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Hearth & Home May 2014

2014 March Business Climate


March Retail Sales

In early April, Hearth & Home faxed a survey to 2,098 specialty retailers of hearth, barbecue and patio furnishings products, asking them to compare March 2014 sales to March 2013. The accompanying charts and selected comments are from the 207 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


Make that nine consecutive months that at least 60 percent of hearth retailers reported better month/year over month/year results.


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

Month/year over month/year sales of hearth products continued to be quite favorable.


Retailer Comments

Northeast

Connecticut: “Best March ever. Interest still strong. High oil prices and cold weather make for good business. 2014 looks like a great year.”

Connecticut: (Hearth, BBQ, Spas) “Never thought we could match 2008. We are up 25 percent over ’08 to date. It’s going to be a great year for hearth.”

Maine: (Hearth, Patio, BBQ) “March is our low sales point. The extended cold has drained customer resources, leaving fewer discretionary dollars.”

Massachusetts: (Hearth) “Construction has been picking way up in Massachusetts. Hopefully we will see this continue.”

Massachusetts: “Builders and remodelers are coming in. Interest in pellet and wood for next year. Hope the Massachusetts change-out goes well. Lung association is also having a change-out in my area and Rhode Island. Could this be a breakout year? All these great programs and EPA wants to ban them. Shame on them.”

Massachusetts: (Patio) “Good start.”

New Hampshire: (Hearth, BBQ) “Surprisingly strong sales at the end of March. Pellet shortage brought in a lot of traffic that would have been at the Box stores.”

New Jersey: (Hearth) “Strong first quarter finish. Let’s see what happens in the second.”

New York: “Best first quarter in 30 years. Pellets stoves are hot, hot, hot even without pellets.”

New York: (Hearth) “The beginning of the month was slow, but at the halfway point you could not keep up.”

New York: “Had a great March. Lots of new construction and renovations happening on the east end of Long Island. For us, this is typically when we sell the majority of our gas-burning products.”

New York: (Patio, BBQ) “Slowly recovering from the stormiest winter. People definitely have cabin fever.”

New York: “The long winter finally caught up to us. March was slow, but pellet sales were booming. Smart purchasers never ran out of pellets. There were weeks when we were the only store within 30 miles with wood pellets.”

New York: “The winter that will not end means people are still purchasing hearth products.”

Pennsylvania: “Pellet fuel sales were bizarre. A truckload would sell out in a few hours even though we were rationing 10 bags at a time. The winter continued and so did sales of gas and pellet products.”

Pennsylvania: “Fireplace sales steady, patio sales off to a very slow start. Worst March in years is probably due to the coldest, snowiest March in years.”

Pennsylvania: (Hearth, BBQ) “Down a little for the month, but up 20 percent for the quarter. Already started on showroom changes and training and retraining in sales, services and installations. Always accentuating the fundamental basics.”

Pennsylvania: “Still have very heavy foot traffic and still backlogged on gas, wood and pellet installations. Pellet fuel is still a problem and also a major pain in the ass. Fireside chat pits, tables and outdoor fireplaces are still showing an incredible increase. Smaller, pre-fabricated grill islands are starting to come on strong.”

Vermont: (Hearth) “People are still coming in.”


Weather Report

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

It was the coldest March ever recorded in Vermont and the second coldest in New Hampshire and Maine. Only California and Arizona averaged much above normal for the month, while eight other western states had above average temperatures.

California and Arizona had record warm average temperatures for the three-month period January to March, and Nevada and Utah were close behind. A huge swath of the U.S. from Minnesota to Louisiana through Alabama and on up to New York experienced much-below average temperatures for the period. It was the third coldest January to March in 120 years in Wisconsin and Indiana, and the fourth coldest in Michigan, Illinois and Ohio.

It was the third and sixth wettest March in 120 years in Montana and Washington. Oregon, Idaho, Wyoming, Florida, Rhode Island and Maine were the only other states with above-average to much-above average precipitation for the month.

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South

Arkansas: (Hearth) “No floor traffic. No sales. Scary.”

Florida: (Hearth) “YTD up 37 percent.”

Mississippi: (Patio) “Terrible weather this spring made for a very late start to the season.”

North Carolina: (Patio) “Things are cranking even though the weather has been horrible. Might be a good year.”

Tennessee: (Hearth, BBQ) “The cold, rotten weather in March made for a great month for us. Finally, we had a real winter in Tennessee.”

Virginia: (Hearth, Patio, BBQ) “Really good foot traffic. Customers were looking for bargains.”

Midwest

Illinois: (Hearth) “Has been dead since about March 20.”

Illinois: “Cold weather kept fireplaces hot. Cold weather cooled off BBQs. Cold weather doesn’t hurt furniture early-buy orders because they can’t go out anyway.”

Indiana: “Sales are double the average for the last five years. We are still three weeks out on installs. Gas and wood both selling well. Even propane units!”

Indiana: (Patio, BBQ, Pools) “Everybody seems to have spring fever after the long winter and are out looking for backyard products.”

Michigan: (Hearth, Patio, BBQ) “Slow, cold.”

Michigan: (Hearth) “The long winter and propane prices brought lots of traffic through our doors. Could have been even better if we could have gotten product from distributors and manufacturers.”

Missouri: “Sales of stoves and fireplaces remained strong with the continuing cold temperatures. Barbecue was up despite the cold weather.”

Missouri: (Hearth) “New construction is very good.”

Ohio: “Good month for both pellet stove and fuel sales. Frustrated by lack of fuel availability whenever demand is high. An industry problem. Also, already getting pellet price increases for spring/early buy orders. Wrong strategy!”

Ohio: “Multiple power outages during an excessively chilly March have helped create a rush on hearth products that don’t require power. Gas logs, DV inserts, etc.”

Wisconsin: (Hearth, BBQ) “The first three months are up over last year.”

Wisconsin: (Hearth) “Very strong first quarter.”

Wisconsin: (Hearth) “January through March has been very busy. We’re going into April with strong momentum.”


Consumer Confidence

The Conference Board Consumer Confidence Index recovered a bit in March, rising to 82.3 from a revised reading of 78.3 in February. According to Lynn Franco, director of Economic Indicators at the Conference Board, “While consumers were moderately more upbeat about future job prospects and the overall economy, they were less optimistic about income growth. …Overall, consumers expect the economy to continue improving and believe it may even pick up a little steam 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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West

Arizona: (Hearth) “Need more snow. The home show was a blast; definitely brought in new customers.”

California: (Hearth) “What an awesome March. Closed a few high-end sales.”

California: (Hearth) “Overall, business is up 127 percent from one year ago.”

California: (Hearth, Patio, BBQ, Spas) “Awful March. No rain, no cold weather. We assembled barbecues and crossed our fingers for an early patio season.”

California: (Hearth, BBQ) “Surprised by the strong finish to March. Our valley has seen an economic upturn since the beginning of 2013 and it keeps getting better.”

California: (Hearth) “Very slow growth for sales and service.”

Colorado: (Hearth, BBQ) “Many more builders knocking on the door with higher-end projects. Customers are not as freaky about costs as they have been over the last five years. Very encouraging.”

Washington: “Stoves are slowing down, hot tubs are heating up.”

Washington: (Patio, BBQ) “Consumer confidence and hopes of better weather meant higher sales.”

Canada

British Columbia: “March started slow and then went into overdrive. Barbecues and hot tubs way, way up.”

British Columbia: “Spring has sprung. Barbecue sales up 250 percent. Best March ever. Hearth down 10 percent, but barbecues more than make up for that. Customers seem more willing to spend and will buy units they want rather than settle for a less costly choice.”

Ontario: (Hearth) “Looks like a banner month, but a lackluster February kept the average to a modest increase over last year.”

Ontario: (BBQ) “Slow start to the year. Very cold weather. Most customers can’t find their patios for the snow.”


Stock Watch

COMPANY – EXCHANGESYMBOL52 WEEKWeek Ending% CHANGEMARKET CAPITALIZATION
    High Low 28-Feb-14 28-Mar-14 4 Week 26 Week 52 Week ($000,000)
Furniture Brands International (d) FBNIQ 0.87 0.06 0.08 0.09 16.5% NA NA $0.7
HNI Corporation (a) HNI 40.73 31.00 35.55 35.41 -0.4% -1.1% -0.2% $1,650.0
Pool Corporation (b) POOL 62.84 46.62 58.46 60.24 3.0% 7.1% 25.5% $2,750.0
Restoration Hardware Holdings (a)(c) RH 78.50 32.02 67.72 71.93 6.2% 9.9% 105.5% $2,798.8

(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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