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Hearth & Home May 2015

2015 March Business Climate


March Retail Sales

In early April, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare March 2015 sales to March 2014. The accompanying charts and selected comments are from the 232 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


It’s interesting that Hearth products led the way in percentage of retailers who were Up, as well as the percentage who were Down. The preponderance of retailers in the other three industries experienced No Change from the prior year.


13 MONTH YEAR-TO-YEAR-YEAR RETAILER SALES
March 2014 Through March 2015

The long run of positive results for the hearth industry wound down in March, while the patio, barbecue and spa industries all posted positive results.


Retailer Comments

Northeast

Connecticut: (Hearth) “First quarter was down from last year’s first quarter. Maybe it was the price of oil? Hopefully, this long, cold winter will bring another great year. We’re discouraged at pellet prices, and really not sure what to expect this year.”

Maine: (Hearth) “In March we could not get pellets. As a result, no pellets, fewer pellet stove sales. Oil came down to $2.10 a gallon. Small saving if any, if pellets sell for $300 a ton.”

Maryland: (Hearth) “Pellet fuel availability is a crucial issue.”

Massachusetts: (Hearth) “We were still recovering from the February storms which really impacted business. It has picked up toward the end of the month and looks promising moving into the spring.”
Massachusetts: (Hearth, BBQ, Spas) “We are down 25-29 percent in 2015 from last year. We are so done with winter. Our builders are trudging through the mud. Things should improve.”

Massachusetts: (Hearth, Patio) “Even though my overall season is up around 30 percent and my March sales are down around 20 percent, I think people
are just so done with this winter
season that they are spending their extra money on a family vacation to somewhere warm rather than buying something that will give them warmth for years to come.”

Maryland: (Hearth, Patio, BBQ,) “March is usually our worst month of the year as people transition from winter to spring. Drop in sales is due to mostly less ‘service’ revenue, less sweeps, less service.”

New Hampshire: (Hearth, Patio, BBQ) “Although it’s April, it snowed again last Saturday. Low oil costs, no pellets, snow every Saturday. We’re into our credit line early this year.”

New Jersey: (Hearth, Patio) “Nice increase over 2014. Our showroom is still very active with quality customers. Enjoyed the HBPA show! Left with a lot of new ideas to run with.”

New York: (Hearth) “Very slow. Little store traffic. Strange after such a brutal winter.”

New York: (BBQ, Spas) “After a very poor February, March bounced back, helping the first quarter. Aggressive promoting helped.”

Pennsylvania: (Hearth, BBQ) “Traffic is down substantially, but most are expressing an interest in gas over pellets due to the lack of available pellet fuel. Always a guessing game.”


Weather Report

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

March weather was not as extreme as first quarter numbers. Yet 14 western states posted Much Above Normal figures, and Maine, New Hampshire, Massachusetts, Connecticut and Rhode Island experienced Much Below Normal weather.

There’s as much difference between weather on the West Coast and weather on the East Coast as there is between Republicans and Democrats these days. Seven western states set records for the Warmest first quarter since 1895, while Vermont and New York set records for the Coldest first quarter.

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South

Arkansas: (Hearth) “Excellent retail month for wood products. First quarter was great.”

Florida: (Hearth, BBQ) “March 2015 was a good month. March 2014 was a very good month.”

Mississippi: (Patio) “Horrible. No fun at all.”

North Carolina: (Hearth) “Business just seems to be getting better and better. Just wish there was a better labor pool to choose from. Selling is easy, getting it installed is the tough part.”

Oklahoma: (Hearth, BBQ) “Ready for a great barbecue season.”
Tennessee: (Hearth, BBQ) “March was OK. The snow and ice on the 5th and 6th (our welcome to the HPBA) when we did very, very little business kept us from reaching what we did in 2014 (which was a good month for us for March).”

Texas: (Hearth, BBQ) “Good sales for March in Texas. Good mix of retrofits and new construction. We’re seeing more interest in higher-end wood and gas fireplaces in new construction. Several new homes with multiple units seem to be an indicator of good health in the custom home building market.
“Relatively strong pellet appliance interest despite stable LP fuel prices. Weird, very wet weather has slowed installation to a crawl, but wet weather and having a list of installs to do are both good problems to have in spring in Texas.”

Virginia: (Hearth, BBQ) “Very slow month. The weather had a lot to do with it. One week was cold, the next week temperatures were in the 60s and 70s. Spring is here.”

Midwest

Illinois: (Hearth, Patio, BBQ) “In northern Illinois, the cold winter does not accurately reflect sales for patio or barbecue.”

Michigan: (Hearth, BBQ) “New construction is busy. Remodels busy. Traffic busy.”

Michigan: (Hearth, BBQ) “Store traffic was strong in March with prints for new houses. Looks good for future sales.”

Minnesota: (Hearth, BBQ) “March sales are always slow. April-May is looking good.”

Missouri: (Hearth, Patio, BBQ, Spas) “It’s feeling like 2007 again! Customers are cheerful and willing to spend money. Sales are coming easier. We’re seeing lots of movement in the real estate market. Building has resumed. It’s going to be a good year!”

Ohio: (Hearth, BBQ) “While we didn’t show any sales increase from last year, we were able to match the same record-breaking pace we were at. It’s encouraging because the bigger remodeling jobs for gas fireplaces keep coming in.”

Wisconsin: (Hearth, BBQ) “Another good March. New construction is strong. Big homes, two to four units in each. Electric fireplaces are moving. Pellet stoves sales are flat. Looks like another record year.”


Consumer Confidence

The Conference Board Consumer Confidence Index, which had decreased in February, improved in March. The Index now stands at 101.3 (1985=100), up from 98.8 in February.

According to Lynn Franco, director of Economic Indicators at The Conference Board: “Consumer confidence improved in March after retreating in February. This month’s increase was driven by an improved short-term outlook for both employment and income prospects; consumers were less upbeat about business conditions.”

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, Patio, BBQ, Spas) “We’re seeing more couples in the store. Many are ‘just starting to look’ and planning for future projects. A few are waiting to see how their taxes work out.”
California: (Hearth, Patio, BBQ, Spas) “We brought in upholstered furniture to help with declining sales and that has helped. We need a hard and cold winter in California to have business pick up.”

Idaho: (Hearth) “Fewer total sales, but customers are purchasing much larger, quality equipment this time of year. Mendota sales have been through the roof this month.”
Nevada: (Hearth, BBQ) “March was good!”

Oregon: (Hearth) “Still cool weather. New construction is beginning to kick in. Manufacturers are working with good promotions.”

Washington: (Hearth, Patio, BBQ, Spas) “Warm spring in the Northwest. Hearth down significantly and outdoor products up significantly.”

Canada

New Brunswick: (Hearth, Patio, BBQ) “Got to get rid of this snow; it just won’t leave.”

British Columbia: (Patio, BBQ) “We were up 75 percent from March 2014. There was fantastic weather and we were hopping from sale to sale. Our assembly and delivery team was going full bore.”

Ontario: (Hearth) “Nice to see the increase over 2014. Gas unit sales accounted for that increase.”

Ontario: (BBQ) “March was great. Pent-up demand combined with a break in the weather has put us back on track for a good year. Hopefully the snow is gone for good.”

Ontario: (Hearth, Patio, BBQ) “Just brought in kitchen islands and tailgater barbecues. These are a natural for a garden centre.”

Ontario: (Hearth, BBQ) “We are a major pellet stove/fuel supplier. Our supply has been good, however, the perceived shortage at the Box stores has slowed the stove sales part of the game, temporarily.”

Ontario: (Hearth, BBQ) “Weather was terrible, with not many people in the store, but those who were, were serious.”

Ontario: (Hearth, Patio, BBQ) “Terrible weather. Prevented customers from venturing out.”


Stock Watch

COMPANY – EXCHANGESYMBOL52 WEEKWeek Ending% CHANGEMARKET CAPITALIZATION
    High Low 27-Feb-15 27-Mar-15 4 Week 26 Week 52 Week ($000,000)
HNI Corporation (a) HNI 53.34 31.61 51.00 53.80 5.5% 45.5% 51.9% $2,410.0
Pool Corporation (b) POOL 70.99 51.61 69.17 69.14 -0.0% 26.9% 14.8% $3,060.0
Rentech (b)(e) RTK 2.70 1.06 1.37 1.15 -16.1% NA NA $261.5
Restoration Hardware Holdings (a) RH 102.00 59.31 88.10 96.92 10.0% 20.7% 34.7% $3,900.0
Wayfair, Inc. (a)(c) W 39.43 16.74 23.35 32.33 38.5% NA NA $2,790.0

(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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