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Ace Hardware Posts Record Net Income in 2003

Published on 2004-02-13. Author : SpecialChem

Profits Increase 22.7 Percent As Sales Grow 4.3 Percent

Ace Hardware Corp. embarks on its 80th anniversary in 2004 having surpassed $100 million in net income for the first time in its history in 2003.

The leading hardware retailing cooperative reported net income of $100.7 million, an increase of 22.7 percent over income of $82.1 million in 2002. Consolidated wholesale sales in 2003 were $3.159 billion, 4.3 percent greater than sales of $3.029 billion in 2002. Ace's 2003 results include 53 weeks, while 2002 included 52 weeks.

Fourth quarter 2003 sales were $836.4 million, compared to sales of $749.6 million for the fourth quarter 2002, an 11.6 percent increase. Fourth quarter earnings were $18.9 million, a jump of 128.3 percent from the $8.3 million for fourth quarter 2002.

Thanks to the strong financial performance of the company, Ace retailers will also be receiving record dividends, totaling $159.4 million. This amount includes $102.0 million in year-end patronage dividends and $57.4 million in up-front dividends retailers received throughout the year as reduced handling charges and pre-paid freight.

Commenting on the strong results, Ace President and Chief Executive Officer David Hodnik said Ace benefited in 2003 from strong markets in new housing and sales of existing homes, improvements made to occupied homes, and the company's retail initiatives and management of operating expenses.

"It's clear that our strategy to strengthen our retailers' position in the convenience sector of the home improvement industry is working," he said. "With such a strong year behind us, we have a great deal of momentum going into 2004 and expect continued strong sales, bottom line results and overall growth for the company."

Hodnik said Ace continued to invest in retailing programs during the challenging economic environment and that has enriched the experience for shoppers. "For example, our One Day Sale the day after Thanksgiving increased sales by 16 percent over the same event in 2002. And that's on top of the 33 percent increase the 2002 sale registered over the prior year," he said.

In addition, during 2003, Ace retailers implemented nearly 4,000 new product category displays and increased inventories in their stores to further ease product selection and purchasing for customers.

"Homeowners continue to create a better lifestyle environment for themselves, whether they are moving or staying put. As that trend grows, Ace will continue to benefit," Hodnik said.

Ace also reported it exceeded its 2003 goal of opening 1 million square feet of new retail space by 10 percent and anticipates to add at least another 80 new stores, totaling 1.6 million square feet, in 2004. "We expect further growth through new investors who want to enter the hardware retailing segment as well as existing Ace retailers who want to add additional store locations to their business," Hodnik added.

Other initiatives established in 2003 and cited by Hodnik to enhance competitive performance in 2004 include:

· Enhancing the Ace brand through continued growth of retail initiatives such as the Helpful Hardware Club, Ace's customer loyalty program that now includes more than seven million members.

· Four major national sales events to occur President's Day Weekend, Memorial Day, Labor Day and the day after Thanksgiving.

· A new partnership with The Sherwin-Williams Company that enables Ace retailers to sell the paint manufacturer's Pratt & Lambert Accolade and Red Seal brands to complement the extensive Ace Paint offerings.

· Opening of Ace's new 1 million square-foot retail support center near Sacramento, Calif., to handle the growing business in that region.

· Expansion of Ace's international activities, which includes the opening of a buying office in Hong Kong and new stores and retrofits in Indonesia, Fiji and Ireland.

Founded in 1924, Ace Hardware Corp., headquartered in Oak Brook, Ill., is the largest retailer-owned cooperative in the industry. Ace's annual retail sales from its more than 4,800 hardware, home center and lumber and building materials retailers top $13 billion. Ace currently operates 15 distribution centers in the United States and has stores located in all 50 states and 70 countries.


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