Ace Hardware is still surging

A month after being named America's favorite home improvement store, Ace Hardware reported record profit in the first quarter of 2015.

The Illinois-based hardware cooperative had net income of $29.9 million for the first quarter of 2015, an increase of 22.5%. Revenue was $1.2 billion, an increase of 10.0% from the first quarter of 2014.

"I want to thank the entire Ace enterprise for delivering record first-quarter revenues and net income for the second consecutive year," said John Venhuizen, president and CEO, Ace Hardware Corp. "Our strategic acquisitions, new stores and an impressive 9.2% increase in retail same-store-sales fueled the double-digit growth."

In April, a study conducted by Market Force named Ace Hardware "America's favorite home improvement chain." According to the study, the findings are based on consumers' satisfaction levels and likelihood to recommend Ace Hardware to others.

Ace added 33 new domestic stores in the first quarter of 2015 and canceled 32 stores. This brought the company’s total domestic store count to 4,252 at the end of the first quarter of 2015, an increase of 32 stores from the first quarter of 2014.

The 9.2% increase in retail same-store sales reported by the approximately 3,000 Ace retailers that share daily retail sales data consisted of a 5.3% increase in customer count and a 4.2% increase in average transaction size, the company said. Increases were noted across all departments with paint, lawn and garden, auto and outdoor living, tools and electrical showing the largest increases.

Excluding the impact of non-recurring Paint Studio revenues in 2014, wholesale merchandise revenues to new domestic stores activated in 2014 and the first quarter of 2015 contributed $64.8 million in incremental revenues during the quarter, while wholesale merchandise revenues decreased $9.5 million due to canceled stores.

Retail revenues from Ace Retail Holdings -- consisting of Westlake Ace Hardware -- were $46.3 million in the first quarter of 2015. Same-store sales growth drove the increase of $2.6 million or 5.9% from the first quarter of 2014. With increases in nearly all departments, nursery and landscape, paint, electrical and barbecue had the largest increases.

Debt increased $65.7 million versus the first quarter of 2014 as a result of additional borrowing on the company’s revolving credit facilities. The increase in debt was primarily due to the increase in receivables and inventories, growth in the paint business through significant investment in The Paint Studio initiative and an increase in the wholesale distribution network through the acquisition of distributor Jensen-Byrd Co. in the fourth quarter of 2014.

The acquisition contributed $25.2 million towards an increase in inventory and $21.1 million toward an increase in receivables.