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Hearth & Home October 2015

2015 August Business Climate


August Retail Sales

In early September, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare August 2015 sales to August 2014. The accompanying charts and selected comments are from the 220 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


Spas posted the highest percentage of retailers who were Up in August, followed by hearth (41%), patio (35%) and barbecue (24%).


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

The average retailer of spas was Up 20 percent in August, while the average retailer of hearth products was Up 4%, and patio products (4%) and barbecue (2%).


Retailer Comments

Northeast

Connecticut: (Hearth) “This just isn’t 2014, however, August sales matched August sales for 2013 so we are having a normal year, but store traffic is picking up and it appears the 2015-2016 season should be good.”

Delaware: (Hearth) “Sales are down but floor traffic is starting to pick up somewhat.”

Maine: (Hearth, Patio, BBQ) “Demand for wood and gas heating products is strong despite drooping oil prices. Last year’s severe winter has customers planning for another one!”

Maine: (Hearth) “It is currently cheaper to burn oil than pellets at today’s prices. Heat pump sales seem to be taking the place of pellet stove sales (based on a conversation with a local business). Don’t have high hopes about the season!”

Maryland: (Hearth) “August came out of the gate strong. Looking forward to a great season.”

Massachusetts: (Hearth, BBQ) “Thank God for a tax-free weekend and gas products (new construction). Saved our butts.”

Massachusetts: (Hearth) “Fireplace sales have been steady all summer long. Things are trending for a busy summer.”

Massachusetts: (Hearth, Patio, BBQ) “Sales tax holiday was up 35 percent!”

New Hampshire: (Hearth, Patio) “We can’t really account for last year’s steep drop in sales for the month of August, but this year is our best August in our 16 years.”

New Jersey: (Hearth, Patio, BBQ) “Too hot for folks to even think about fireplaces. We remain confident.”

New York: (Hearth, Patio, BBQ) “Wood stoves up 22 percent. Gas and pellet down slightly.”

New York: (Spas) “Nice surprise for August, which is typically flat in hot tub sales; we’re up double digits.”

Pennsylvania: (Hearth, Patio, BBQ) “Gas is king and sales were up for log sets, fireplaces and inserts, but it got hot again and the urgency to buy went right out the window. Service is up and floor traffic is picking up again.”

Pennsylvania: (Hearth) “Oil prices are taking their toll on sales. Pellets and pellet stoves are down 50 percent, but gas is the player now. Very serious concerns.”

Vermont: (Hearth, Patio, BBQ, Spas) “Showroom just opened up. With cold weather coming, I believe hearth products will pick up.”

South

Arkansas: (Hearth) “Finally, a good retail month for wood products, mainly ZC fireplaces in new home construction. Great month. Exciting start to fall and winter.”

Oklahoma: (Hearth) “Super hot weather but people are coming in to get ahead of September.”

Tennessee: (Hearth, BBQ) “A very good August, hope it keeps up!”

Texas: (Hearth, BBQ) “Decent month for August, but flat year over year.”

Virginia: (Hearth, BBQ) “Looking forward to a busy fall!”


Weather Report

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

July was a cool month in most of the country, with only Florida, South Carolina, Louisiana, Mississippi and Washington reporting Much Above Average temperatures.

Looking at the three-month period of May, June and July, we see a much warmer situation. Not one state experienced Below Normal temperatures; only 15 states reported Near Normal temperatures, and the rest of the country experienced Above Normal, Much Above Normal, and Record Warmest (Oregon and Washington).

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Midwest

Illinois: (Hearth, Patio, BBQ) “Grills are way up since weather started getting better at the end of July. Overall, grills and patio are down for the year.”

Indiana: (Hearth, BBQ) “Direct-vent fireplaces and inserts are off to a great start this pre-season.”

Michigan: (Spas) “2014 had four back-to-back promotions on hot tubs that were incredibly successful. This year we ran an identical program - advertising, pricing and promotion – and no one showed up at the party. We did exactly half the business for the month.”

Michigan: (Patio, BBQ) “We had a severe storm in the area early August. An influx of insurance claims resulted in new furniture purchases.”

Missouri: (Hearth, Patio, BBQ, Spas) “Sales are still holding strong, even through the rain and heat.”

Ohio: (Hearth, BBQ) “Not too bad for August; we’ll take it!”

Ohio: (Hearth, BBQ) “The last few weeks of August were strong for hearth sales. The early birds are buying direct-vent gas inserts and gas logs that can heat. We are still ahead of our record sales mark from last year.”

Wisconsin: (Hearth, Patio, BBQ, Spas) “Fire pits and new construction sales are up. Some days are very quiet and then the next day we can’t keep up. Lots of signed proposals. September is full and October is about 50 percent full.”


Consumer Confidence

The Conference Board Consumer Confidence Index, which had declined in July, rebounded in August. The Index now stands at 101.5 (1985=100), up from 91.0 in July.

“Consumer confidence rebounded in August,” said Lynn Franco, director of Economic Indicators at The Conference Board. “Consumers' assessment of current conditions was considerably more upbeat, primarily due to a more favorable appraisal of the labor market.”

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) “August sales were disappointing. We were ready; the store looked great, but it just didn’t happen. We had to go back 16 years to see the same numbers.”

California: (Hearth, Patio, BBQ, Spas) “We have had an awesome summer season. Lots of traffic. Mood looks good going forward!”

Hawaii: (Patio) “Worst August in 15 years!”

Nevada: (Hearth, BBQ) “S L O W.”

Oregon: (Hearth) “Hot summer. State’s on fire. Very weak sales.”

Washington: (Hearth, Patio, BBQ, Spas) “Record sales.”

Washington: (Hearth, Patio, BBQ) “I think the hot weather and all the fires in the area really slowed things down.”

Canada

British Columbia: (Hearth, Patio, BBQ, Spas) “Our August was fantastic! Sales are up 55 percent. It’s our biggest month ever.”

British Columbia: (Hearth) “Last year we had lots of inquiries about catalytic; this year there has been virtually none. Back to the norm of basic, no frills, steel stoves.”

British Columbia: (Patio, BBQ) “We had a decline in August sales from previous August sales. But the sales of January to August 2015 have surpassed January to December 2014 sales. We are very happy with the overall sales.”

British Columbia: (Hearth, BBQ) “We have had an extremely hot summer. This is reflected with the more than doubling of barbecue sales. This has been a trend over the last five or six years, with stronger sales all summer into the fall.”

New Brunswick: (Hearth, Patio, BBQ) “Seemed to be lots of activity in regards to pellet stove sales; we’re looking for a good September!”

Ontario: (Patio) “August was just steady, nothing fantastic.”

Ontario: (Hearth, Patio, BBQ) “We were pleasantly surprised by August. Not sure why sales were up, maybe due to good weather and a slower than expected June/July.”

Ontario: (Hearth, Patio, BBQ) “All our young guys are coming back from the oil patch with no jobs and deep debt. Our oil heaters are holding out for lower costs with the cheap barrel price.”

Ontario: (Hearth, BBQ) “Lots of quoting. Expect to see those convert to sales in September.”

Ontario: (Hearth, BBQ) “Very hot August weather has impacted sales.”

Ontario: (Hearth, Patio, BBQ) “This recession scare has people walking around with their hands in their pockets in regards to spending money for products that they can do without.”

Ontario: (Patio, BBQ) “Patio sales have stalled earlier than expected this year. We will be looking at adding some lower-priced fire pits to the lineup for 2016 as this category seems to be generating renewed interest.”


Stock Watch

COMPANY – EXCHANGESYMBOL52 WEEKWeek Ending% CHANGEMARKET CAPITALIZATION
    High Low 31-Jul-15 28-Aug-15 4 Week 26 Week 52 Week ($000,000)
HNI Corporation (a) HNI 57.74 34.75 49.59 46.03 -7.2% -9.7% 21.4% $1,980.0
Pool Corporation (b) POOL 72.85 51.61 70.42 68.45 -2.8% -1.0% 21.0% $2,970.0
Rentech (b)(e) RTK 5.39 22.00 0.76 7.03 823.4% 413.1% NA $168.2
Restoration Hardware Holdings (a) RH 105.98 69.80 101.46 91.93 -9.4% 4.3% 9.6% $3,670.0
Wayfair, Inc. (a)(c) W 56.84 16.74 37.31 42.22 13.2% 80.8% NA $2,950.0

(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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