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Hearth & Home December 2015

2015 October Business Climate


October Retail Sales

In early November, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare October 2015 sales to October 2014. The accompanying charts and selected comments are from the 203 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


Only 44 percent of hearth dealers – in the heart of their season – posted positive numbers in October. If you’re wondering why, just look at our weather report.


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

Specialty hearth dealers were up only three percent in October; spas were up four percent, and both barbecue and patio products posted the negative number of minus four percent.


Retailer Comments

Northeast

Connecticut: (Hearth) “Slowest October in years. No urgency, warm weather and low oil prices. All in all, it was a normal year in terms of profit. Not sure what the rest of the season will bring though.”

Maine: (Hearth, Patio, BBQ) “Demand remains steady for gas and wood sales. Pellet stove sales are off compared to last year at this time.”

Massachusetts: (Patio) “No contract orders; 20 to 30 percent above average October sales (down from 2014).”

New Jersey: (Hearth, Patio) “Patio sales good when clearance is involved.”

New York: (Hearth, Patio, BBQ) “Warm weather and low fuel costs have sales steady, but not any sign of urgency by the customers.”

New York: (Hearth) “Here in the Northeast the weather has been very warm. Our hearth business is down from last year at this time by about 25 percent. That’s a huge amount. We can only hope cooler weather will help to push sales up in November.”

New York: (Hearth, Patio, BBQ, Spas) “It’s a good feeling not to be complaining about pellets so far, but we are still unsure how things will look in three months or so.”

Pennsylvania: (Hearth) “Gas is KING! Low oil prices, high cost of pellets and pellet stoves has killed the market. Should be some factory clearance sales by January. Nice!”

Pennsylvania: (Hearth, Patio, BBQ) “This is the worst November I have ever seen – so far.”

Pennsylvania: (Hearth) “We’re plus-eight percent since our fiscal year start on July 1, 2015. Our net profit is plus-15 percent. Very good year.”

Pennsylvania: (Hearth, Patio, BBQ) “Gas is king with wood coming in a very distant second and pellet a very, very distant third place. Floor traffic is strong and steady, and service is 65 percent above last year, but where is the cold weather? Seventy and 60 degree weather is not conducive to hearth sales.”

Pennsylvania: (Hearth, Spas) “Too warm to sell hearth products and fuel.”

Pennsylvania: (Hearth, Patio, Spas) “Sales are just so, so, not great.”


Weather Report

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

The state of Washington experienced its Record Warmest October since record keeping began in 1895, while 11 other western and southwestern states posted Much Above Normal temperatures.

For the three-month period August-October, seven western states experienced Record Warmest temperatures, while another 36 states had either Above Normal or Much Above Normal temperatures.

In October, precipitation levels were Near Normal to Much Above Normal throughout the nation, with the exception of Oregon, Missouri, Illinois and Florida, which were Below Normal.

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South

Arkansas: (Hearth) “October was a super month for retail sales of wood stoves, inserts, ZC fireplaces and chimney systems. Excellent year so far.”

Alabama: (Hearth, Patio, BBQ) “Lately, when they enter our showroom, they’re not here to ‘Kick the Tires’; they’re here to buy. Buyers are more educated than ever due to Google/Internet, etc.”

North Carolina: (BBQ) “Overall a consistent sales month compared to prior Octobers. Decent warmer weather was a positive contributor.”

Oklahoma: (Hearth) “Busy, busy.”

Tennessee: (Hearth, BBQ) “A very good October. Now bring on some cold weather and even a little snow the first part of November and we should kick ass.”

Texas: (Hearth, BBQ) “Canada – will you please send us a cold front? Ceramic grills are down big; vent-free logs are up! Funny how a home town football team’s failure affects people’s affection for grilling.”

Texas: (Hearth, Patio, BBQ) “We were extremely slow the last of September through most of October. Did see a good upswing the last week of October. Hope this will continue through the end of the year.”

Virginia: (Hearth, BBQ) “Wow. What a month. Record setting.”

Midwest

Illinois: (Hearth, Patio, BBQ) “Weather in October 2015 was very warm and nice. It increased sales of barbecues and furnishings. It reduced impulse sales of glass doors and gas logs.”

Indiana: (Hearth) “Sales were down 20 percent over last year, but last year was the best year ever. We were up 64 percent from two years ago.”

Indiana: (Hearth, Patio) “Crazy weather.”

Indiana: (Patio, BBQ, Spas) “We have had a long, warm and dry fall so far. We’re not sure if that is hindering barbecue sales or not. The wet spring and early summer have kept patio products down.”

Michigan: (Hearth, Spas) “The weather turns cold and business is good, then it warms up (above normal) and it drops off. That’s the roller coaster ride our 2015 stove season is on. Spas and hot tubs are holding their own.”

Michigan: (Spas) “Mother Nature strikes again. Temperatures in September made it feel like spring. October sales rocked. Tee shirts and shorts in October – Maui time in Detroit. Spa sales were bubbling like a witch’s caldron. Our temporary staff is back in school. Year-round folks got writer’s cramp. Nice end to a roller-coaster season. Bring on cabin fever to heat up the hot tub sales. You go girl (Mother Nature).”

Missouri: (Hearth, BBQ) “Last year was a good year and this year even better. It has been a slow, steady growth as opposed to the unsustainable growth back in 2006 and 2007. The market (locally) appears to be healthy and stable enough to win over consumer confidence in terms of new construction and big remodels. All hearth retailers in our area are scheduling four to six weeks out for installs or service.”

Ohio: (Hearth, BBQ) “Selling almost as many direct-vent inserts as we are gas logs. Hard to keep up with that unexpected business, but we’re happy to deal with the problem.”

Wisconsin: (Hearth, BBQ) “Very warm weather, but gas and wood products are selling. New construction is up again for the third year. Homes are getting bigger. The economy is recovering greatly. We had to hire more staff this year. Can’t get enough people to work a good paying job. Every business in the area is in same boat. At least we’re not Maytag repairmen without work.”

Wisconsin: (Hearth, BBQ) “Sales are down a bit. We need an additional good employee. We just cannot keep up with the demand.”


Consumer Confidence

The Conference Board Consumer Confidence Index, which had increased moderately in September, declined in October. The Index now stands at 97.6 (1985=100), down from 102.6 in September.

“Consumer confidence declined in October, following September’s modest gain,” said Lynn Franco, director of Economic Indicators at The Conference Board. “Consumers were less positive in their assessment of present-day conditions, in particular the job market, and were moderately less optimistic about the short-term outlook.”

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) “A very cold Halloween and early winter means a white Christmas! Sell, sell, sell!”

California: (Hearth, BBQ) “Retail sales for the last four months are down by 40 percent overall.”

California: (Hearth, Patio, BBQ, Spas) “Disappointing sales on the hearth side. Up slightly in grills.”

California: (Hearth) “Sales are up. Lots of traffic. All is good!”

Colorado: (Hearth) “This year it’s up, up, up. That’s refreshing from down, down, down of years past. Customers are not frightened to death to spend some money.”

Hawaii: (Patio) “Slowest October in 15 years.”

New Mexico: (Hearth) “Strong sales of high-end and contemporary gas fireplaces. Also, EPA wood fireplaces are selling well.”

Oregon: (Hearth) “Very good September and October. Cold weather with good factory promotions.”

Washington: (Hearth) “About even for the year.”

Canada

British Columbia: (Hearth, Patio, BBQ, Spas) “Barbecue is up a bit, fireplace and patio were flat, but hot tubs stole the show and made the month fantastic!”

Ontario: (Patio) “Nothing is changing. High United States money is tough on Canadians right now.”

Ontario: (Hearth, Patio, BBQ) “I don’t usually run a day-by-day sales graph, my old heart can only handle monthlies on a good day, but I had to see this month in color. The day-to- day graph over the month of October goes from peak highs one day to two to three-day flats; our end of month was acceptable at best. Our booking dates are way behind on in-stock stoves. There’s a dollar difference in consumer purchases; we’re selling a lot more upper-end Harman’s, fewer entry level stoves. Forget Survivor or Naked and Afraid, you want real survival stories, go to a long-time hearth retailer – nerves of steel (cast iron, actually).”

Ontario: (Hearth) “Summer-like weather but we maintained our numbers.”

Ontario: (Hearth, BBQ) “Grinning like a dog in a butcher’s shop!”

Ontario: (Patio, BBQ) “Extended nice weather will hopefully extend our season for fire pit sales.”

Ontario: (Hearth, Patio, BBQ) “Nice weather? No other explanation.”

Ontario: (Hearth, Patio, BBQ) “Still warm but sales are good.”


Stock Watch

COMPANY – EXCHANGESYMBOL52 WEEKWeek Ending% CHANGEMARKET CAPITALIZATION
    High Low 01-June-15 29-June-15 4 Week 26 Week 52 Week ($000,000)
HNI Corporation (a) HNI 57.74 41.29 43.69 42.94 -1.7% -10.7% -8.0% $1,910.0
Pool Corporation (b) POOL 83.39 58.00 73.88 81.54 10.4% 23.8% 36.6% $3,540.0
Rentech (b)(e) RTK 17.00 5.23 5.47 5.85 6.9% 395.8% NA $135.5
Restoration Hardware Holdings (a) RH 105.98 76.63 93.51 103.09 10.2% 18.0% 28.3% $4,140.0
Wayfair, Inc. (a)(c) W 56.84 16.74 36.18 42.24 16.7% 40.7% 68.3% $3,540.0

(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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