Hearth & Home February 2016

2015 December Business Climate


December Retail Sales

In early January, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare December 2015 sales to December 2014. The accompanying charts and selected comments are from the 208 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


The bad news is that 53 percent of Hearth retailers were Down in December. The good news is that 90 percent of patio retailers, 79 percent of Barbecue retailers and 70 percent of Spa dealers were Up or had No Change from December 2014.


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

This year, due to warmer weather, the month of December was unusually strong for Patio furnishings, Barbecue products and Spas.


Retailer Comments

Northeast

Connecticut: (Hearth, BBQ, Spas) “We’ll bounce back; time to readjust and get more aggressive.”

Connecticut: (Hearth) “Pretty much worst year in business. Between warm weather, low oil prices and high pellet and wood prices, we are in a slump. Don’t know what to expect in 2016. Maybe the tax credit will help. Let’s hope so.”

Connecticut: (Hearth, Patio, BBQ) “We feel the weather was a huge factor, being much warmer than usual.”

Delaware: (Patio, BBQ) “We are in Christmas. Had great traffic. Great response.”

Maine: (Hearth, Patio, BBQ) “December can sometimes be inflated by holiday sales, but this year seems to show a solid gain over last year. We credit the improved economy, but will it have legs in 2016?”

Maryland: (Hearth) “Worst in 40 years.”

New Hampshire: (Hearth, Patio) “Sales are up 20 percent for the year. Service calls are driving new sales.”

New Jersey: (Hearth, Patio, BBQ) “Very busy. Great year-end finish! Hope it continues in 2016.”

New York: (Hearth, BBQ, Spa) “Walk-in traffic is down during the holiday season. Sales were strong, however.”

New York: (Hearth, Patio, BBQ, Spas) “Very steady, but slow. Winter has just arrived in our area about a week ago. With no winter and very low energy costs, sales have slowed.”

New York: (Hearth, BBQ) “Disappointing finish to a disappointing year.”

New York: (Hearth) “I hate to blame anyone’s mother, but Mother Nature has done us in. It has been unusually warm in the Northeast and sales are down. Way down. It’s not just us, but many businesses that profit or rely on the weather for their profit have had a bad season thus far. The temperatures may change and we may be able to recoup some of our losses yet.”

Pennsylvania: (Hearth) “Pellet stoves and fuel are dead. Dandelions blooming in December offered the most excitement. Gas sales are our savior.”

Pennsylvania: (Hearth, Patio, BBQ, Spas) “Low fuel prices and warm weather turned this into a summer-like traffic flow. We sold as much furniture as hearth in December in Pennsylvania.”

Pennsylvania: (Hearth) “Fiscal year to date July 1 to December 31, 2015, was up three percent, but profit was up eight percent.”

Pennsylvania: (Hearth, Patio, BBQ) “One of the warmest December’s on record; December of 2015 was also one of the wettest December’s on record. So trying to sell hearth appliances was like trying to sell a refrigerator to an Eskimo. We did sell a few. It was service that kept everything running.”


Weather Report

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

Call Guinness! Twenty-nine states – virtually the entire eastern portion of the country – posted Record Warmest temperatures in the month of December.

For the months of October, November and December, only Nevada was at Near Normal temperatures; all other states were at Above Normal, Much Above Normal, or Record Warmest levels.

For the entire year 2015, every state registered temperatures higher than normal, with Florida, Oregon, Washington and Montana experiencing their warmest year since recording began in 1895.

Only seven states experienced Near Normal precipitation; all the rest were at Above Normal or Much Above Normal, with Iowa and Wisconsin at Record Wettest levels.

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South

Mississippi: (Hearth, Patio, BBQ) “Flat, mainly due to warm weather, and that led to a drop in log sales!”

Mississippi: (Hearth) “Sales down due to weather.” North Carolina: (Hearth) “Record warm temps in North Carolina. Profitable service is up 86 percent.”

North Carolina: (Patio) “Record warmth of December didn’t excite the climate change worries, but does not hurt patio furniture sales.”

Oklahoma: (Hearth) “Cold weather and snow brought the foot traffic in to buy pellets! HOORAY!”

Tennessee: (Hearth, BBQ) “December was a continuation of the warm, rainy, rotten November we had. Terrible for anything related to fireplaces, stoves (wood and gas), and all related accessories. Compared to Nov./Dec. 2014, it was a disaster. If we don’t have some very cold, nasty weather in Jan./Feb., we will carry over a helluva lot of inventory.”

Texas: (Hearth, BBQ) “Surprisingly good, waiting for the ice storms. C’mon El Nino.”

Texas: (Hearth, Patio, BBQ) “December started slow, but picked up through the end of the holidays. With cooler temperatures, hearth products were much better.”

Virginia: (Hearth, BBQ) “Too warm this December. Over a week and a half of no customers for service or new sales. Terrible December, the worst on record for me!”

Virginia: (Hearth, BBQ) “Slowing down a little. But hoping the cold weather predicted will help.”

Midwest

Indiana: (Hearth, BBQ) “Looks like we saw no growth over last year’s sales.”

Indiana: (Hearth) “Very warm December. Sales were down 22 percent from last year, which was extremely busy, but just slightly down from a normal year.”

Michigan: (Hearth, Spas) “Winter came on Jan. 10, 2016; hopefully we will be able to salvage an already terrible season. Gas products are strong, pellet and wood are off by a long shot!”

Michigan: (Spas) “Ended the year on a positive note and made a few bucks. Not the year I expected. Gave every loyal employee a nice holiday bonus. My 2016 New Year’s resolution: If a customer likes you, you got a shot at serving them, so smile. Knowledge is power. We already are sharp and we’re going to get sharper. When we extend a handshake we’re thanking our customer for the sale, not handing them a business card, and we are worth more than any cheap price on the Internet. We are brick and mortar. We are here for you and we will exceed your expectations. Sounds corny, but it’s a fact.”

Ohio: (Hearth) “Weather conditions unusually warm.”

Ohio: (Hearth, Patio) “The warmer weather finally caught up to us in December. Around Thanksgiving the sales funnel really started to dry up. Still it was a top three overall sales year since we opened in 2004, but a little disappointing since we were on pace all year long to break our record.”

Wisconsin: (Hearth, BBQ) “It’s too warm this winter to sell pellet stoves or even pellets.”

Wisconsin: (Hearth, BBQ) “December sales were way up! However, the year’s total sales were down. We are still looking for an additional good employee. The dollar amount down is probably close to the amount that a good employee would bring in.”

Wisconsin: (Hearth, Patio, BBQ, Spas) “Sales slowed down after a busy November. Booked into late January. Quiet around Christmas and New Year’s.”


Consumer Confidence

The Conference Board Consumer Confidence Index, which had decreased moderately in November, improved in December. The Index now stands at 96.5 (1985=100), up from 92.6 in November.

“As 2015 draws to a close, consumers’ assessment of the current state of the economy remains positive,” said Lynn Franco, director of Economic Indicators at The Conference Board, “particularly their assessment of the job market. Looking ahead to 2016, consumers are expecting little change in both business conditions and the labor market. Expectations regarding their financial outlook are mixed, but the optimists continue to outweigh the pessimists.”

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

Arizona: (Hearth) “Late winter this year.”

California: (Hearth, Patio, BBQ, Spas) “The economy is starting to look up in our area. People are finally shopping. Stove and grill sales were up! Hoping for another great year in 2016.”

California: (Hearth) “Lots and lots of foot traffic! A great December! Looking forward to a great 2016!”

Washington: (Hearth, BBQ) “Stoves and fireplaces remained the same in numbers. Parts, hearth accessories, chimney systems are up 20 to 25 percent. Dollar value is up by $20,000.”

Washington: (Hearth) “Nice increase. Very busy!”

Canada

British Columbia: (Hearth, Patio, BBQ, Spas) “December started slowly and then became a fantastic month! Despite a large percentage drop in barbeque sales, we grew tremendously in every other category. Hot tubs were the star of the show with a huge increase over already decent sales in 2014. Looking forward to 2016 with much anticipation.”

British Columbia: (Patio, BBQ) “Our best December sales ever! No logical explanation. Just happy about the very good increase in sales.”

Ontario: (Hearth, BBQ) “Very few Christmas people. Very low close rate.”

Ontario: (Hearth, Patio, BBQ) “Mild December slowed floor traffic.”

Quebec: (Hearth) “Very slow.”

Saskatchewan: (Hearth, BBQ) “December kind of held its own. People are a lot tighter with their money, so if you are not giving them a deal they are not buying. I expect 2016 to be even tighter than 2015.”


Stock Watch

COMPANY – EXCHANGESYMBOL52 WEEKWeek Ending% CHANGEMARKET CAPITALIZATION
    High Low 04-Dec-15 31-Dec-15 4 Week 26 Week 52 Week ($000,000)
HNI Corporation (a) HNI 57.74 34.62 42.38 36.06 -14.9% -28.4% -28.6% $1,590.0
Pool Corporation (b) POOL 84.43 61.67 84.16 80.78 -4.0% 15.6% 28.1% $3,440.0
Rentech (b)(e) RTK 14.40 2.44 2.70 3.52 30.4% 241.7% NA $81.0
Restoration Hardware Holdings (a) RH 106.49 76.10 92.38 79.45 -14.0% -18.5% -16.5% $3,220.0
Wayfair, Inc. (a)(c) W 56.84 18.12 42.48 47.62 12.1% 26.3% 129.2% $4,010.0

(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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