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Hearth & Home November 2016

2016 September Business Climate


September Sales

In early October Hearth & Home faxed a survey to specialty retailers of hearth, barbecue and patio products, asking them to compare September 2016 sales to September 2015. The accompanying charts and selected comments are from the 203 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


RETAILER SALES – U.S. AND CANADA
September 2016 vs. September 2015

It's September, and 38 percent of Hearth retailers are Up over last year. That's the good news. The bad news is that 42 percent are down.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
September 2015 Through September 2016

In September, only Spa sales were Up over last year, and by a strong 12 percent. Both Patio and Barbecue sales were down two percent, and Hearth stayed even with September 2015 sales.


Retailer Comments

Northeast

Connecticut: (Hearth) “Worst year ever in business. Don’t know what to expect this season.”

Maine: (Hearth, Patio, BBQ) “Retail sales lagged in September. Service demand is expectedly high with customers preparing for the heating season. Product demand is steady but not breaking any records.”

Maine: (Hearth) “How long can small businesses, small family businesses or specialty shops survive with all the increases in pay advocated by the president, yet facing a decrease in sales? Looks like only the Big Boxes will survive because they don’t service what they sell and they sell multiples of products.”

Maryland: (Hearth, Patio, BBQ, Spas) “Great hot tub and patio year!”

New Jersey: (Hearth, Patio, BBQ) “Down slightly in September although we see the violet surge on the horizon...”

New York: (BBQ, Spas) “In store promotions and steady traffic has made for a great month.”

New York: (Hearth, Patio, BBQ, Spas) “Hot tub sales are up and we are having a hard time keeping inventory in stock.”

New York: (Hearth) “We are hoping for a cold winter in the Northeast. Perhaps home owners have heard of a colder winter and are wanting to prepare ahead of time. Whatever the reason we are happy.”

New York: (Hearth, Patio, Spas) “September demonstrated an increased interest in Swim Spas. Swim Spas are a unique category, in that the sale process is often much longer than ordinary spas. Hearth products are very slow. It’s too warm here in the northeast!”

Pennsylvania: (Hearth, Patio, BBQ) “Customers are starting to think about cooler temperatures even if the temperatures have been in the upper 70’s – more spring than fall. Floor traffic is good but the sales are slow. Service is very strong and getting stronger. Redoing showroom – being cautiously optimistic and praying hard for a long, cold winter!!”

Pennsylvania: (Hearth) “Very slow start to the season.”


Weather Report

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

In September, two-thirds of the country experienced Above Normal or Much Above Normal temperatures, with Ohio setting a Record.

While only five states posted Near Normal temperatures, 13 states had a Record Warmest July – September. All the rest were at either Above Normal or Much Above Normal temperatures.

Maine and Vermont were the only states with Much Below Normal precipitation, while 13 other states were Below Normal.

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South

Arkansas: (Hearth) “Finally getting some wood stove business...feels great. People are holding off on buying this year, but floor traffic is picking up.”

Louisiana: (Hearth) “With the unfortunate flooding in Louisiana, many homeowners that never were flooded before got flooded. Their fireplaces had to be removed and replaced, which has brought in more installs, etc. October will probably be the same along with other people building.”

Oklahoma: (Hearth) “Still waiting on winter!!!”

Virginia: (Hearth, BBQ) “Slow month.”

Tennessee: (Hearth, BBQ) “September was AWFULLY slow compared to the last two years (2014 and 2015 were really good). Thankfully, this damn election will be over soon and hopefully, that will restore some confidence in the buying public. Plus, some good cold weather would help.”

Texas: (Hearth, Patio, BBQ) “It has been a long summer. We had a wet spring and early summer. July and the first half of August were better. August and September the heat slowed things down. Fall is starting out a little stronger, let’s hope it continues and we have a strong holiday season and end the year better.”

Texas: (Hearth) “We suffered an electrical fire that extensively damaged our warehouse and showroom in the spring and did not re-open for regular business until late September. Don’t recommend your business catching on fire, not a good experience. Open now and have a good outlook going forward.”

Texas: (Hearth, Patio, BBQ) “Fall sales getting at least a later start. Ready for disgusting election to be over. Who are you voting against?”

Midwest

Iowa: “Sales are up from last year. The numbers given are from a cash basis. Receivables are up!”

Indiana: (Patio, BBQ, Spas) “Store sales have slowed way down from what they had been in early summer. The swimming pool side of the business is still rolling along strong. I have half of my spring and summer schedule already booked for next season. I haven’t seen this type of outlook since 2008. I have asked and there isn’t one deciding factor that has caused this to happen that I can find. Everyone is concerned about the election going either way.”

Michigan: (Spas) “Nice gross dollars for the month. Did it all the hard way, lots and lots of small tickets.

“Nice bounce on hot tub sales. Margins a little better also. Still battling with internet, we have studied summer sales and clearly web sales have impacted our year-to-date margins. You hate to lose a customer because of price, but we have sent a lot packing out the door. Cannot even think about matching some of the offers we have seen. Obviously our biggest problem is web sales.”

Michigan: (Patio, BBQ) “Consumers are still adding to their outdoor spaces, despite our short season here in Northern Michigan. Oddly enough, we have had many special orders this month, which is considered late in our season. Hoping the trend is strong through the end of the year and into next spring.”

Ohio: (Hearth, BBQ) “The Toledo market is dead due to warm weather when it comes to hearth products. Grill sales were down but parts and accessories were up. Also not happy with Napoleon grills for opening another store two miles away from my store and that also contributed to a sales decline. I will be looking to replace Napoleon grills at my shop with another company a bit more dealer loyal.”

Wisconsin: (Hearth, BBQ) “We are spending more though, to get the same numbers.”

Wisconsin: (Hearth, BBQ) “We are still reeling from this summer’s natural disasters. It has been difficult/impossible to get to some of the areas that we are scheduled for installation. We are also dealing with the setbacks of our own damages - mostly personally over business. This fall season is starting out very good. It will be a struggle to complete the summer’s work along with the current installs.”


Consumer Confidence

The Consumer Confidence Index, which had increased in August, improved further in September. The Index now stands at 104.1 (1985=100), up from 101.8 in August.

“Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession,” said Lynn Franco, director of Economic Indicators at The Conference Board. “Consumers' assessment of present-day conditions improved, primarily the result of a more positive view of the labor market. Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.”

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.

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West

California: (Hearth, BBQ) “September sales slipped a little. After great months this summer, the September sales dropped about 17 percent. Barbeque sales were also down about 20 percent. We still have warm days, but the cool nights are helping foot traffic.”

California: (Hearth) “Busy, Busy, Busy ‘tis the Season.”

California: (Hearth, BBQ) “Sales are keeping in line with last year’s figures. We expected better but were happy to be moving into October.”

Colorado: (Hearth, Patio, BBQ) “In hearth we are ‘killing it’ this year. American Lung Association deals are bringing in sales, but moreover it is just a much better selling climate. Higher-end sales and not much whining about money. I have to pinch myself to make sure I’m not dreaming.”

Washington: (Hearth, Patio, BBQ, Spas) “Biggest month ever!”

Washington: (Hearth) “We had a mild September weather wise. Therefore our sales were a little lower.”

Canada

British Columbia: (Hearth) “Overall not bad but sales are down a bit and foot traffic is down by a lot.”

British Columbia: (Hearth, BBQ) “Our wood hearth products are up by 50 percent over September 2015. Wood has seen a steady increase all year starting in February 2016 (traditionally a slow month).”

Ontario: (BBQ) “September was down, but it is always a slow month following the Labor Day rush. Overall 2016 is up about 17 percent and we were able to hold on to our profit margin.”

Ontario: (Hearth, Patio, BBQ) “Slower than expected…Wide Spread…General Economic Uncertainty.”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 29-SEP-16 27-SEP-16 4 WEEK 26 WEEK 52 WEEK ($000,000)
HNI Corporation (a) HNI 56.96 29.84 56.18 39.80 -29.2% 0.2% -8.9% $1,760.0
Pool Corporation (b) POOL 102.86 71.10 100.42 94.52 -5.9% 6.9% 27.9% $4,000.0
Rentech (b)(e) RTK 6.73 1.55 3.67 2.92 -20.4% -3.9% -46.6%     $23.2
Restoration Hardware Holdings (a) RH 106.49 24.75 33.88 34.58 2.1% -21.0% -63.0% $1,370.0
Wayfair, Inc. (a) W 50.00 28.85 38.74 39.37 1.6% -10.4% 8.8% $3,270.0

(a) = New York Stock Exchange
(b) = NASDAQ
(e) = Rentech is the parent company of New England Wood Pellet, which is the parent company of Allegheny Pellet.

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