Hearth & Home July 2017

2017 May Business Climate


May Sales

In early June, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare May 2017 sales to May 2016. The accompanying charts and selected comments are from the 196 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


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

Remember this: May is one of the few months when all four industries are doing relatively well. Combining retailers Up in sales with those that remained the Same shows that Spas were at 93%, Patio and Barbecue were both at 90%, and Hearth was at 77%.


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

In May, Barbecue sales in the specialty retail channel were up 10%, Hearth & Patio were both up 6%, and Spas were at 5%.


Retailer Comments

Northeast

Connecticut: (Hearth) “Not surprised. Even manufacturers’ promotions not helping. Looks like another slow year.”

Delaware: (Hearth, BBQ) “We are not a big barbecue product dealer, so this number will be skewed. However, stove sales continue to be down.”

Maine: (Hearth, Patio, BBQ) “A colder than average spring has sparked a late season rally for wood stoves! Pellet is still non-existent and gas remains steady.”

Massachusetts: (Hearth) “May was a strong month for us and we are trending in the right direction. Building in our area is very steady and we are getting a good deal of people coming into the showroom.”

New Jersey: (Hearth, Patio, BBQ) “Small increase is better than a small decrease. Solid sales numbers for May.”

New York: (Hearth, BBQ) “We are slow and not sure how to get customers to come visit. Extra hours and Saturdays just not doing it.”

New York: (Hearth) “Still up 24% year-to-date because of the New York State Energy Research and Development (NYSERDA). Down 30% for May 2017 because we started NYSERDA April 2016.”

Pennsylvania: (Hearth, Patio, BBQ) “Floor traffic has been steady to a degree but nothing to write home about. Service is still very strong for this time of year. Consumers buying a lot of parts for cheap imported fire tables – somebody is really going to get hurt out there.”


Weather Report

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

May was a rather temperate month, with only nine states registering Above Average temperatures – six in the West, and three in the Southeast. The rest of the nation experienced Near Average temperatures, with the exception of Kansas, Oklahoma, Louisiana, and Mississippi.

While five New England states, plus New York and Washington, enjoyed Near Average temperatures in May, the rest of the country was at Above Average or Much Above Average.

States along the Atlantic Coast, including Louisiana, were hit with much rain throughout the month of May.

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South

Arkansas: (Hearth) “Extremely bad retail month! Set a 20-year, record-low retail sales month which is very depressing. It rained on 50% of the sales days and totally stopped floor traffic and sales. No point in turning on the lights. June had better be better.”

Florida: (Patio, Spas) “Surprisingly slow all around, across multiple categories and SKUs. Maybe weather-related nationwide?”

Oklahoma: (Hearth) “Percentage could have been higher, however weather slowed construction projects pushing some sales into June – July.”

North Carolina: (Hearth) “Trump has people in our area in a nervous breakdown – it’s like the short periods around discussions of shutting down the government/not making debt payments that lead to their shutting down their purchases, except this is prolonged. The goal is to not get Trumped.”

Virginia: (Hearth, Patio, BBQ) “Very busy month. What a shock!”

Texas: (Hearth, BBQ) “This really happened: (Honey, do you want to buy some fire starters while we’re here? No, I’ll just get them on Amazon. But they are a dollar less here. No, I’ll get them on Amazon.) Welcome to retail. UNBELIEVABLE!”

Texas: (Hearth, Patio, BBQ) “Pellet grills are selling the best.”

Midwest

Michigan: (Spas) “Incredible month – would have been a little nicer if Mother Nature was a little nicer. It is what it is. Consumers are tough and demanding white glove service and attention at low margin pricing. Next few years are going to be interesting for brick-and-mortar sales. We’re having fun and registers are ringing. Life is good.”

Ohio: (Hearth, Patio, BBQ) “Great May even with cold weather the first week.”

Ohio: (Hearth, BBQ) “Large remodeling hearth projects and big ticket stainless-steel barbecue grills made this May one of the best ever. Hoping this wave of demand for high-end products continues for a long time.”

Wisconsin: (Hearth, BBQ) “Very steady business. Added a new employee last year, but desperately need an additional committed employee!”

Wisconsin: (Hearth) “Very strong builder market. Retail customers looking for larger and more features on fireplaces.”


Consumer Confidence

The Consumer Confidence Index, which had decreased in April, declined slightly in May. The Index now stands at 117.9 (1985=100), down from 119.4 in April.

“Consumer confidence decreased slightly in May, following a moderate decline in April,” said Lynn Franco, director of Economic Indicators at The Conference Board. “However, consumers’ assessment of present-day conditions held steady, suggesting little change in overall economic conditions. Looking ahead, consumers were somewhat less upbeat than in April, but overall remain optimistic that the economy will continue expanding into the summer 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.

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) “We have been in the barbecue business for two years. This makes the increase in percentage of sales larger than 20%, but I just put wrote a realistic percentage so it won’t be unrealistic.”

California: (Hearth, Patio, BBQ, Spas) “Numbers were consistent with May 2016, no changes. We would be happy if that trend continues this summer.”

California: (Hearth, BBQ) “We’re a fairly new company (six years old but in the industry for 40 years) and we have been growing at this rate every year since 2011.”

California: (Hearth, BBQ) “People are still spending money, which is nice. Mostly retro-fits and re-models.”

Hawaii: (Hearth) “Wood-burning stoves, factory-built fireplaces all down – we do not sell any gas appliances. However, basic services, sweeps, troubleshooting, repairs, parts, accessories remain stable. Stove refurbishing is very small niche market in Maui, Hawaii.”

Idaho: (Hearth) “Winter and bad weather has finally ended. YAHOO!”

Oregon: (Hearth, Patio, Spas) “May was a great month for us. We have a huge backlog built up and the sales keep coming in. We are seeing a decline in foot traffic, but still expect growth in June.”

Oregon: (Hearth) “Economy is getting stronger, so is new construction. It’s our best May sales since 2012. Looking for a great year.”

Washington: (Hearth, BBQ) “On May 1, 2016, our store burned down. We did not have any type of storefront until May 18, hence the numbers in May 2017.”

Washington: (Hearth, BBQ, Spas) “Decent month of sales. Poor weather led to a slow start to the season.”

Washington: (Hearth) “April and May numbers are even with last year.”

Canada

Alberta: (Patio) “Sales are even for the month.”

British Columbia: (Hearth, BBQ) “Wood stoves and wood fireplace sales are running steady with last year, which is gratifying as 2016 was a very good year. We have most of our booking orders already stocked high in our warehouse and expect to deliver and install many of these before September. A tough winter with many power failures surely keeps us growing.”

British Columbia: (Hearth, Patio, BBQ, Spas) “Another crazy month! Patio furniture has been phenomenal and the good weather has not hit yet. Just shy of our all-time record in sales and lots of future work booked. Our only issue is finding good employees.”

Ontario: (Patio) “Still tough due to the higher U.S. dollar, although weather and the economy are accommodating.”

Ontario: (Patio, BBQ) “A broader line of products has pushed patio sales this year.”

Ontario: (Hearth, BBQ) “Poor weather to blame for barbecue sales.”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 5-May-17 2-Jun-17 4 WEEK 26 WEEK 52 WEEK ($000,000)
Standard & Poor’s 500 (a) S & P 2,439.07 2,328.95 2,381.12 2,439.07 2.4% 11.3% 16.2%  
HNI Corporation (b) HNI 56.96 37.24 45.55 45.29 -0.6% -13.2% -2.9% $2,000.0
Pool Corporation (c) POOL 123.42 87.02 121.80 122.45 0.5% 22.6% 32.3% $5,060.0
Rentech (c)(d) RTK 3.97 0.36 0.44 0.46 4.6% -69.3% -82.0%     $10.68
Restoration Hardware (b) RH 60.11 24.11 57.15 42.54 -25.6% 22.4% 25.0% $1,410.0
Wayfair, Inc. (b) W 68.91 27.60 48.52 68.18 40.5% 83.7% -62.2% $5,910.0

NOTES:

(a) = Standard & Poor’s 500 is based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. It is considered one of the best representations of the U.S. stock market, and a bellwether for the U.S. economy.
(b) = New York Stock Exchange
(c) = NASDAQ
(d) = Rentech is the parent company of New England Wood Pellet, which is the parent company of Allegheny Pellet.

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