#USA #financial results #Oak Brook #Ace Hardware #2024 earnings

Ace Hardware's Financial Overview

Ace Hardware Corporation, a prominent player in the hardware retail industry, has released its financial results for the fourth quarter and the full fiscal year of 2024. The company achieved record revenues of $2.3 billion for the fourth quarter, reflecting an increase of $162.2 million, or 7.6 percent, compared to the same period in 2023. Moreover, the full-year revenues reached a significant $9.5 billion, an increase of $360.3 million, or 3.9 percent, highlighting a positive trend in the company's financial health.

John Venhuizen, the President and CEO, expressed enthusiasm about the results, attributing the quarter's success to strong sales from hardware format stores, increased growth in new store openings, and advancements in digital sales. The cumulative efforts have resulted in a commendable performance that not only exceeded revenue expectations but also led to record shareholder dividends totaling $357 million. This translates to a nearly 39% return on shareholder equity, underlining the company's effective management and stewardship of resources.

Revenue Analysis

Looking into the revenue streams, retail sales reported by approximately 3,700 Ace retail stores that share sales data indicated a modest increase of 1.6 percent for U.S. retail same-store sales in the last quarter of 2024. This uptick was largely driven by a rise in the average ticket value, which saw a 1.9 percent increase, although this was somewhat counterbalanced by a 0.3 percent decline in the number of transactions.

For the entirety of 2024, U.S. retail same-store sales decreased slightly by 0.3 percent, influenced primarily by a 1.5 percent reduction in transaction counts, albeit offset by a 1.2 percent increase in average ticket size. This trend reflects the dynamics of consumer behavior and spending patterns prevalent in today’s market.

Segment Performance

Within the consolidated revenues of $2.3 billion for the last three months ending December 28, 2024, total wholesale revenues were reported at $2.1 billion. This marks an increase of 7.3 percent from the prior year's quarter. Notable growth areas included outdoor power equipment, grilling, and generators, all showcasing substantial sales increases. New domestic Ace stores opened since January 2023 have contributed an incremental revenue of $53.9 million during this quarter.

A closer examination of specific divisions reveals that while wholesale merchandise revenues from comparable stores increased by $45.9 million, challenges remain evident in areas where stores have canceled memberships, leading to a decrease of $6.3 million in wholesale merchandise revenues from these locations.

Additionally, Ace's international subsidiary, Ace Hardware International Holdings, Ltd., reported a slight decline in wholesale revenue by $2.5 million when compared to last year. Conversely, the company’s Ace Wholesale Holdings LLC noted a notable $23.6 million increase in wholesale revenues, significantly driven by higher sales to hardware and e-commerce customers.

Profit and Expenses

Gross profit figures for the fourth quarter indicate a wholesale gross profit of $267.4 million, which saw an increase of $40.9 million from the same quarter a year prior. The gross margin percentage for wholesale revenue was logged at 12.8 percent, a commendable improvement over the previous year's 11.7 percent, largely attributable to favorable inventory expenses.

The retail sector also fared well, with gross profit reaching $92.4 million, a rise of $8.5 million compared to Q4 2023. However, the retail gross margin percentage experienced a slight decline, settling at 45.7 percent.

Operating expenses across the wholesale and retail businesses have seen an uptick, attributed to increased marketing and the net effects of new store operations. Despite the growth in expenses, the strength of the company’s revenue saw it effectively manage these costs against a backdrop of rising operational demands.

Conclusion

In summation, Ace Hardware’s robust financial performance in 2024 showcases its resilience and adaptability in a competitive marketplace. The company’s commitment to collaboration with independent retailers, alongside its investments in technology and new store openings, underpins its long-term growth strategy. With a strong balance sheet and operational efficiencies, Ace Hardware is poised for continued success in the future.

For additional details on Ace Hardware's operations and strategy, visit acehardware.com.