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Hearth & Home December 2016

Energy Savers, Meredith, New Hampshire.

HEARTH: A Forgettable Year

By Bill Sendelback

Most hearth dealers are struggling to stay even with last year, without much help from sales of wood or pellet stoves.

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Steve Dumais Dave Coppinger Jeff Bartlett Dorothy Matthews
Jon Bergeron Keith Guidry Greg Nutting Guy Fasanaro
Sam Halsey Gene Henry Gary Boelter Steve Wells
Roy L’Esperance Carl Larkin Jonathan Kelly Mark Kindred

Most hearth product dealers are fairly vocal about not seeing robust sales this year. With the hearth industry slowly recovering along with the economy, most are just happy to see sales matching 2015 or slightly better. The majority of dealers aren’t forecasting large sales increases – or decreases – in 2017; they just hope that sales will slowly improve.

A few hearth dealers, however, are enjoying substantial sales increases; they’re the ones who are focusing on high-end sales and taking advantage of the comeback in new home construction to sell custom homebuilders. Another bunch of dealers with smiles on their faces are those that diversified into other product categories such as grills, patio furniture and/or other Outdoor Room products. Not only do those products bring in sales during previously down months, but some are ringing up sales increases while hearth product sales, overall, remain relatively flat.

Hearth dealers struggled through the first half of the year. That was demonstrated by total wood appliance sales being down almost nine percent going into summer despite wood fireplaces being up more than nine percent. Pellet stoves were also down, off more than eight percent, and total gas hearth appliances were down more than 16%.

Weather certainly has not helped hearth product sales this year with warm temperatures prevailing until late October. Despite that, most hearth dealers told us that sales improved, albeit minimally, as winter approached.

Weather may not be a hearth product dealer’s friend in 2017 either. La Nina, unusually cold ocean temperatures in the eastern equatorial Pacific Ocean, is expected to return by the end of 2016, affecting 2017 with warmer than normal winter temperatures in the Southeast and cooler than normal in the Northwest, according to the National Oceanic Atmospheric Administration (NOAA).

Steve Dumais
Energy Savers
Meredith, New Hampshire

Energy Savers in Meredith, New Hampshire, is seeing flat hearth sales this year after being up 33% last year, according to owner Steve Dumais. “We’d be happy with a five to seven percent increase,” he says, “but we’re in a second-home market and those sales are flat this year.” He explains that his 33% increase last year was mostly because of increases in his spa business. “If we had only hearth, we would have been up only 15%.”

Dumais’ wood stove sales consistently are 25% of his business, whether oil or propane prices are up or down. Gas sales are up because of strong local remodeling activity. And pellet product sales have been flat for the last two years, he says. “This season didn’t take off as normal,” he says. “Usually by September our installations are out six weeks, but not this year. However, a surge in the fall caused us to play catch up, but you can’t rapidly staff up on installers just for the season.”

Dumais sees 2017 as a good sales year. “We’re in a high-end market and now seeing quite a bit of high-end remodels and builder business with large, 42-in., traditional gas fireplaces.” He also is “flirting” with counter seasonal products for next year, including Outdoor Rooms and patio awnings.

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Jon Bergeron
Hearth Works Fireside Systems
Hooksett, New Hampshire

With three stores in New England, Jon Bergeron, president of Hearth Works Fireside Systems based in Hooksett, New Hampshire, says his 2016 sales are similar to 2015, while his Massachusetts store is “doing gangbusters” because natural gas is now available in that area.

“We’re up in one store,” he says, “stable in another and down in the third,” he adds. “But our hearth business overall is lackluster with little profit. We just don’t see any light ahead for hearth products. There is nothing driving our industry, like advertising and promotions. There is no industry effort to drive consumers to want hearth products. The new blood in our industry doesn’t know what industry promotions were like when manufacturers advertised to the consumer.” As an example, Bergeron says his patio awning supplier, Sunsetter, “drives” customers in his door.

Bergeron also is concerned about the effects of the EPA’s NSPS regulations on the industry. “This has caused the prices of wood-burning appliances to go up, and that is causing our wood stove sales to go down.”

Bergeron sees nothing on the 2017 horizon that will change that scenario. “We need a revolutionary new product,” he says, “and we can’t leave consumer advertising up to the retailer. Manufacturers need to do that, just like Harley-Davidson.”

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Sam Halsey
Yankee Doodle
Wilton, Connecticut

Yankee Doodle in Wilton, Connecticut, is having a “pretty good” hearth year, up almost 20% into October after a weak summer, according to owner Sam Halsey. “Gas is a very big part of our business,” he says, “and we’ve had good success with contemporary, European-style fireplaces in this fairly affluent area. Gas logs have also been huge for us; it’s our top selling category. And wood-burning products have picked up from 2015. We’ll be happy if we end the season 15% ahead overall.”

Halsey attributes some of his sales success to new people moving to the area; an unusual eight percent of Wilton’s homes are now on the market because of high property taxes. Halsey feels positive about 2017; he’s looking for another good year, the 40th anniversary year for Yankee Doodle. “Things look good, and we think it will continue next year,” he says.

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Roy L’Esperance
The Chimney Sweep Fireplace Shop
Shelburne, Vermont

It’s been a “pretty scary” 2016 for Roy L’Esperance, owner of The Chimney Sweep Fireplace Shop with three stores headquartered in Shelburne, Vermont. “We thought we would be off 15 to 20% this year, but now we’ll end up within one percent of our 2015 sales after a heavy stream of customers starting in late October. We had a lot of projects, such as in our ski areas, last year, but we didn’t see many projects this year.”

Local fire marshals are “coming down” on old zero-clearance fireplaces, so this has resulted in replacement and remodeling business. Service also has become an important revenue stream for L’Esperance. “Some gas models were put in as long as 25 years ago,” he says, “so they have reached their life expectancy and are now ripe for service or replacement.”

Strong in wood-burning, L’Esperance is seeing wood-burner sales off this year while gas product sales are up. And regarding a big downturn in pellet products, he points out that heating oil is now cheaper than pellets in his area.

L’Esperance’s concerns about 2017 revolve around hearth manufacturers and suppliers. “With many seeing flat sales, we’ll see more consolidation, and more consolidation is not our friend.”

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Dave Coppinger
Taproot Hearth & Patio
Williamsburg, Virginia

Dave Coppinger, president of Taproot Hearth & Patio, Williamsburg, Virginia, is having a “really good hearth year” and a better patio year. “We were busy all summer, but a cold bump in September helped hearth product sales.” While Taproot is now selling customers their second set of gas logs, Coppinger says, “The bloom is a little off gas logs” as he is now replacing many gas logs with direct-vent gas fireplace inserts. Customers are taking out old builder box fireplaces and upgrading, driven by the new looks available in today’s fireplaces. “I’m amazed at how many linear fireplaces we’re selling in this strong remodeling trend,” he says.

Coppinger reduced his inventory levels to one-third of his former levels. “We threw out thousands of dollars of obsolete goods,” he says. “We’re now working to be more profitable, but it’s difficult to reduce inventory because manufacturers now have so many SKUs.”

He doesn’t see much changing for 2017. “There is nothing to push the market, and we didn’t see a lot new at the trade show,” he says.

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Keith Guidry
Percy Guidry Hearth & Patio
Lafayette, Louisiana

The big floods earlier this year in Louisiana have been a mixed blessing for Percy Guidry Hearth & Patio in Lafayette. “With the drop in oil prices, it has hit our oil and gas industries pretty hard,” says Keith Guidry, manager. “Oil and gas people have been laid off, and the area has lost thousands of jobs. Our region is scared. So it’s been a tough couple of years for new construction. But the floods pulled us out because a lot of zero-clearance fireplaces were under water and had to be changed out.”

Things were so slow for Guidry that the company downsized its retail footprint and inventory levels back to the size of the 1980s. “If we survive, we’re going to thrive because we now make money with one-third less gross sales.”

Gas hearth products are very popular, and modular masonry fireplace sales are growing for Guidry. “Normally we install more than just one unit in each location,” he says. For the last two or three seasons, Guidry has sold more linear gas fireplaces. “I’m amazed at just how many we’ve sold,” he says.

Hearth products have always been 30 to 40% of Guidry’s gross sales, but this year hearth sales have jumped to 60 to 70% of the company’s total after patio furniture sales took a sales slide. “But we rely on hearth in the fourth quarter, so we’re optimistic about 2016,” he says.

But Guidry is not as optimistic about 2017. “I hope I’m wrong,” he says, “but I think we’re going to hate 2017 because of the effect of all of the job losses in our oil and gas industries. We live and die on the price of oil.”

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Gene Henry
Georgetown Fireplace & Patio
Georgetown, Texas

This year has been “pretty slow” for Gene Henry, president of Georgetown Fireplace & Patio, Georgetown, Texas, which Henry blames on the warm weather and the uncertainty of the election. “We had two record sales years,” he says, “but not this one. We’re not starving, but we now should be struggling to keep up, and we’re not. It’s not setting up to be a good year with this warm, dry winter.”

High-end products and linear gas fireplaces are doing well for Henry. “They are probably carrying us, but gas logs, too, are always huge for us. Fewer people are buying wood stoves, and we’re losing electric fireplace sales to the Internet.” Patio furniture also has slowed for Henry; again, he’s losing some sales to the Internet. “I don’t see us going back to the sales levels we had two to 10 years ago,” he says.

Echoing other hearth dealers, Henry finds that keeping good employees is “always a problem. Next year’s sales should be better with the election over, so we’ll just take a breath and reboot.”

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Carl Larkin
Westminster, Maryland

“We did well three years ago, but we’ve been on a slight downward trend since then,” says Carl Larkin, president of Fireworks, Westminster, Maryland. “This year we’re holding our own.” The majority of wage earners in Larkin’s market area work for the Federal government or a supplier to the government, with 40% working for the NSA (National Security Administration), so Larkin sees his area as “pretty recession proof.

“Although we rarely sell a wood stove, our wood-burning fireplace insert sales are up. Gas is also up, but pellet appliance sales are down.” Larkin says that 2017 is tough to forecast, but he’s lost some competition, so he thinks sales will be better. “We’re about the only full service hearth and grill store left here,” he says.

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Jeff Bartlett
Energy Savers of Minnesota
Oakdale, Minnesota

This year’s sales are about the same as they were in 2015, according to Jeff Bartlett, general manager of Energy Savers of Minnesota in Oakdale. “It was pretty warm until October, but customers are asking us to do more elaborate installations including combining hearth with big screen TVs, adding more electronics and doing more elaborate finishes.”

Bartlett is now running with a leaner staff because of his trouble finding qualified installers. “We’ve been busy with a lot of job-bids out, but with this leaner staff, our three crews are out six weeks on installs.”

While electric fireplace sales are “on the rise,” pellet appliance sales are dead. Gas hearth products now account for 70% of Energy Savers’ hearth sales with wood-burners totaling almost 30%.

Bartlett is taking a wait-and-see attitude about the 2016 season, hoping for cold weather. He says 2017 will be about the same as this year. Home building is very strong in the Oakdale area, and Bartlett says gas fireplaces in new homes are a bright spot for 2017.

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Greg Nutting
Springfield, Missouri

The year started fast for Maschino’s in Springfield, Missouri, but with temperatures in the 90s until mid-October, and election year jitters, hearth product sales approached the end of the year up less than two percent, says Greg Nutting, general manager. In fact, Nutting put his fall advertising on hold until after the election with little effect on his sales.

Gas and wood hearth product sales are stable, with strong sales in vent-free gas models. Electric fireplace sales are flat, and there is “no real interest” in pellet stoves. But with Maschino’s selling a lot of Outdoor Room products, outdoor fireplace sales are continuing to grow. Fire pits and patio furniture also are big sellers for Maschino’s.

Linear gas fireplaces have become strong sellers, sometimes resulting in sales per installation of as much as $30,000. “We try to keep modern fireplaces on display, adding two or three new ones each year,” he says. “Our hearth clients want nicer stuff; they’re the same people who want grill islands.”

Nutting is hopeful that 2017 will be better. He hopes that interest rates remain low as he continues to pick up new homebuilder clients.

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Gary Boelter
The Fire Place
Milwaukee, Wisconsin

Gary Boelter, owner of The Fire Place, Milwaukee, Wisconsin, says this year is “good, probably a couple of percentage points better than 2015 which also was a good year for us.” Gas product sales remain strong with more linear fireplaces going out the door. Boelter sells a few electric models, and pellet stove sales are “pretty much non-existent.”

He doesn’t see much change for 2017 except an increase in the sales of linear gas fireplaces offering more features for remodels and new construction, but “no new trends.”

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Jonathan Kelly
Fireplace & Bar-B-Q Center
Overland Park, Kansas

Fireplace & Bar-B-Q Center, Overland Park, Kansas, is having a “good” 2016 with a big part of its business replacing old zero-clearance fireplaces, according to Jonathan Kelly, owner. “Sales of hearth products are great,” he says, “while grill sales are frustrating, down a little because of the Big Box stores. As a result, the margins for grills are not there compared to hearth.”

Working with landscapers and deck contractors, Kelly is selling more outdoor fireplaces. “We’re getting asked more about linear outdoor models.

“We’ve evolved past just gas logs and glass doors. We decided a year ago to do more of the construction for the remodels we are involved in, working with architects, designers and good home builders.” Kelly also points out the difficulty of finding skilled labor for construction and installations.

For 2017, he believes sales will continue to grow as he works more with chimney sweeps. “Early pre-fabs now need to be replaced, and sweeps need to retool to be able to do fireplace extractions.”

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Dorothy Matthews
Inglenook Energy Center
Conifer, Colorado

In general, hearth products sales have been great for Dorothy Matthews, owner of Inglenook Energy Center, Conifer, Colorado, up almost 30% even with October temperatures still in the 80s. “It’s about time,” she says, “because from 2008 when the economy plunged, we’ve been losing at least 10% in sales each year.”

Matthews is seeing her community become economically healthier. “Wood burners have always been very strong in this upper-middle-class bedroom community at 8,200 ft. in the mountains, but everything we sell is doing better. The happy surprise is that now people are buying what they really want rather than just what they think they can afford.” Helping Matthews in her sales efforts has been a stove change-out program in her area offering as much as $1,500 to get rid of non-EPA wood-burners.

Matthews is optimistic about 2017, but she doesn’t see the year being that much better. She’s hopeful, however, that the change-out program gets funded into 2017.

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Guy Fasanaro
Buck Factory Outlet
Benicia, California

Hearth sales were “very, very spotty” early in 2016, a trend left over from 2015, at Buck Factory Outlet, Benicia, California, says Guy Fasanaro, president. “Sales started like gangbusters and then slowed down. Then in July it really picked up. Now the volume is back up where it should be.” Fasanaro expects his 2016 sales to be up perhaps 20% over 2015, as sales were up 10% going into the late fall.

Recent California earthquakes caused some chimney damage from which Fasanaro expected to sell fireplace inserts. “But we had almost as many retrofits with complete new fireplaces as just inserts,” he says.

Environmental pressures continue to take their toll on wood-burning, which is now relegated to the fringe areas of the San Francisco region. “Now we sell 30 wood stoves versus 200 gas stoves,” he says. “And there is zero interest in pellets and hardly any electric sales. People are convinced they can’t burn anything. Our upcoming Net Zero regulations are not affecting sales yet – but they will.

“Who knows about 2017?” says Fasanaro.

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Steve Wells
Hot Spot Fireplace & Patio
Beaverton, Oregon

Steve Wells, president of Hot Spot Fireplace & Patio, Beaverton, Oregon, is “not unhappy” that his 2016 sales are dead-even with 2015. “It used to be bedlam around here,” he says. “Now it’s not great and not overwhelming. I’m old enough that I’m tickled we’re not swamped. Life is too short.” Wells does expect 2016 to be up a couple of percentage points over 2015.

Tax credits and rebates on clean-burning wood stoves are helping Wells. Oregon offers a $1,000 tax credit on “best available” wood-burning technology and pellet stoves. “But we’re getting our butts kicked by gas hearth products being sold by Northwest Natural Gas utility, where customers can get tax credits of as much as $900 plus rebates for gas burners with at least 70% overall efficiency. When all of these tax credits are gone, our wood stove sales may be cut in half.”

Remodeling is “going crazy” in Wells’ area, and he is making inroads into the commercial and hospitality arenas with unique, innovative, new linear gas fireplaces now on the market. “We have four bids out right now ranging from $20,000 to $40,000 each,” he says.

For 2017, Wells sees “a few more sales” picked up from the expected closing of a nearby competitor.

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Mark Kindred
Missoula, Montana

It’s been an up and down hearth products sales year for Axemen in Missoula, Montana, after a good first quarter, a terrible second quarter and a sales recovery in the third quarter, according to Mark Kindred, Hearth Department manager, who just hopes 2016 will at least match 2015 sales. Among wood, gas and pellet appliances, his sales mix has stayed fairly steady throughout the year.

“For us, wood has been strong for decades,” says Kindred, “but beginning in the ’90s, gas began to take the steam out of wood sales. And large zero-clearance fireplace sales began to pick up last year.” Kindred is finally beginning to see modern “stuff” sell. “Five years ago, no.” Homebuilding starts are beginning to recover in the Missoula area, and consumers are starting to purchase again.

His thoughts on 2017? “Heck, we’re just trying to survive 2016.”

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Bottom Line: This year has not been great for sales of hearth products, and most hearth retailers think 2017 won’t be much better.

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