Revenues up, income down at Ace
Ace Hardware Corp. reported total revenues of $859.3 million for the fourth quarter, a 7.4% increase over revenues of $800.3 million for the same quarter in 2009. Net income was $20.6 million for the fourth quarter of 2010, compared with $12.4 million in 2009, a 65.1% increase.
For the full year, total revenues were $3.5 billion, a 2.1% increase over fiscal 2009. Net income was $75.1 million for fiscal 2010, compared with $95.7 million in fiscal 2009, a 21.5% decrease.
On a category basis, the strongest selling categories were hand and power tools, lawn and garden, heating and cooling, electrical and seasonal.
Merchandise sales to comparable U.S. stores increased $40.6 million in the fourth quarter of 2010 as compared with the previous year. Merchandise sales to new domestic stores activated in the 2009 and 2010 fiscal year periods contributed $19.4 million in incremental sales during the quarter, while merchandise revenues decreased $10.9 million due to canceled stores.
For fiscal 2010, merchandise sales to comparable domestic stores increased $34.8 million as compared with the prior year. Merchandise sales to new domestic stores activated in the 2009 and 2010 fiscal year periods contributed $62.7 million in incremental sales during the year, while merchandise sales decreased $57.3 million due to canceled stores. This is a net increase in revenues of $5.4 million in 2010 related to new or canceled stores compared with a net decrease of $36.9 million in 2009.
Ace added 119 new stores and canceled 163 stores in 2010. This brought the company’s total store count to 4,447 at the end of 2010.
In the expenses column, operating expenses increased $21.2 million, or 6.6%, to $341.0 million in fiscal 2010 as compared with 2009. The increase in operating expenses reflects higher selling, general and administrative expenses of $17.4 million, primarily due to higher depreciation and labor expenses from recently implemented technologies related to Ace’s supply chain initiative. In addition, retail success and development expenses increased $7.6 million primarily due to higher advertising expenses in the current year. Partially offsetting these increases, distribution operations expenses decreased $3.8 million primarily due to reduced property taxes and lower depreciation expenses.
“While consumers were still somewhat cautious during 2010, we certainly saw positive activity during the fourth quarter," said Ray Griffith, Ace president and CEO. “Although our net income for the full year was down from the prior year, we did achieve our budgeted income goal for 2010. We are encouraged with the progress made this year with strategic initiatives, such as Craftsman and Benjamin Moore, and we will continue to strategically invest in our business to support the best hardware retailers in the industry.”
