OAK BROOK, IL -- Ace Hardware Corporation, the largest retailer-owned hardware cooperative in the industry, reported total revenues of $1.2 billion for the second quarter of 2013, an increase of $103.4 million or 9.7 percent from 2012. Net income was $42.3 million for the second quarter of 2013, an increase of $27.4 million from the $14.9 million earned in 2012. The second quarter 2013 results include a charge of $6.2 million related to the estimated costs to close the Toledo, Ohio Retail Support Center (RSC), while second quarter 2012 results included a charge of $19.9 million related to a loss on the early extinguishment of debt.
"We were pleased with our second quarter and first half results," said John Venhuizen, Ace president and chief executive officer. "Sales increased in virtually every department with significant growth at both wholesale and retail from our Discovery Edge, Level 3 merchandising re-sets and branding initiatives."
"At the half way point, we are also optimistic about the remainder of the year as a result of our Ace retailers adoption and execution of 2020 Vision, our long term growth strategy." Venhuizen continued, "Same store retail sales were up 5.3 percent for the quarter and are up 3.0 percent for the first half. Same store retail sales growth has continued to accelerate. June same store retail sales were up 6.1 percent and July was up 9.8 percent."
On June 5, 2013, Ace reported The J.D. Power and Associates 2013 U.S. Home Improvement Retailer Store Satisfaction Studysm again ranked Ace Hardware "Highest in Customer Satisfaction with Home Improvement Retail Stores, Seven Years in a Row." Ace has captured this ranking ever since the organization began researching the home improvement category seven years ago.
Comparability of 2013 and 2012 Results
The December 2012 acquisition by Ace of WHI Holdings Corp. , the indirect owner of the 86 store Westlake Ace Hardware retail chain, results in the consolidation of WHI's financial statements into Ace's financial statements for 2013. This affects the comparability of the 2013 and 2012 financial statements and results in a reduction of reported wholesale revenues, as wholesale revenues from Ace to WHI are now eliminated. This elimination totaled $21.9 million in wholesale revenues for the second quarter of 2013 and $40.8 million for the first half of 2013.
Ace's balance sheet is also affected by the WHI acquisition. Most notably, the Ace balance sheet as of June 29, 2013 now includes $69.0 million of WHI inventory, $19.1 million of property and equipment, $23.0 million of goodwill and other intangibles, and $21.9 million of WHI acquisition debt.
In December 2012, the Company sold its paint manufacturing assets to The Valspar Corporation. This also affects the comparability of 2013 and 2012 as the inventory and fixed assets of this business are no longer reflected in the balance sheet.