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Hearth & Home May 2016

2016 March Business Climate


March Sales

In early April, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare March 2016 sales to March 2015. The accompanying charts and selected comments are from the 216 useable returns.


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Weather Report

Stock Watch


RETAILER SALES – U.S. AND CANADA
March 2016 vs. March 2015

In March, 90 percent of Patio and 89 percent of Barbecue specialty retailers were either Up or the Same as in the prior year, while only 10 percent and 11 percent, respectively, told us their sales were Down.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
March 2015 Through March 2016

For the fifth month in a row, sales of Patio furnishings in the specialty retail channel were up substantially over the prior year; in March, they were up 12 percent.


Retailer Comments

Northeast

Connecticut: (Hearth, Patio, BBQ) “First quarter sales consistent with 2015.”

Connecticut: (Hearth, BBQ) “This crazy New England weather and low fuel costs have made sales unpredictable.”

Connecticut: (Hearth) “THE WORST SEASON EVER – what can we do? Manufacturers need to create some big incentives that we can offer along with the tax credit. Forget early buys – not going to happen this year.”

Connecticut: (Hearth, Patio) “Warm weather in March means a great start to the patio season!”

Maine: (Hearth) “More gas products this year.”

Maine: (Hearth) “Wood pellet stoves are down.”

Maine: (Hearth, Patio, BBQ) “Complex renovations installing gas fireplaces and stoves are leading over new construction. Pellet remains off with some fuel suppliers dropping price per ton. Be wary of perishable pellets!”

Maryland: (Hearth, Patio, BBQ) “We sell a mix of billiards, saunas, Amish-made structures, casual and hearth. Thank goodness. First quarter down only four percent overall. Casual looking good so far.”

Massachusetts: (Hearth) “Very busy so far this year. A mild winter has allowed construction to stay strong. Looking forward to a busy spring and summer.”

Massachusetts: (Hearth, BBQ) “Early start with barbecue but stalled with cold weather. Hearth is doing very well. Wood stoves and inserts are even and gas is up substantially.”

New Jersey: (Hearth, Patio, BBQ) “Solid growth for March. Hoping it keeps on rolling along.”

New York: (Hearth, BBQ) “March was very slow. No winter, low oil prices and stock market iffy.”

New York: (BBQ, Spas) “Excellent traffic and buyers. Many taking advantage of zero percent interest financing plans.”

New York: (Hearth, Spas) “Great pool traffic, both above-ground and in-ground.”

New York: (Hearth) “We will probably not see an increase in sales until the late summer/early fall when consumers consider the upcoming winter.”

Pennsylvania: (Hearth, Patio, BBQ) “The weather is still strange and I think it is making the consumers even stranger. Hearth is almost flatline except for gas. Service is steady and patio/barbecue is just now starting to pick up a bit.”

Pennsylvania: (Hearth) “Can’t complain about business, there is none. Winter just arrived in April.”

Pennsylvania: (Hearth) “For fiscal year July 1, 2015 to March 31, 2016 sales dollars are dead even, but net profit is up 10 percent. All growth is in gas fireplaces and inserts. Coal, wood and pellet are down.”

Pennsylvania: (Hearth, Patio, BBQ) “Down in March, up in February. Slightly up for first quarter. It’s not getting any easier!”

Pennsylvania: (Hearth, BBQ) “Interest in gas products is up from last year but the warm weather and low oil prices seem to have slowed wood and pellet sales.”

Vermont: (Hearth) “Slowest I’ve ever seen in 37 years.”


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 a memorable month of March. Every state in the contiguous U.S. posted Above Normal or Much Above Normal Temperatures.

This was the winter that basically didn’t occur. From Maine to the state of Washington, and North Dakota to Texas, most folks were content, except ski areas and enthusiasts, snowmobilers, ice fishermen and the restaurants they frequent, etc.

New Mexico experienced a Record Driest month in February, while seven other states posted Much Below Normal precipitation.

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South

Arkansas: (Hearth) “Very, very slow month. No floor traffic whatsoever. Year-to-date 2016 is not looking good at all compared to 2015.”

Florida: (Patio) “More deep-seating groups.”

Texas: (Hearth, BBQ) “Business is less stressful now that we have ended our relationship with grill companies that sell grills cheaper on the Internet. We also savor the moments when we tell customers to contact the Internet for warranty help if that’s where they bought it. Go brick and mortar!”

Texas: (Hearth, Patio, BBQ) “The early spring weather has people out in their yards and thinking about moving outside. Our outdoor kitchen contractors are already getting a backlog on new outdoor living spaces. If that continues, it should be a great season.”

Virginia: (Hearth, Patio, BBQ) “Very slow month.”

Midwest

Illinois: (Hearth, Patio, BBQ) “March was warmer than usual.”

Indiana: (Patio, BBQ, Spas) “We have seen a steady flow of people coming through the doors this spring. I have not seen this type of interest since before the downturn in ’08. The in-ground pool sales have also been way up for this early in the spring. Hope it continues and the weather helps us this year instead of hampering.”

Michigan: (Hearth, Spas) “Our product of the month promo (stoves) rescued an otherwise slow month. Spas/Hot Tubs picking up slightly.”

Michigan: (Hearth, BBQ) “Slow grill sales. Hearth products busy. Gas logs, wood and gas inserts enjoying strong sales.”

Michigan: (Spas) “Absolute crummy start of the month. Politics and retailing mix like oil and water. The Michigan primary at start of month ruined business. Did all of month’s business at a three-day backyard show. It was fantastic. Made for a great increase over 2015 March sales, but we did all 31 days of business in the three days. I had to check store front doors to make sure they weren’t locked. “Store floor traffic was way off. Easter was early, screwed up school spring break lasted three weeks. Weather just so-so. Four knuckle heads running for presidency and disturbing retailing. Come on Mother Nature, heat it up, hot, real hot I hope.”

Missouri: (Hearth) “Very strong new construction in March. Hope it stays up.”

Missouri: (Hearth, BBQ) “Soft sales and low walk-in traffic during March. Very mild winter ended the heating season early. New construction beginning to pick up.”

Ohio: (Hearth, BBQ) “Still trying to get back on track after a slow beginning of the year. Need warm weather for grill season to really take off. Thankfully, Big Green Eggs and Eggcessories are already moving well.”

Wisconsin: (Hearth, BBQ) “Yes, March 2016 was down from March 2015. It’s just steadier this year. Probably because of the warm winter in northern Wisconsin. I’m sure it’s going to be another big year. New construction permits are up. Will start seeing that work by May/June.”

Wisconsin: (Hearth) “Much slower than a year ago.”

Wisconsin: (Hearth, BBQ) “Nice month, a fair amount of remodels and new construction booked for spring/summer time. Hoping the political climate does not affect sales in the future. Added an additional employee.”

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) “It’s great getting new customers as the weather warms up.”

Arizona: (Hearth, Patio, BBQ) “Local competitors continue to sell way below MAP, mostly local chain paver, hardscape-type companies who think 15 to 20 percent is a good margin.”

California: (Hearth, BBQ, Spas) “We warmed up in February so hearth products tanked. In the San Joaquin, California, valley, as soon as we get a week of warm weather sales and service drop dramatically until late April.”

California: (Hearth, Spas) “Great spring so far.”

California: (Hearth, BBQ) “March has been a great month for fireplace sales. There are lots of remodels and the higher-priced fireplaces are selling best. Surprised to see barbecue sales up so early.”

California: (Hearth, BBQ) “Best March since 2011.”

California: (Hearth, Patio, BBQ, Spas) “A little slow but looking forward to a good year. We had a lot of customers looking at stoves and wanting to install them this summer.”

California: (Hearth) “Good bounce from March going into the summer season.”

Colorado: (Hearth, BBQ) “We were up 100-plus percent on a number of units sold over March 2015. Got to love that. We also built a fabulous website last fall and are seeing the results. Got to spend money to make money.”

Nevada: (Hearth, BBQ) “Happy with March 2016.”

Washington: (Hearth, Patio, BBQ, Spas) “Slow month.”

Canada

British Columbia: (Patio, BBQ) “March 2015 was extremely good sales, and comparing March 2016 to the 2015 March shows a very big drop. But comparing to March 2014, we have an increase of two percent. We moved to a larger showroom after eight years at the old location because we needed more showroom space. Now we are settling in the new showroom and there is a lot of foot traffic as we are situated near a very busy liquor store! Imagine a liquor store and a barbecue shop and a butcher shop in one busy complex. Can’t wait for summer.”

British Columbia: (Hearth) “Better sales in units and chimney. More cookstove sales than last year is the only specific difference.”

Ontario: (Patio) “Things are about the same as last year. Some consumer resistance because of price increases related to the United States dollar. Canadians currently buy most patio in United States dollars. But that may change.”

Ontario: (Patio, BBQ) “The weather is pretty much like a seesaw. Once the snow is gone and it warms up, it’s looking good for 2016. Lots of interest!”

Ontario: (Hearth, Patio, BBQ) “March had a surprising increase.”

Ontario: (Hearth, BBQ) “Not a good winter. Period.”

Ontario: (Hearth) “Who shut off the lights?”

Ontario: (Hearth, Patio, BBQ) “Thank goodness this season is coming to an end and we can focus on making 2016/2017 a catch-up year. I feel for the young folks who have only the past couple of years to base a business on, and the giants with the big payrolls must be crying. No more Mr. Nice, this year we’re going to bury the weak, no mercy! Some new dealers need to learn real math skills; try reading Blueprint for Success, it might just save your investment. It changed our way of thinking decades ago.”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 04-MAR-16 01-APR-16 4 WEEK 26 WEEK 52 WEEK ($000,000)
HNI Corporation (a) HNI 57.74 29.84 36.32 39.55 8.9% -9.5% -29.7% $1,730.0
Pool Corporation (b) POOL 89.17 64.50 81.56 88.39 8.4% 19.6% 29.0% $3,750.0
Rentech (b)(e) RTK 12.50 1.55 2.42 3.04 25.6% -44.4% 171.4% $77.6
Restoration Hardware Holdings (a) RH 106.49 35.03 39.41 43.77 11.1% -53.2% -53.9% $1,760.0
Wayfair, Inc. (a) W 56.84 27.36 44.73 43.96 -1.7% 21.5% 42.7% $3,520.0

(a) = New York Stock Exchange
(b) = NASDAQ
(e) = Rentech is the parent company of New England Wood Pellet, which is the parent company of Allegheny Pellet.

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