Westlake CEO looks to the East

Lenexa, Kansas-based Westlake Ace Hardware has more than 90 stores. But until this week, it had none east of the Mississippi River.

The acquisition of two Ace Hardware of Raleigh stores last week follows a pattern of steady growth for Westlake, but it also marks a dramatic jump eastward, where the company hopes to establish a foothold from which to grow up and down the coast.

Westlake CEO Tom Knox told HBSDealer that the decision to acquire the Raleigh retailer was much like all of its previous acquisitions. “We think hard about all of them, and we don’t do something unless we think it’s in the best interest of the company.”

One interesting aspect of the Raleigh acquisition is that it shows Westlake is willing to venture outside of its traditional Midwest footprint. The company, a wholly owned subsidiary of Ace Hardware Corp., operates stores in Missouri, Kansas, Nebraska, Iowa, Oklahoma, Texas and New Mexico.

He said the Ace Hardware of Raleigh stores were high-performance operations located in a high-growth area, presenting a “great opportunity to grow on the East Coast.”

 The move closely follows other growth announcements, including an agreement to buy Seagoville (Texas) Ace, and an announcement to open a new store in Carrolton, Texas. As Westlake makes deals, more opportunities present themselves, Knox said. Sometimes Ace corporate introduces opportunities, and sometimes stores appeal directly to Westlake. In the case of Raleigh, it was a relationship between Knox and Raleigh owners Howie and Brug Jung that advanced the deal. 

The company expects to end the year with 98 to 100 stores, and sales in excess of $260 million.

“I think you get the general sense that we're growing and we plan to grow more," said Knox. "That was one of the reasons Ace Hardware purchased Westlake Ace [in 2012],” he said. “And we're going to grow responsibly.”

Knox was named CEO of Westlake Ace in early 2014, when the chain had 85 stores.

Asked for lessons learned since then, Knox introduced the phrase "chain store math." 

“The thing I tell people you have to learn here is ‘chain store math,’” he said. “That means anytime we want to do something to our stores, we have to multiply it by the number of stores. It may not seem like very much, but when you multiply it by 91, that’s a big number.”