Industry News

Ace Hardware Net Income Sets Record in 2004

Published on 2005-02-21. Author : SpecialChem

OAK BROOK, ILL. -- Ace Hardware Corp. concluded its 80th anniversary milestone in 2004 with record net earnings for the second consecutive year. The leading hardware retailing cooperative reported net earnings of $101.9 million on consolidated wholesale sales of $3.289 billion in 2004.

Wholesale sales in 2004 increased by $129.4 million, or 4.1 percent, over the previous year. Excluding the impact of the 53rd week in 2003, 2004 sales increased 5.2%. Net income was $1.2 million, or 1.2 percent, higher than 2003 and trailed the sales increase due to significant investments at retail.

The total Ace retailer return for 2004 is $174.5 million, including $100.3 million in patronage dividends and $60.1 million in upfront dividends, which includes reduced handling charges and pre-paid freight on select products throughout the year. For the first time, Ace will also return $14.1 million to nearly 1,900 high-performing retailers who achieved all of the brand, merchandising and customer service initiatives under the Vision 21 program via an achievement award based on one percent of their handled purchases.

David Hodnik, Ace chief executive officer, reported that in addition to this continued strong performance, the company achieved a number of other significant accomplishments in 2004, including:

  • One hundred and thirty-three new store openings, which included 75 branch openings by existing Ace retailers, 39 conversions from other hardware co-ops, and 19 by new investors, adding more than 1.6 million square feet of retailing space.
    More than 300 Ace retailers completed a significant retrofit or expansion project to better serve their customers.
  • Four national sales events, the largest number in the company's history, which boosted sales and profits for those retailers participating in the promotions.
  • The opening of a new 1 million square-foot retail support distribution center near Sacramento, Calif., that serves some 350 retailers in California and Nevada, doubling the size of its former facility in the region. The company also began work to enlarge by 50 percent its distribution facility in Colorado Springs, Colo.
  • The opening of a buying office in Hong Kong, AGD Asia Ltd., that fuels Ace's burgeoning international business by sourcing and supplying a wide array of products to Ace retailers around the world.
  • Additional national brand exposure upon Ace becoming the Official Hardware Store of Little League® Baseball, the largest youth baseball organization.
  • Receipt of the Good Housekeeping magazine and the Good Housekeeping Institute "Good Buy" award for Ace Paint's latest innovation, Ace Sensations™ with Scotchgard™ Protector. The annual awards recognize groundbreaking household products based on ingenuity, value and exceptional performance.

The company also began an orderly transition in leadership in advance of Hodnik's retirement on April 1, 2005, by promoting Ray Griffith from executive vice president and chief operating officer to president and chief executive officer effective that date.

Griffith, an 11-year veteran with Ace, said his charge will be to "continue the focus on initiatives designed to enhance our retailers' share in the convenience hardware retail segment.

"No other hardware cooperative in the marketplace today has the sharp retail focus that we do," said Griffith. "We will take this focus and the programs we have in place to accelerate a rapid expansion of new Ace locations around the country to make our stores even more convenient to do-it-yourselfers."

Ace Hardware Corp. is the largest retailer-owned hardware cooperative in the industry. Annual retail sales for Ace's 4,800 hardware, home center and lumber and building materials locations approximate $13 billion. Headquartered in Oak Brook, Ill., Ace currently operates 15 distribution centers in the United States with retailers' stores located in all 50 states and 70 countries.

Source: Ace Hardware Corp.

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