Ace Hardware 3Q revenues jump 10 percent

Oak Brook-based Ace Hardware Corp. said third quarter revenues increased 10.6 percent on adjustments to its store network and the expansion of its product lineup to include some well-known brands.

The company said third quarter revenues were $912.0 million, an increase from $87.1 million or 10.6 percent from 2010. For the nine-month period ending Oct. 1, 2011, total revenues were $2.787 billion, an increase of $116.0

million or 4.3 percent.

Net income was $17.0 million for the quarter, an increase of $3.1 million or 22.9 percent, compared to $13.9 million in 2010. For the nine-month period, net income was $58.5 million, an increase of $3.9 million or 7.2

percent over last year.

“Our third quarter results reflect revenues and net income that were higher than both last year

and our plan,” said Ray Griffith, Ace president and chief executive officer. “We are pleased

with the results from our strategic initiatives, such as Craftsman and Clark+Kensington paint

and primer, during the current year. These strategic initiatives provide a solid platform for future

long-term growth.”

Ace added 35 new stores and canceled 46 stores in the third quarter and ended the quarter with a

total domestic and international store count of 4,424.

Gross profit for the quarter was $114.4 million, an increase from $105.2 million last year. The gross profit percentage was 12.5 percent, down from 12.8 percent in the prior year primarily due to higher expenses in the current year reflecting inflationary price increases on inventory purchases.

Operating expenses increased 5.9 percent to $90 million during the period, as compared to 2010. The company said the increase reflects higher retail success and development expenses of $3.4 million partly due to a planned shift in the timing of advertising and marketing expenses from the second quarter to both the first quarter

and the second half of 2011 as compared to the prior year.

Selling, general and administrative expenses decreased $1.0 million primarily due to higher costs incurred in the prior year related to the Company's supply chain initiative. In addition, the timing of employee benefit expenses

resulted in $5.5 million higher expenses across all expense categories as compared to the prior

year.

Ace received some of its holiday inventories earlier in the year as compared to last year and its manufacturing inventories increased due to the production of the Clark+Kensington paint and primer in one, which was released in September. As a result, inventories at the end of the third quarter of 2011 were $579.6 million, an increase of $68.9 million.