expansion of its West Jefferson, Ohio, Retail Support Center (RSC) and began the expansion of its Wilmer, Texas, RSC. “We launched a first-ever multi-employer healthcare plan for Ace retailers; another means by which we seek to leverage the skill and scale of all of us for the benefit of Ace shareholders,” he said.

Ace Retail Holdings reported retail revenue of $466 million. Westlake Ace was up 12.8 percent in total and Great Lakes Ace was up 19.7 percent. Great Lakes had pre-tax net income of $5.8 million, an 83 percent increase from last year. Westlake’s income does not look as impressive on the financials—but it is entirely the result of $8.3 million in one-time startup charges from new stores. Most of these new stores were the 11 former Orchard Supply locations in California; all of which are now up and running and performing very strongly. Excluding all the accounting noise from new stores, Westlake delivered $22.6 million in EBITDA—or 6.1 percent of sales.

Consolidated revenue for the entire company was up 6.2 percent and consolidated net income was up 9.5 percent. Not every area of the company set records, and some were a disappointing drag on otherwise stellar performance, according to Venhuizen. Ace International reported total revenue was down 2.5 percent, while Emery Jensen Distribution was again a major drag on earnings with a loss of $27 million after more than $15 million in fees to Ace domestic. The other disappointment in 2019 was the performance of The Grommet. Ace took a non-cash accounting impairment charge of $8.5 million as Ace determined the carrying value exceeded its estimate of the fair value.

Venhuizen stated, “The industry in which we operate continues to change and consolidate—both at wholesale and at retail. One approach to this changing, consolidating landscape may be to sit back and hope the chips fall our way. This is not our approach. We will continue to set direction, deploy capital and align resources in order to lead consolidation in the hardware industry for the betterment of Ace shareholders.”

He added in his message to Ace shareholders, “Management’s primary responsibility to shareholders is to deliver a return on the investment you have in both your stores and in this company. I’m proud to report that with a patronage distribution of $182.2 million, Ace owners, in aggregate, received a 33% return on their equity in Ace. At the same time, the passion of this company remains an ever-improving retail store model. With estimated consolidated retail EBIT north of $1 billion, we recognize that Ace retailers’ primary interest lies in their stores. Our interests are entirely aligned.”

Venhuizen pointed to several other accomplishments:

  • Acehardware.com revenue increased 59 percent and attracted more than 102 million customers.
  • 168 new stores were opened in the U.S. (208 globally), and they averaged $140/ft. in sales in year one.
  • 6 out of 7 years in a row of increased same-store retail transactions.
  • 8 years in a row of net new domestic store growth.
  • 10 years in a row of increased same-store retail sales and same-store gross profit.
  • 12 out of 13 years in a row as Highest Customer Satisfaction, according to J.D. Power.

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