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Hearth & Home December 2017

2017 October Business Climate


October 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 2017 sales to October 2016. The accompanying charts and selected comments are from the 214 useable returns.


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Weather Report

Consumer Confidence

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RETAILER SALES – U.S. AND CANADA
October 2017 vs. October 2016

In October, the majority of Hearth retailers (55%), and the majority of Spa retailers (56%) were UP, while the majority of Patio retailers (71%), and the majority of BBQ (60%) retailers were the Same as last year.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
October 2016 vs. October 2017

In October, sales of Spas were up 10%; both Hearth and Patio products were up 6%, and Barbecue was up 4%.


Retailer Comments

Northeast

Connecticut: (Hearth) “August and September were very encouraging but, with the warm weather hanging on, sales slowed down. Not sure what to expect for the rest of the season. Still, like the last few years, there’s no urgency.”

Delaware: (Patio) “Quiet.”

Maine: (Hearth, Patio, BBQ) “Despite the warmest October on record, severe weather events have pushed demand for back-up heat sources. Customers want to be ready the next time the grid goes down.”

Maine: (Hearth, BBQ) “Had projected great sales for October (typically our busiest month of the year) based on the increased sales in the previous two months, however, that is not how it turned out. It appears consumers found better things to do in the absence of cold weather. Maine summers are lingering on way too long up here – not good for end of season sales.”

Massachusetts: (Patio) “Late spring was rainy. Summer months were all up with large increases. October is normally the poorest month for sales, however, this year…”

New Jersey: (Hearth, Patio, BBQ) “Started fast then the warm weather stalled the sales.”

New Jersey: (Hearth, Patio, BBQ) “Strong growth in October! Looking to continue this trend throughout the season.”

New York: (BBQ, Spas) “Not the best October we have had. Disappointing after a great run so far in 2017.”

New York: (Hearth, Patio, BBQ, Spas) “Every category is strong. Gas is still number one, pellet is second and wood is third. Wood is the best it’s been in years.”

New York: (Hearth, Spas) “An extremely mild October contributed to an increase in hot tub sales and decreased sales in hearth products. Having a hard time finding reliable installers! No one wants to work.”

Pennsylvania: (Hearth) “We are down 3% for the calendar year. Everything selling well in gas, but coal and wood are dead because of mild weather.”


Weather Report

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

The six New England states experienced the Record Warmest month of October since tracking began 123 years ago (and we enjoyed every minute of it!). At the other end of the country, Washington, Oregon, Idaho and Wyoming had Below Average temperatures.

In the three-month period from August to October, five New England states had Record Warmest temperatures, while Vermont posted temperatures that were Much Above Average. Only Oklahoma recorded Below Average temperatures.

In October, a precipitation record was set in Michigan, while 10 states (Maine, New Hampshire, Massachusetts, Connecticut, Rhode Island, West Virginia, Kentucky, Wisconsin, Iowa and Nebraska) experienced Much Above Average precipitation.

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South

Alabama: (Hearth, Patio, BBQ) “Not sure why, but sales were down. The temperature was 75 degrees yesterday 11/6/17 – people here tend to procrastinate until the first cold snap.”

Arkansas: (Hearth) “Not a good month for retail. Warm weather kept customers outside and not interested in heating products. Need some cold weather!”

North Carolina: (Hearth) “Turning down more business than we are doing due to personal health reasons, and the labor pool just plain SUCKS! Every time I hire someone who thinks they know what they’re doing, I end up spending more time and money going behind them to fix their crappy workmanship. After turning 60 with 35 years in the business, it’s time for this worn-out 75-hour a week old man to get out. Maybe I’ll open a training college for the morons who think they know Quality.”

Oklahoma: (Hearth) “Year-to-date up 48%.”

Oklahoma: (Hearth) “Strong month – hope it keeps getting better. Almost doubled last October sales.”

Texas: (Hearth, Patio, BBQ) “September and October have been very slow for barbecue equipment; accessories have held their own. Hearth products are way behind last year, but we have been very warm and, until it cools off, expect for it to stay slow.”

Virginia: (Hearth, Patio, BBQ) “Steady volume all month long. Tis the season!”

Midwest

Michigan: (Hearth, Spas) “Record setting heat in the Midwest made for a dismal October for our hearth business. Spa/Hot Tubs still strong.”

Michigan: (Spas) “Another great month in the hot tub business, up from last year, but 2016 was a little soft. Attribute sales growth to a massive advertising market over last few months. Small ticket sales, accessories, supplies and equipment – Amazon is absolutely killing it. Gravely concerned about the future. Gave entire staff time off, and cut some nice bonus checks. Had a good time in October. All set and ready to go for holiday business. If November and December 2017 match last year it’s going to be a hard-fought but profitable year.”

Michigan: (Hearth) “Just opened our fourth store in Southeast Michigan and are growing at a 10% pace without the new sales from the just opened store in Brighton, Michigan. The first month of the new store’s opening has seen $250K in sales. Michigan is back and hearth is booming.”

Missouri: (Hearth, BBQ) “October was an extremely good month, so much so that we flat ran out of month and have had to carry many jobs into November. While I had a 22% increase over last year, I had to carry over an additional 28% into November. Last year at this point, my company had grown about 22% for the year. I’m keeping pace with that growth, even considering the increased competition we had this year.”

Nebraska: (Hearth, Patio, BBQ) “We need more consistent cold weather.”

Wisconsin: (Hearth, BBQ) “Last year October was outstanding; this year we had comparative sales. With the early cold and snow, hoping for continued good sales.”


Consumer Confidence

The Consumer Confidence Index, which had improved marginally in September (an upward revision), increased again in October. The Index now stands at 125.9 (1985=100), up from 120.6 in September.

“Consumer confidence increased to its highest level in almost 17 years (December 2000, 128.6) in October after remaining relatively flat in September,” said Lynn Franco, director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved, boosted by the job market which had not received such favorable ratings since the summer of 2001. Confidence remains high among consumers, and their expectations suggest the economy will continue expanding at a solid pace for the remainder of the year.”

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.

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West

Arizona: (Hearth, Patio, BBQ) “Business up in all categories. Booked for installs through December!”

California: (Hearth, Patio, BBQ, Spas) “October sales are down because we have not been able to bill everyone in a timely manner. Still very busy with installs and services. Need more help, but it’s hard to get employees who have any construction experience.”

Oregon: (Hearth, BBQ) “Sales are good. As everyone else, we could use more qualified help. It’s hard to find. Sales have been brisk.”

Utah: (Hearth, Patio) “Sales are picking up, looks like we’re going into a good final season.”

Washington: (Hearth, Patio, BBQ, Spas) “Up over last year, and last year was a record.”

Canada

British Columbia: (Hearth, Patio, BBQ, Spas) “Pretty flat month with last year, but September was our best month ever.”

Ontario: (Patio) “Patio still tough. Canadian dollar falls again after an upside splurge. It hurts when you have to buy and pay in U.S. dollars.”

Ontario: (Hearth) “Ontario had a very warm month for October, and there was not a lot of traffic in our store. Toward the last week, we finally got some sales, but even so, we’re down 38% from last year!”

Ontario: (Hearth, Patio, BBQ) “Folks are talking what a good year this is turning into. Compared to what, the pathetic previous two years? Too many dealers, too much Internet BS, too much price chopping, add manufacturers that are not ready, and voila! Appears this industry is dead as we knew it; welcome to the new world, and don’t forget your rubber boots.”

Ontario: (Hearth) “The warm fall is having a delaying effect on traffic.”

Ontario: (Hearth, BBQ) “Great fall, all is well.”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 29-Sep-17 27-Oct-17 4 WEEK 26 WEEK 52 WEEK ($000,000)
Standard & Poor’s 500 (a) S & P 2,581.07 2,085.18 2,519.36 2,581.07 2.4% 8.3% 21.4%  
HNI Corporation (b) HNI 56.94 31.16 41.47 35.82 -13.6% -23.4% -11.3% $1,830.00
Pool Corporation (c) POOL 124.26 91.68 108.17 121.13 12.0% 1.3% 31.3% $4,850.00
Rentech (d) RTK                
Restoration Hardware (b) RH 93.64 24.41 70.32 86.64 23.2% 80.6% 198.6% $1,820.00
Wayfair, Inc. (b) W 84.19 27.60 67.40 67.55 0.2% 47.8% 102.4% $5,630.00

NOTES:

(a) = Standard & Poor’s 500 is based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. It is considered one of the best representations of the U.S. stock market, and a bellwether for the U.S. economy.
(b) = New York Stock Exchange
(c) = NASDAQ
(d) = Rentech is the parent company of New England Wood Pellet, which is the parent company of Allegheny Pellet.

Rentech has notified Nasdaq of its intention to voluntarily withdraw the Company’s common shares from listing of the Nasdaq Capital Market effectively immediately prior to market opening on October 16, 2017. Rentech’s common shares will be listed on the OTCQB Market. The transfer is due to Rentech’s inability to cure its noncompliance with the NASDAQ Listing Rule which requires Rentech’s common shares to trade above $1.00 for 30 consecutive business days before October 9, 2017 or 180 days from which Rentech received notification from Nasdaq regarding its noncompliance with the NASDAQ Listing Rule. Effective with this issue, Rentech will no longer be reported in Stock Watch.

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