More stores, more sales for Ace Hardware

Boosted by store growth and crisp sales of outdoor living, paint and lawn and garden, Ace Hardware Corporation Tuesday reported second quarter 2016 revenues of $1.4 billion, an increase 0.6% from second quarter 2015.

Net income was up 5.8% to $63.4 million, the second highest in company’s history.



“New store growth was the primary driver of our record revenue,” said John Venhuizen, president and CEO. “While records are nice, we are not satisfied with the growth as the enterprise and our retailers are working far too hard to settle for modest increases. Given their collective and effective execution year-to-date, I remain optimistic about accelerating both our growth and earnings going forward.”



For the first six months of 2016, the 2.4% increase in retail same-store-sales reported by the approximately 3,000 Ace retailers who share daily retail sales data was primarily the result of a 2.2% increase in average transaction size.

Total wholesale revenues were $1.3 billion, an increase of 0.5%.

The company’s Ace Wholesale Holdings LLC subsidiary contributed $4.1 million of incremental revenue in the second quarter of 2016, which was an increase of 4.4% from the prior year second quarter.



Retail revenues from Ace Retail Holdings – essentially sales from Westlake Ace Hardware -- were $87.4 million in second quarter 2016, up 2.3% from second quarter 2015. Same-store-sales increased 1.6%, compared to the prior year with the largest increases in outdoor living and lawn and garden.



Ace added 42 new domestic stores in second quarter 2016 and cancelled 29 stores. This brought the company’s total domestic store count to 4,315 at the end of second quarter 2016, an increase of 59 stores from second quarter 2015.



Wholesale gross profit for the three months ended July 2, 2016 was $172.5 million, an increase of $9.0 million from second quarter 2015. The wholesale gross margin percentage was 12.9% of wholesale revenues in second quarter 016, an increase from the 2015 second quarter gross margin percentage of 12.3%. The increase in the wholesale gross margin percentage was primarily driven by the timing of income from vendors.

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