Ace Hardware Income, Comps Slip In Q3

Ace Hardware reported modest comp and income declines in its third quarter.

For the third quarter, Ace Hardware Corp. posted company net income of $50.2 million versus $54.2 million in the year-prior period.

Revenue for the cooperative was $1.23 billion, down 3.6% from the 2015 quarter. Retail revenue was $59.9 million versus $60.2 million in the third quarter of 2015, with comparable store sales down 3.4% versus the year-earlier period with the largest decreases, by segment, in paint, lawn and garden, and hardware. Wholesale revenues were $1.17 billion, down from $1.22 billion in the quarter a year previous, with declines in electrical, paint and plumbing.

“Our expectation for the third quarter of this year was modest sales growth and lower net income as a result of last year’s strong 13.2% consolidated revenue growth and 45.3% net income growth,” said John Venhuizen, Ace president and CEO. “We missed on sales in our Ace domestic business, but exceeded our net income budget. The Ace domestic sales shortfall was largely driven by last year’s sell-in of LED lights and the lowering of wholesale selling prices to our retailers. For our shareholders, these wholesale price reductions were positive as over three quarters of our wholesale price changes were decreases, resulting in less margin for the corporation, but more margin for our retailers.”

Ace added 36 new domestic stores in the quarter and cancelled 16. This brought the company’s total domestic store count to 4,335 at the end of the third quarter.