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Hearth & Home February 2014

2013 December Business Climate


December Retail Sales

In early January, Hearth & Home faxed a survey to 2,133 specialty retailers of hearth, barbecue and patio products, asking them to compare December 2013 sales to December 2012. The accompanying charts and selected comments are from the 192 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


The hearth, barbecue and spas/hot tubs categories have all experienced at least 12 consecutive months in which a higher percentage of retailers reported positive, rather than lower, month/year-over-month/year sales results.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
December 2012 Through December 2013

It is now a full calendar year of month/year-over-month/year sales growth for hearth products, with double-digit positive comparisons occurring in 10 of the past 12 months.


Retailer Comments

Northeast

Connecticut: (Hearth) “The year ended strong and there’s still strong interest going forward. With the cold weather and oil prices rising, it looks hopeful.”

Connecticut: (Hearth, Patio, BBQ, Spas) “Other than 2008 this was the best year we’ve had in our 34 year history. Looking forward to an even better 2014.”

Maine: “Pellets were very big for us in the fourth quarter. Oil prices, in combination with federal and state tax credits, gave us a great finish to 2013.”

Massachusetts: (Hearth, BBQ) “Good end to the first up year since the Great Recession of ’08. Those years hurt, but we got stronger and better. We are looking forward to a good 2014. Cross your fingers and climb aboard.”

New Jersey: (Hearth) “Great finish to a very good year. Steady showroom sales and in-creased builder sales made the difference.”

New York: (BBQ, Spas) “Slow traffic, but serious buyers.” New York: (Hearth) “December was a terrible end to an otherwise good year.”

New York: (Hearth) “December sales were brisk and constant. Sales were up about 40 percent.”

New York: “Wood stove sales were down, but pellet and gas were up.”

Pennsylvania: “Cold weather has installations out three to four weeks in January. Pellet sales are very strong. New construction picking up.”

Pennsylvania: (Hearth) “Steady customer traffic with the colder weather. A real winter for a change.”

Pennsylvania: “Very strong pellet stove sales due to the severe weather. Both gas and pellet inserts were strong. December was as good as our September.”


Weather Report

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

While Florida had the sixth warmest December in 119 years, average temperatures ran much below normal in North Dakota, Minnesota, Wisconsin and Michigan. Nineteen other states were below normal, and seven states in the Mid-Atlantic and Southeast enjoyed above normal temperatures. Nationwide it was the 21st coldest December since 1895.

For the three-month period October — December, Florida was the only state in the contiguous U.S. with much above average temperatures. Oklahoma and Arkansas had their 11th and 12th coldest period since 1895, and were joined by 23 other states with below normal averages. Nationwide, it was the 23rd coldest October to December in 119 years.

California had its 12th warmest calendar year in 119 years, much above normal. Fourteen states averaged above normal for the year, 14 were near normal and 19 experienced annual averages that were below normal. Nationwide it was the 37th warmest calendar year on record.

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South

Arkansas: (Hearth) “Very poor retail month. No floor traffic due to winter storms and ice.”

Texas: (Hearth, BBQ) “The cold weather came early and stayed. Sold out of a lot of products.”

Midwest

Michigan: “Love the cold weather driving our stove market right now. Stoves and inserts are flying out of here. Hate the frigid temperatures, but can’t have the best of both worlds.”

Missouri: “BBQ sales were way up due to gift packages and people buying to cook holiday meals on the Big Green Egg. We were happy with barbecue sales in December, considering temperatures were below average.”

Wisconsin: (Hearth) “Strong finish to a very strong year. Extraordinary demand for service on existing units.”

Wisconsin: “Busy month. Extreme, repeat snowstorms and sub-zero temperatures slowed us down in our installations. Because of this, January is completely booked for work.”

Wisconsin: (Hearth) “A great month.”


Consumer Confidence

The Conference Board Consumer Confidence Index rebounded in December, rising to 78.1 from a revised reading of 72.0 in November. According to Lynn Franco, director of Economic Indicators at the Conference Board, “Consumer confidence is now close to pre-government shutdown levels. Sentiment regarding current conditions increased to a 5 1⁄2 year high, with consumers attributing the improvement to more favorable economic and labor market conditions…Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began.”

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

Wisconsin: (Hearth) “A great month.”

Arizona: “What a great year for hearth sales in the North Country.” California: (Hearth) “Very, very busy December.”

California: “The Air District’s wood stove and fireplace change-out really has helped keep traffic and sales up in December.”

California: “Although the weather has been mild, our foot traffic has been good. Most of our customers were shopping for decorative products – gas logs, glass doors, beds of glass – and not for heating units like wood and pellet stoves.”

Washington: (Hearth, BBQ) “This December was the best in our 30-year history. A little snow, rain and wind does wonders for business in the Pacific Northwest.”

Canada

Alberta: (Hearth, BBQ) “A better year than last.”

British Columbia: (Hearth, BBQ, Spas) “We have been in business 18 months, and our growth has been phenomenal in a down local economy.”

British Columbia: (Patio, BBQ) “December was good, up 23 percent from last year.”

Saskatchewan: (Hearth, Spas) “We had a pretty reasonable last four months of the year.”

Ontario: (BBQ) “A quiet time of the year on the showroom floor. A busy time receiving inventory, changing displays and planning advertising and promotions. Also planning, planning, planning to make a profit.”

Ontario: (Hearth, BBQ, Spas) “Overall, this year saw a steady, if slow, increase. Nice to finally see.”

Ontario: “Steady store traffic. Colder weather than normal. Gas stoves outselling wood stoves. January booked with gas installs until the end of the third week. Hail 2014. Long live the hearth business.”


Stock Watch

COMPANY – EXCHANGESYMBOL52 WEEKWeek Ending% CHANGEMARKET CAPITALIZATION
    High Low 29-Nov-13 27-Dec-13 4 Week 26 Week 52 Week ($000,000)
HNI Corporation (a) HNI 40.73 28.28 39.64 39.38 -0.7% 9.2% 35.7% $1,781.9
Pool Corporation (b) POOL 58.87 41.27 56.04 58.01 3.5% 10.7% 39.6% $2,665.0
Restoration Hardware Holdings (a)(c) RH 78.50 31.60 75.50 64.64 -14.4% -13.8% 90.7% $2,515.1

(a) = New York Stock Exchange
(b) = NASDAQ
(c) = Restoration Hardware Holdings issued their initial public offeringon Nov. 1, 2012. Shares are trading on the New York Stock Exchange under the ticker symbol RH. We will include respective data points as they occur.


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