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Hearth & Home July 2015

2015 May Business Climate


May Retail Sales

In early June, Hearth & Home faxed and emailed a survey to 2,500 specialty retailers of hearth, barbecue and patio products asking them to compare May 2015 sales to May 2014. The accompanying charts and selected comments are from the 203 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


Only 33 percent of patio retailers reported better sales in May 2015 than in the prior year, compared to 45 percent of hearth retailers, and 44 percent of retailers of both Barbecues, and Spas/Hot Tubs.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
May 2014 Through May 2015

Although May could be considered the heart of the Patio and Barbecue seasons, Patio retailers were up only five percent, and Barbecue retailers only four percent.


Retailer Comments

Northeast

Connecticut (Hearth) “Very depressing. A lot of tire kickers but no motivation in May. With low oil costs, and the cost of pellets where they are, just not sure if the long, cold winter of last season will drive business in. Just not sure what to expect.”

Maine: (Hearth, Patio, BBQ) “First month in two years we were down. Rain/cold didn’t help.”

Maine: (Hearth, Patio, BBQ) “The value of seasonal customers is apparent this time of year. Taking care of the perennial customer ensures future business.”

Maine: (Hearth) “After a dismal February, March and April, the month of May has saved our bacon! Despite the record cold in the Northeast this year, our sales plummeted. Low heating oil costs, winter fatigue and plain awful driving really affected the first quarter. May sales were driven by gas units, which are LP in our area. All in all, we say Yay for May!”

Maryland: (Hearth, BBQ) “Floor traffic slowed but service is up 30 percent. Overall, things are great!”

Maryland: (Hearth, Patio, BBQ) “Sales numbers are a little bit lower than last year. It’s an odd patio year, with fewer patio sales but higher tickets.”

Maryland: (Hearth, Patio) “This is our third month in a row of double-digit sales increases for patio. We hope a new trend is emerging, but will not be surprised if the increases stall. Volatility is our only constant.”

Massachusetts: (Hearth, BBQ) “The main difference for the decline is the Massachusetts wood stove change-out urgency has declined. The 2014 program was unbelievable. This year it’s good, but there is no excitement about the program.”

Massachusetts: (Hearth, Patio, BBQ) “It seems this year people are looking forward to outdoor entertaining after the harsh winter we had. They are not hesitating to spend on higher quality grills, gas fire tables, anything to enhance the enjoyment of their outdoor living space.”

New Hampshire: (Hearth, BBQ) “The economy and weather have not been co-operating. Signs are saying sluggish year in the hearth business. Hope that is not the case.”

New Jersey: (Hearth, Patio, BBQ) “Down slightly from May of 2014, but still a very solid month – no worries. Retail customers wanting higher-end products make the difference. Builders are steady.”

New York: (BBQ, Spas) “Amazing month, the buyers are out!”

New York: (Hearth, Spas) “Very good traffic.”

New York: (Hearth) “We have had a cooler spring this year in the Northeast. Sales have remained constant. Selling pellets at a discount and purchasing coal with deferred payments gets us through the long spring and summer months.”

Pennsylvania: (Hearth, Patio, BBQ) “Floor traffic was sluggish and sales were slow. Just finished opening a new store. What a chaotic cotillion that was! Still waiting for units to come in so we can finish our displays. Too many customers coming in with printouts from the Internet with insanely low pricing for pergolas and gas fire pits.”

Pennsylvania: (Hearth, Patio, BBQ) “People are getting turned off from pellet stoves due to the lack of fuel last year.”

Pennsylvania: (Hearth) “Manufacturers of stoves, fireplaces and pellets continue to find reasons to raise prices in a month that’s always slow. Expect pellet stove sales to be down 30 percent this year.”

Pennsylvania: (Hearth, Spas) “Picked up a new line of hot tubs with more features at less cost. Cold spring kept customers coming in for pellets, coal and firewood.”

Vermont: (Hearth) “Fireplaces and new construction.”


Weather Report

For the following weather charts, the numbers for each state reflect the temperature ranking for the period since records began in 1895.

If your May sales of patio furnishings, barbecues and fire pits were strong in the Northeast, great weather most likely played a major role. May was the Record Warmest month since reporting began in 1895 for New Hampshire, Massachusetts, Connecticut and Rhode Island. Ten other Northeastern states enjoyed weather Much Above Normal.

For the three-month period from March to May, the heat was in the West and Southeast, with Florida posting its Record Warmest March-May period.

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South

Arkansas: (Hearth) “Absolutely horrible month for sales, the worst in 18 years! It wasn’t worth opening the doors. I think people are afraid to buy wood stoves now after the February report on EPA emission standards. People are misinterpreting the information.”

North Carolina: (Hearth) “Very disappointed after a good March. Looking forward to a great June.”

Oklahoma: (Hearth, BBQ) “Lots of foot traffic.”

Tennessee: (Hearth, BBQ) “Not the greatest May we have ever had, but up five percent in dollar volume over 2014. Cannot complain too much about that.”

Tennessee: (Hearth) “New home starts are the reason for increases.”

Texas: (Hearth, BBQ) “Seeing an uptrend in gas grills over ceramic cookers. First time in eight years.”

Texas: (Patio, BBQ) “Sales were up despite horrendous weather in North Texas.”

Texas: (Hearth, Patio, BBQ) “We had record rain fall in May. I think it would have been much stronger if we had better weather. Outdoor living projects are way behind schedule.”

Texas: (Hearth, BBQ) “Rain in Texas. Builders either can’t get started on projects because they can’t get concrete poured, or can’t get finished with roof or exteriors. We’ve had jobs we can't even physically get to because of mud. We’ll take this over drought anytime, though.”

Virginia: (Hearth, BBQ) “Wow, what a month! This was one to remember.” 

Midwest

Indiana: (Hearth) “Even though sales were down 10 percent from last year, we are still way above for the month in a normal year. It’s not like the record-breaking last two years." 

Michigan: (Hearth, Spas) “A rather cool spring/early summer was not good for pool sales. Gas, wood, pellet stoves and spas are moving along quite nicely.”

Michigan: (Spas) “After a roaring April and a great May start, the doors slammed shut during the second, third and fourth weeks of May. I give up trying to figure out the buying public.”

Michigan: (Patio, BBQ) “May has finally brought some warmer weather that is bringing people out for backyard improvements. As the weather trend continues to be sunny and warm, we predict a great June.”

Minnesota: (Hearth, BBQ) “The bottom has seemingly dropped out since February. We are seeing a few people come in who are looking for quotes on high-end product, but closing sales is very difficult. Pricing has a lot to do with it. It’s becoming a shoot-out at the OK Corral around here as we bash heads against the competition. 

“The few shoppers we have are looking for luxury fireplaces at economy prices. Contractors have failed to see the price increases we have received due to technical changes that have been thrust upon the industry, and are not giving their clients enough of a budget for even the least expensive models. 

“I had a client last week who told me she had been given a budget for a contemporary linear fireplace of $1,600 – $1,900. I laughed. And of course there's the constant problem of manufacturers NOT SUPPORTING the brick-and-mortar dealer by selling their products on-line. It’s very hard to make a living these days.”

Missouri: (Hearth, BBQ) “Continued soft sales of hearth products in May. Persistent rain has slowed construction projects. Barbecue has really opened up. Unfortunately, its gains don’t offset the losses in hearth products.”

Wisconsin: (Hearth, BBQ) “Great month! We have a fair amount of jobs lined up for the months of June and July already. We are trusting this will continue.”

Wisconsin: (Hearth, Patio, BBQ, Spas) “Monthly sales doubled last year’s sales. Profit was up by double as well. While last year seemed extremely busy, this year’s pace is slower but more profitable. Go figure.”

Wisconsin: (Hearth) “Definitely a different year than 2014. A lot less intensity due to lower LP prices.”

Wisconsin: (Hearth, Patio, BBQ) “Gas and pellet are at about equal, and wood is getting more interest than in previous years.”


Consumer Confidence

The Conference Board Consumer Confidence Index, which had declined in April, increased moderately in May. The Index now stands at 95.4 (1985=100), up from 94.3 in April.

According to Lynn Franco, director of Economic Indicators at The Conference Board, “Consumer confidence improved modestly in May, after declining sharply in April.”

A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth. The Index is based on a probability-design random sample conducted for The Conference Board by The Nielsen Company.

The Index is based on a probability-design random sample conducted for The Conference Board by The Nielsen Company.

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West

California: (Hearth, BBQ) “In general we had a better first quarter this year.”

California: (Hearth) “Looking forward to a good summer and a great season!”

California: (Hearth, BBQ) “Sales in general are up. Last year was great for us so any improvement keeps us moving forward.”

California: (Hearth, Patio, BBQ) “In California this time of the year, 99 percent of sales are due to new construction or remodel projects.”

California: (Hearth, Patio, BBQ, Spas) “We’re praying that the up-swing continues.”

Colorado: (Hearth, BBQ, Spas) “Wet weather put a damper on outdoor activities.”

Colorado: (Hearth, BBQ) “Looking up! Customers are not so nervous about spending a little money.”

Oregon: (Hearth) “Horrible month.”

Oregon: (Hearth, BBQ, Spas) “April was extremely slow. May has started us back on track. Hoping for a great June.”

Washington: (Hearth, Patio, BBQ, Spas) “Warm and slow.”

Canada

Alberta: (Hearth) “With the change in government and the continuing low oil prices, Albertans seem to be sitting on their wallets. Many have said, ‘I just want to wait and see what the NDP does before I go ahead.’ I sure hope this will create a pent-up demand for the Fall season.”

British Columbia: (Patio, BBQ) “The weather on the West Coast is phenomenal and our spring has been fantastic; it translates into fantastic sales. People are happy and are spending money on good barbecues and good patio sets. Mind you, the price is a very big factor. Good quality and reasonable prices are the buzzwords for most of our sales. 

“We priced ourselves in the sweet spot of $1,500 for barbecues, $2,500 for patio furniture and $1,500 for fire tables. This is where we see a lot of volume in our business. Margins are not very good but we make it up in higher tickets as customers buy a barbecue and patio set and a fire table. 

“To accommodate the set-up and delivery, we bought a new pick-up and outfitted it with a power tailgate. We also bought the new ProMaster Dodge van that has tons of room inside and we can do a large delivery in one trip. Things are looking good.”

Ontario: (Hearth, Patio, BBQ) “The year started strong then disappeared as quick as it came.”

Ontario: (Patio) “Sales just OK.”

Ontario: (Hearth, Patio, BBQ) “Patio furniture was good in April, but stalled in May.”

Ontario: (BBQ) “After a poor April, sales are back on track for a good year.”

Ontario: (Hearth) “There’s more building and renovating going on this year compared to the last two or three years.”

Ontario: (Hearth, Patio, BBQ) “Great weather and a great rebound from a cool, wet summer last year. We also fixed a few mistakes we made last year regarding advertising and merchandising.”

Quebec: (Hearth, Patio, BBQ, Spas) “BAD WEATHER = BAD SALES.”


Stock Watch

COMPANY – EXCHANGESYMBOL52 WEEKWeek Ending% CHANGEMARKET CAPITALIZATION
    High Low 01-May-15 29-May-15 4 Week 26 Week 52 Week ($000,000)
HNI Corporation (a) HNI 57.74 34.62 48.09 48.49 0.8% 3.3% 29.5% $2,190.0
Pool Corporation (b) POOL 72.55 51.61 65.89 66.28 0.6% 11.6% 14.8% $2,940.0
Rentech (b)(e) RTK 2.70 0.99 1.18 1.18 0.0% NA NA $257.0
Restoration Hardware Holdings (a) RH 102.00 63.26 87.35 90.96 4.1% 7.7% 36.8% $3,640.0
Wayfair, Inc. (a)(c) W 39.43 16.74 30.03 29.89 -0.5% 23.2% NA $2,410.0

(a) = New York Stock Exchange
(b) = NASDAQ
(c) = Wayfair, Inc. issued their initial public offering on October 1, 2014. Shares are trading on the New York Stock Exchange under the ticker symbol W. We will include respective data points as they occur.
(d) = OTCQB
(e) = Rentech is the parent company of New England Wood Pellet, which is the parent company of Allegheny Pellet.


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