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Hearth & Home March 2017

2017 January Business Climate


November Sales

In early February, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products asking them to compare January 2017 sales to January 2016. The accompanying charts and selected comments are from the 231 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


RETAILER SALES – U.S. AND CANADA
January 2017 vs. January 2016

In January, 43% of Hearth dealers were up, and 38% of Spa dealers were up. Only 19% of Patio dealers were up, while Barbecue retailers were flat.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
January 2016 Through January 2017

In January, Spas led the way with an 8% gain, while Hearth, Patio and Barbecue sales posted 2%, 1% and 0% gains, respectively.


Retailer Comments

Northeast

Connecticut: (Hearth) “Pellet stove sales are still down. Traffic is very slow. Warmer weather and low oil prices are still having an impact.”

Maine: (Hearth, Patio, BBQ) “One of the warmest January’s on record didn’t help hearth sales. Things are pointing toward a good patio and barbecue year. Hope spring gets here soon!”

Maine: (Hearth, Patio, BBQ) “January 2017 is down over last year as consumers rebound from the holidays. Gas remains the leader, with some interest in the new and improved electric flame picture.”

Maine: (Hearth) “Continuing a down trend, low sales.”

Maryland: (Hearth, Patio, BBQ, Spas) “January was a strong month, the best in years.”

New Hampshire: (Hearth) “Great to have the elections over; business has returned to a normal level.”

New Jersey: (Hearth, BBQ) “Need cold weather to return!”

Pennsylvania: (Hearth, Patio, BBQ) “Store traffic has increased with new home construction and remodeling looking for wood or gas fireplaces. Linear gas fireplaces have finally made it to our Western Pennsylvania area. Sales are looking up.”


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 January, the Northeast, Southeast and portions of the Midwest experienced Above Normal or Much Above Normal temperatures, while 11 states in the Midwest and West were at Near Normal or Below Normal.

For the three month period of November, December and January, only six states were at Near Normal or Below Normal temperatures. The rest of the states were at Above Normal or Much Above Normal. Texas stands out as the lone state to post a Record Warmest ranking.

In January, 10 states experienced Much Above Normal precipitation, while the rest of the states were at Above Normal, Near Normal or Below Normal rankings.

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South

Georgia: (Hearth, BBQ) “January 2017 was not a good month due to warmer temps in the Southeast.”

Mississippi: (Hearth, Patio, BBQ) “Sales were up.”

Oklahoma: (Hearth) “Innovative Hearth Products (IHP) needs to get their heads out of their butts.”

Tennessee: (Hearth, Patio, BBQ) “Direct-vent gas fireplaces led to our largest single month in years.”

Texas: (Hearth, Patio, BBQ) “The weather in January was not helpful; cold and wet. But like most Januarys, business stayed slow. February will be the home show and warmer weather; customers will start looking toward summer and getting back outdoors. Looks like we will have a strong spring with grills, furniture and outdoor kitchens and living areas.”

Virginia: (Hearth, Patio, BBQ) “Blah, blah, blaaah.”

Midwest

Indiana: (Hearth, Patio) “Traffic is down. More price comparison to Internet.”

Michigan: (Spas) “January is usually not a big month for us. Showroom traffic was off 60% across the board – big tickets as well as small tickets. Closing ratio was again extremely high, but fewer folks in the store and fewer sales. Service was extremely strong, even with a price increase we started January 1 – a whopping 20% over 2016. Not having any backlash from consumers actually has been a real positive, adding extra revenue at little or no cost. Waiting for spring – we’re done with winter.”

Michigan: (Hearth, Spas) “Above average temps in the fall and mild winter killed the stove season. Nice bump in spa traffic over the holidays. Overall, gas appliances are ahead of everything in stoves and fireplaces.”

Ohio: (Hearth, BBQ) “Where is the winter?”

Ohio: (Hearth, BBQ) “We were very pleased with the direct-vent gas fireplace and insert sales that came in after the holidays. One of our stores broke a January sales record! Still have a lot of ground to make up after a down 2016, but things are looking good so far.”

Wisconsin: (Hearth, BBQ) “Wow, busy month! We are grateful! Mixture of wood, gas and pellet product.”


Consumer Confidence

The Consumer Confidence Index, which had increased in December, retreated in January. The Index now stands at 111.8 (1985=100), down from 113.3 in December.

“Consumer confidence improved in November after a moderate decline in October, and is once again at pre-recession levels,” said Lynn Franco, director of Economic Indicators at The Conference Board. (The Index stood at 111.9 in July 2007.) “A more favorable assessment of current conditions coupled with a more optimistic short-term outlook helped boost confidence.

“Consumer confidence decreased in January, after reaching a 15-year high in December (Aug. 2001, 114.0),” said Lynn Franco, director of Economic Indicators at The Conference Board. “The decline in confidence was driven solely by a less optimistic outlook for business conditions, jobs, and especially consumers’ income prospects. Consumers’ assessment of current conditions, on the other hand, improved in January. Despite the retreat in confidence, consumers remain confident that the economy will continue to expand in the coming months.”

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, Patio, BBQ, Spas) “The weather is causing our jobs to be cancelled and people are not coming into the store. Looking forward to a better February if the weather cooperates.”

California: (Hearth, Spas) “Great January, lots of traffic and lots of solid quotes going forward!”

Colorado: (Hearth, Patio, BBQ) “This has been a slow start for the year. February is already looking up!”

Colorado: (Hearth) “Snowfall has broken records back to the late 1970s here in the southern Rockies.”

Idaho: (Hearth) “Typical January – soft sales, slow pay.”

Oregon: (Hearth, Patio, BBQ) “January was tough with the weather and we lost almost a week of work. All of that said, we still exceeded last year’s sales and are poised with a huge backlog for February.”

Canada

British Columbia: (Hearth) “Typical January.”

Ontario: (Hearth, Patio, BBQ) “This is usually a slow month, but we were booking in January from the beginning of December, and it hasn’t slowed down yet.”

Ontario: (Hearth, BBQ) “Low foot traffic but serious buyers.”

Ontario: (Patio, BBQ) “Our early-buy has helped push sales in January when we normally don’t sell any patio.”

Ontario: (Hearth, Patio, BBQ) “January was not too bad, considering the terrible snowy weather.”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 30-Dec-16 27-Jan-17 4 WEEK 26 WEEK 52 WEEK ($000,000)
HNI Corporation (a) HNI 56.96 30.58 55.92 51.50 -7.9% -1.2% 51.4% $2,290.0
Pool Corporation (b) POOL 107.98 75.00 104.34 105.03 0.7% 2.7% 24.3% $4,340.0
Rentech (b)(e) RTK 4.15 1.42 2.48 2.72 9.7% 6.3% 39.5%     $63.1
Restoration Hardware Holdings (a) RH 63.55 24.75 29.95 26.09 -12.9% -15.3% -57.7% $1,060.0
Wayfair, Inc. (a) W 49.34 27.60 35.05 42.31 20.7% -2.7% -6.4% $3,620.0

(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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