In an age of big-box home improvement centers ( Home Depot, Lowes), Ace makes the case for the local hardware store. By sales it is the #1 hardware cooperative in the US, ahead of Do It Best. Ace dealer-owners operate more than 4,000 Ace Hardware stores, home centers, and lumber and building materials locations in all 50 US states and about 60 other countries. Stores range in size from small, urban shops to large rural locations. From about 15 warehouses Ace distributes such products as electrical and plumbing supplies, garden equipment, hand tools, housewares, and power tools. Its paint division is also a major paint manufacturer in the US. Ace was founded in 1924 by a group of Chicago hardware store owners.
To foster growth overseas, Ace in 2011 reorganized its international division into a stand-alone entity: Ace Hardware International. Ace is the majority shareholder in the newly-created entity, with a 78% stake. Ace has distribution centers in Shanghai, Panama City, and Dubai, UAE. In 2011, Ace Hardware rang up about 6% of its sales overseas.
The company also makes and distributes paint, accounting for more than 3% of sales in 2011.
After a rough patch during the deep recession and lackluster recovery that constrained sales and profit growth at the hardware cooperative, Ace's sales have rebounded. The company rang up $3.7 billion in sales in 2011, a 5% increase vs. the prior year. (In the previous annual comparison sales inched up 2%.) Also, same-store merchandise sales increased more than 4% in 2011 vs. 2010. Net income increased more than 3% in 2011 vs. 2010 and the company had positive cash flow. The company credited the 5% gain to increased merchandise sales and service revenue. Strong markets included California, New York, Texas, Florida, and Arizona. Substantially all merchandise categories posted gains, with tools, lawn and garden equipment, paint, plumbing and electrical supplies among the strongest performers.
International merchandise sales increased $19.4 million. Overseas sales were buoyed by increases in the Middle East and Asia, partially offset by lower sales in the Caribbean. Despite the sales gains of the past two years, Ace's $3.7 billion in 2011 sales was below the pre-recession high of nearly $4 billion.
To compete against Home Depot and Lowes, Ace rolled out its "next generation" store concept, which involves signage with detailed product descriptions and different flooring to set off departments, among other features. The company is also focusing on opening smaller neighborhood stores to entice customers who would rather not drive to edge-of-town big-box chains. On the merchandise front, in mid-2010 the hardware store chain became the first retailer -- outside of Sears and Kmart stores -- to sell Craftsman brand tools. It also signed a deal with Benjamin Moore Paints to sell its paint at its stores. Ace has seen its network of retail stores shrink in recent years. Indeed, the company posted a net decline in domestic stores of 26 outlets, 50 outlets, and 107 outlets in 2011, 2010, and 2009, respectively. – less