Unseasonable weather was a contributing factor to the first sales and profit decline at Ace Hardware Corp. in more than six years, the cooperative asserted.
With a $21.4 million gain from the first quarter 2022 sale of the former Gainesville, GA, retail support center excluded, net income decreased $32.2 million in the period year over year.
Ace retailers who share daily data reported a 4.4% drop in comparable sales in the quarter, the result of a 3% decrease in comp transactions and a 1.4% decrease in average ticket, the coop pointed out.
Revenues were $2.09 billion, down 5.8%, from the year-prior quarter. A mild winter across most of the U.S., combined with the late arrival of spring-like weather led to declines in the sale of winter and spring goods, pressuring results, Ace maintained. Incremental expenses related to the expansion of warehouse space, higher payroll wage rates and higher health insurance costs also negatively affected results, the company added.
Total wholesale revenues were $1.94 billion, down $119 million, or 5.8%, versus the year-before quarter. Total retail revenues for the quarter were $148.2 million, down $8.4 million, or 5.4%, as compared to the quarter in the previous year. The retail decrease was partially due to the closure of The Grommet during the 2022 third quarter.
“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, Ace president and CEO. “Despite those headwinds, we continue to invest for future growth as evidenced by our two newest Retail Support Centers in Georgia and California.”
Ace added 50 new domestic stores in the quarter and canceled 16. The company’s total domestic store count finished the quarter at 4,901, an increase of 111 stores from the year-past period. On a worldwide basis, Ace added 52 stores in the first quarter of 2023 and canceled 19, bringing the global store count to 5,779 at quarter’s end.