Hearth & Home October 2017

2017 August Business Climate


August Sales

In early September, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare August 2017 sales to August 2016. The accompanying charts and selected comments are from the 189 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


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

In August, 55% of Hearth retailers and 50% of Spa retailers said they were up over the prior year, while only 26% of Patio retailers and 28% of Barbecue retailers said the same thing.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
August 2016 vs. August 2017

In August, Hearth products were up 13% at retail; Barbecue products were up 8%; Spas were up 5% and Patio products were up 4%.


Retailer Comments

Northeast

Delaware: (Hearth, BBQ) “It’s trying to pick up in September, but the scary thing is that at least 75% of the sales are replacing older stoves.”

Connecticut: (Hearth, BBQ) “Although we are down 15% for the year, we are at the same point. Floor traffic is picking up and indications are a cold winter ahead, so hoping things will improve.”

Maine: (Hearth, Patio, BBQ) “Recent severe weather events have motivated customers to look closely at backup heating sources that do not require electricity. Wood stove sales are leading.”

Maine: (Hearth, BBQ) “It is a very promising start to the season - hopeful for a strong end to 2017!”

Massachusetts: (Hearth) “Traffic in our showroom and phone calls are picking up due to the cool nights. We are getting toward the end of August. Looks promising coming into fall.”

New Hampshire: (Patio, BBQ, Spas) “It’s easy to make big changes in a slow month!”

New York: (Hearth, Spas) “Cooler temperatures are boosting hearth sales.”

New York: (Hearth, Patio) “Oh, please, please, please! Give us a season.”

New York: (Hearth) “End of August sales were brisk as the weather was cooler.”

New York: (Hearth, Patio, BBQ, Spas) “Still building pools heading into September, and spas are selling like hot cakes! Hoping for hearth sales to be as good this fall.”

New York: (Hearth, BBQ) “Picked up at the end of the month more than normal.”

Pennsylvania: (Hearth, Patio, BBQ) “Hired one inside and one outside sales position. Looking for two more installers. Very optimistic!”

Pennsylvania: (Hearth) “Up 2% for the calendar year. September is booked at approximately 20% increase over last year.”

Pennsylvania: (Hearth, Patio, BBQ) “It has been typical August weather, hot, humid and wet. Floor traffic has been steady; customers are still looking at fireside chat pits and outdoor fireplaces but strangely enough, wood stoves and inserts jumped by about 20% - good but strange for this time of year.”

Pennsylvania: (Hearth, Patio, BBQ) “Cooler temperatures have helped wood stove, pellet stove and gas product sales.”


Weather Report

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

Three states – Washington, Oregon and California – posted Record Warmest temperatures in August; another seven states posted Much Above Average or Above Average temperatures.

For the three-month period June–August, two states – California and Nevada had Record Warmest temperatures, while another eight states were at Much Above Average levels.

There’s not much of a surprise here, but Texas experienced its Record Wettest month in August due to the impact of hurricane Harvey.

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South

Florida: (Hearth, Patio, BBQ) “Sales for August were steady.”

Florida: (Patio) “Worst August ever in sales. Lots of disruptions - including Internet, more competition and uneasy political environment. We started September strong, but now Florida just got hit with Irma. Everyone will be in recovery mode for the rest of this month.”

Oklahoma: (Hearth, BBQ) “Oklahoma’s economy is on a rebound from old days of yesteryear, but recovery is painfully slow. That’s combined with increased competition from brick-and-mortar stores and Internet sales. We are still trying to add excitement to their shopping experience and feel we are “the” place to shop.”

Oklahoma: (Hearth, Patio, BBQ) “Economy locally has been more optimistic (oil and gas activity is up) and we sell luxury brands. That said, it has not translated into the sales increases we expected. The highest end of outdoor kitchens has been soft. Entry level prices of ($1,000 - $2,500) have been better.”

Oklahoma: (Hearth) “Year-to-date increase - 65.2%.”

Texas: (Hearth, BBQ) “I think I’m going to sell my business on Amazon – if the price is right I’ll deliver it tomorrow for one dollar off.”

Texas: (Hearth, Patio, BBQ) “August was steady early. Planning a big tent sale starting the 25th. Brought in an extra truck of goods. Currently, I think there is plenty of buyer’s guilt. No one wants to spend money on luxury products when their neighbors are suffering. Consequently, I believe Labor Day sales will be tough. Gas lines will not help. Same scenario when Katrina hit – everyone watching rescues and misery. And I get it! It will start to improve with some good news.”

Texas: (Hearth, Patio, BBQ) “August started off good, but as the month went on sales became very slow. Hope is that after kids are back in school, and all that goes on with that, and Labor Day comes things will again pick up. We normally see a slow-down at the end of August and start of September but this year was much slower.”

Virginia: (Hearth, Patio, BBQ) “Busy, slow, then busy again. Weird month!”

Midwest

Iowa: (Hearth, BBQ) “We’re currently up 3% year-to-date. Immediately after being down over 30% January 1 through June 30. This is exactly why I’ve given up on trying to predict what’s going to happen next year. I’d be satisfied with understanding what has already happened!”

Iowa: (Hearth, BBQ) “Very busy in the hearth industry.”

Indiana: (Patio, BBQ, Spas) “Our normally hot August weather has not happened this year and store sales became sluggish. Without the heat, pool use is down and chemical usage has been lowered so store traffic has dwindled in the last three weeks.”

Michigan: (Spas) “Just got the numbers today. We had a great August compared to 2016 cooler temperatures. Absolutely the largest amount of advertising money spent that I can remember by our competitor’s and ourselves. I have lots of competitors’ brochures in my office. That’s always a good feeling. That’s stuff left behind by the buyers of our hot tubs. Internet still hurting small sales under $100. Customer count down 25% in August. Not happy about that – but sail on.”

Michigan: (Patio, BBQ) “Consumers are still special ordering (with average lead times 4-6 weeks) despite our short usage season here in Northern Michigan. Disposable income budgets are significantly higher this summer than in years past.”

Ohio: (Hearth, BBQ) “High-end fireplace remodeling and grill sales are still going strong. September weather forecasts in Northeast Ohio are calling for below normal temperatures. I’m forecasting above normal hearth sales!”

Wisconsin: (Hearth) “Both retail and contractor sales are strong. Demand is focused on larger and full-featured units. Wood-fueled stove sales are dead; wood fireplaces are stronger than historic average, and gas- fueled sales are through the roof.”


Consumer Confidence

The Consumer Confidence Index, which had increased in July, improved further in August. The Index now stands at 122.9 (1985=100), up from 120.0 in July.

“Consumer confidence increased in August following a moderate improvement in July,” said Lynn Franco, director of Economic Indicators at The Conference Board. “Consumers’ more buoyant assessment of present-day conditions was the primary driver of the boost in confidence.”

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

Colorado: (Hearth, BBQ) “August seemed very flat – service was also down. Maybe everyone is worried about the hurricanes and the “nut case” in North Korea.”

Oregon: (Hearth) “Foot traffic has slowed down, but the backlog of jobs is still very high. We need more people to get them all installed, it’s a bit of a logjam.”

Washington: (Hearth, Patio, BBQ, Spas) “Busy last two months.”

Washington: (Hearth, Patio) “Lots of purchases but they are not ready to install. Seems many contractors are behind schedule due to the lack of skilled labor.”

Canada

British Columbia: (Hearth, BBQ) “Good foot traffic and sales. People are starting early this year despite the hot weather.”

British Columbia: (Hearth, BBQ) “Heavy smoke from forest fires all over British Columbia and complete lack of rain have slowed sales somewhat.”

British Columbia: (Hearth, Patio, BBQ, Spas) “August was great, started busy and never let up. All categories performed better year-over-year and overall sales were up 71%, making this our biggest month ever.”

Ontario: (Patio) “The exchange factor is improving somewhat. That is a positive for us.”

Ontario: (Hearth, BBQ) “Great bounce-back month from July.”

Ontario: (Hearth, BBQ) “We have had a phenomenal year so far and August was crazy! Part of it may be the cool summer we have had. As well, we are also celebrating our 10th anniversary so have been doing extra advertising.”

Ontario: (Hearth) “Cool summer. Lots of service. Selling very high-end products, but not as much as last year.”

Ontario: (Hearth, Patio, BBQ) “Just a normal August. Push and squeeze.”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 4-Aug-17 1-Sep-17 4 WEEK 26 WEEK 52 WEEK ($000,000)
Standard & Poor’s 500 (a) S & P 2,480.91 2,085.18 2,476.83 2,476.55 0.0% 4.0% 13.6%  
HNI Corporation (b) HNI 56.94 36.60 36.48 37.14 1.8% -19.3% -33.9% $1,610.00
Pool Corporation (c) POOL 124.26 88.65 109.02 100.79 -7.5% -13.4% 0.4% $4,190.00
Rentech (c)(d) RTK 6.86 0.23 0.46 0.27 -41.2% -68.0% -92.6% $6.11
Restoration Hardware (b) RH 79.91 24.41 56.92 48.51 -14.8% 55.5% 43.2% $1,040.00
Wayfair, Inc. (b) W 82.19 27.60 80.36 72.46 -9.8% 99.2% 87.0% $6,370.00

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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