Ace Reports First Quarter 2023 Results
Ace Hardware Corp. reported first quarter 2023 revenues of $2.1 billion, a decrease of $127.4 million, or 5.8 percent, from the first quarter of 2022. Net income was $66.2 million for the first quarter of 2023, a decrease of $53.6 million from the first quarter of 2022.
Excluding the $21.4 million, gain on sale of the former Gainesville, Ga., retail support center from the first quarter of 2022, net income decreased $32.2 million. The revenue decline was primarily the result of the mild winter across most of the U.S., combined with the late arrival of spring-like weather, which led to declines in the sale of winter and spring goods. Net income was also negatively affected by incremental expenses related to the expansion of warehouse space, higher payroll wage rates and higher health insurance costs.
“We believe an unusually cold, wet winter in California, a particularly warm, mild winter in the Midwest and Northeast, and the significant reduction in direct stimulus payments to individuals by the government were the primary drivers of our first sales and profit decline in nearly six and a half years,” said John Venhuizen, President & CEO. “Despite those headwinds, we continue to invest for future growth as evidenced by our two newest Retail Support Centers in Georgia and California.”
The approximately 3,600 Ace retailers who share daily retail sales data reported a 4.4 percent decrease in U.S. retail same-store-sales during the first quarter of 2023, which was the result of a 3.0 percent decrease in same-store transactions and a 1.4 percent decrease in average ticket.
Consolidated revenues for the quarter ended April 1, 2023 totaled $2.1 billion. Total wholesale revenues were $1.9 billion, a decrease of $119.0 million, or 5.8 percent, as compared to the prior year first quarter. Decreases were seen across many departments with outdoor power equipment, outdoor living and lawn and garden showing the largest losses.
Wholesale merchandise revenues to new domestic stores activated from January 2022 through March 2023 contributed $54.7 million of incremental revenues during the first quarter of 2023, while wholesale merchandise revenues decreased $10.0 million during the first quarter due to domestic stores whose memberships were cancelled. Wholesale merchandise revenues to comparable domestic stores decreased $182.4 million for the quarter.
The company’s Ace International Holdings, Ltd. subsidiary experienced a $1.4 million decrease in wholesale revenue versus the first quarter of 2022, while Ace Wholesale Holdings LLC reported a $13.4 million decrease in wholesale revenues from the first quarter of 2022.
Total retail revenues for the quarter were $148.2 million, a decrease of $8.4 million, or 5.4 percent, as compared to the prior year first quarter. This decrease is partially due to the closure of The Grommet during the third quarter of 2022, resulting in the absence of any revenues from Ace Ecommerce Holdings LLC in the first quarter of 2023 compared with $3.6 million in the first quarter of 2022.
Retail revenues from Ace Retail Holdings LLC were $148.2 million in the first quarter of 2023, a decrease of $4.8 million, or 3.1 percent, from the first quarter of 2022. The Westlake Ace Hardware chain experienced a 3.8 percent decrease in same-store-sales while the Great Lakes Ace Hardware chain experienced a 6.8 percent decrease in same-store-sales in the quarter. Westlake Ace and Great Lakes Ace together operated 230 stores at the end of the first quarter of 2023 compared to 210 stores at the end of the first quarter of 2022. Ace added 50 new domestic stores in the first quarter of 2023 and canceled 16 stores. The company’s total domestic store count was 4,901 at the end of the first quarter of 2023, which was an increase of 111 stores from the first quarter of 2022. On a worldwide basis, Ace added 52 stores in the first quarter of 2023 and canceled 19, bringing the worldwide store count to 5,779 at the end of the first quarter of 2023.