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Hearth & Home March 2014

2014 January Business Climate


January Retail Sales

In early February, Hearth & Home faxed a survey to 2,135 specialty retailers of hearth, barbecue and patio products, asking them to compare January 2014 sales to January 2013. The accompanying charts and selected comments are from the 203 useable returns.


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Consumer Confidence

Stock Watch


The barbecue category has now had 13 consecutive months of having a higher percentage of retailers reporting positive, rather than lower, month/year over month/year sales results.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
January 2013 Through January 2014

Month/year over month/year sales of hearth products continue to be impressive. The barbecue category returned positive results for the 11th consecutive month.


Retailer Comments

Northeast

Connecticut: (Hearth) “Bitter cold and high oil prices made for a great start for 2014. Keep it coming.”

Connecticut: (Hearth) “Short but sweet month. I thought a lot about the great folks we lost this year – especially Dan Shimek. I’m going to the show and we will miss him a great deal.”

Maine: (Hearth, Patio, BBQ) “After a strong fourth quarter, sales in 2014 have started slow. Hoping for return of new construction to help boost sales.”

Maine: “Pellet stoves have made a modest comeback in recent months.”

Massachusetts: (Hearth) “January was down three percent for total sales, but profits were up 45 percent. We are staying busy and looking strong into the next few months.”

New York: (Hearth) “Great January. Very cold, expensive oil and propane. Pellet still strongest category.”

New York: (BBQ, Spas) “Unusually slow for January.”

New York: (Hearth) “Exactly the same as last year.”

New York: (Hearth) “Another great month. The weather helped push us over our last good month.”

New York: “The cold winter has kept hearth sales plentiful all season.”

New York: “As usual, it’s the middle of the season and, partly due to extreme cold and increased consumer demand, we have another year of shortages of pellet fuel. We try to stock ahead, but we have gone through our stock and cannot get any more. “Three of our five suppliers also bag for the Box stores. We have been in this business more than 20 years and have helped build more than one supplier’s business. We have always felt a loyalty to sell their product, but I guess the feeling isn’t mutual, as they would rather have the Box store business than ours. “I feel we dealers are getting the short end of the stick. Wood pellets are a lost game and we may just quit selling them. For the work and trouble moving and promoting them just to make 12-15 percent profit isn’t worth it. Let the Box stores sell them and maybe the consumer can get their stove installed/repaired from them also. “Maybe we will also give up installation. Our liability insurance just doubled to nearly $10,000. We were actually informed by the insurers that it doesn’t matter if you belong to HPBA or are NFI certified, so why do we all pay to belong to them?”

Pennsylvania: “Pellets are a problem.”

Pennsylvania: “Hearth products way up in January. December was the worst December ever.” Pennsylvania: (Hearth, BBQ) “Finally a real winter with snow, ice and low, low temperatures. Good strong demand. New construction is also back.”

Pennsylvania: “Snowy weather has delayed several installation jobs, which lowered total sales for January.”

Pennsylvania: (Patio, BBQ) “January was too cold.”

Pennsylvania: (Heath) “Fiscal year-to-date, July 31-January 31, was up 12 percent.”

Pennsylvania: “Cold weather is helping. Pellet supply is tough and propane pricing affecting sales. Remodeling and new construction interest has been better.”

Pennsylvania: “Gas, pellet, chimney service up. Installations are two to four weeks out.”

Rhode Island: (Hearth, Patio, BBQ, Spas) “Still a tough environment out there.”

South

Arkansas: (Hearth) “Too cold for retail sales. No floor traffic.”

Georgia: (Hearth) “Particularly depressed market in our area of Georgia due to additional market influences and lack of manufacturing.”

Louisiana: “Colder than usual weather has continued hearth product sales. An increase in barbecue grill sales for the holidays has spurred add-on sales.”

Oklahoma: “The month started slow, then propane prices got people’s attention.”

South Carolina: (Hearth, Patio, BBQ) “Weather has been terrific. Great for business and sales show it.” Texas: “Gas logs are insane. Topped all-time monthly totals from early 2000s. Never thought we would approach the record years. Gas fireplaces strong. Wood stoves good. Gas freestanding on the chart for the first time in a long while. Patio shows good signs, strong through Christmas. Great season. Could have been better with more trained people.”

Virginia: (Hearth, BBQ) “Not a busy month.”


Consumer Confidence

The Conference Board Consumer Confidence Index rose for a second consecutive month, posting a January reading of 80.7, up from a revised 77.5 in December. According to Lynn Franco, director of Economic Indicators at the Conference Board, “Consumer’s assessment of the present situation continues to improve, with both business conditions and the job market rated more favorably… All in all, confidence appears to be back on track and rising expectations suggest the economy may pick up more momentum in the months ahead.”

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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Midwest

Illinois: “Gas product sales are great. We are surprised that wood is down despite the cold weather.”

Indiana: (Hearth) “Rough month.”

Kansas: (Hearth) “Up, thanks to a new location and LP prices.”

Minnesota: “Propane and natural gas shortage and extremely cold – perfect storm.”

Minnesota: (Hearth) “Cold snap plus better economy equals great sales. Best January since 2005.”

Missouri: (BBQ, Spas) “If the sun is shining people are out spending. If it is cloudy, might as well lock up and go home.” Wisconsin: “Wood stove sales and pellet very strong. Coldest January I can remember.”

Wisconsin: (Hearth) “While sales down slightly from last year, still extraordinarily strong.”

West

California: (Hearth, BBQ) “It’s been a great two months for overall sales. All our numbers have increased considerably.”

California: (Hearth) “Down. One day of rain in January; 20 days of record heat.”

Wyoming: (Hearth, BBQ, Spas) “Since the new year, sales have dropped off considerably.”

Canada

Alberta: (Hearth, BBQ) ”Really slowed in January.”

Alberta: (Hearth, BBQ) “We have seen an incredible increase in traffic. Confidence levels are way up and our closing percentage is approximately 85 percent, which is great.”

British Columbia: (Patio, BBQ) “Very good for off season.”

Ontario: “Very cold month had an impact on sales. If bitter and impossibly cold weather helps sales, then we will take it.”


Stock Watch

COMPANY – EXCHANGESYMBOL52 WEEKWeek Ending% CHANGEMARKET CAPITALIZATION
    High Low 03-Jan-14 31-Jan-14 4 Week 26 Week 52 Week ($000,000)
Furniture Brands International (d) FBNIQ 0.87 0.06 0.09 0.07 -18.2% NA NA $0.6
HNI Corporation (a) HNI 40.73 28.28 38.89 34.31 -11.8% -11.6% 7.4% $1,552.5
Pool Corporation (b) POOL 58.87 44.39 57.34 54.18 -5.5% -0.5% 18.0% $2,489.0
Restoration Hardware Holdings (a)(c) RH 78.50 32.02 68.30 56.74 -16.9% -17.6% 56.6% $2,207.8

(a) = New York Stock Exchange
(b) = NASDAQ
(c) = Restoration Hardware Holdings issued their intial public offering on 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.
(d) = OTCQB

St. Louis - November 22, 2013 (GLOBE NEWSWIRE) Furniture Brands International announced today that the United States Bankruptcy Court for the District of Delaware has declared an affiliate of KPS Capital Partners, LP ("KPS") as the winning bidder in the auction to acquire substantially all of the company's assets. Furniture Brands and KPS expect to complete the transaction in the next several business days.


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