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Hearth & Home February 2018

2017 December Business Climate


December Sales

In early January Hearth & Home faxed and emailed a survey to 2,500 specialty retailers of hearth, barbecue and patio products, asking them to compare December 2017 sales to December 2016. The accompanying charts and selected comments are from the 182 useable returns.


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Weather Report

Consumer Confidence

Stock Watch


MONTH-TO-MONTH

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

In December, the majority of Hearth retailers were UP in sales (53%), 50% of Spa retailers were also UP, while only 20% of Barbecue retailers and 9% of Patio retailers were UP.


YEAR-TO-DATE

RETAILER SALES – U.S. AND CANADA
January 1 – December 30, 2017 vs. January 1 – December 30, 2016

Sixty-three percent of Hearth retailers were UP on a Year-to-Date basis, 59% of Spa retailers were also UP, while only 26% of Barbecue, and 20% of Patio retailers were UP.


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

In December, sales of Hearth products were up 9%, Spas were up 8%, and Barbecue products were up 3%; Patio furnishings were down -5%.


Retailer Comments

Northeast

Connecticut: (Hearth) “Although we were busier than in December of 2016 due to much colder weather, the sales were more for gas logs than stoves. Also, traffic and interest is stronger than in 2016. Hoping for an extended season. Oil higher, weather colder. Hope it works.”

New Jersey: (Hearth, Patio, BBQ) “Showroom is very busy. Strong finish for a very good year.”

New York: (Hearth, Patio, BBQ) “Large increase in service work that led into sales of new products.”

New York: (BBQ, Spas) “December traffic and sales continued for a great close to 2017. Happy New Year!”

New York: (Hearth, Spas) “December sales were their usual blah until the you-know-what hit the fan, and Mother Nature bore down in a sub-zero freezing fury! Expecting a little uptick now. Still casting our nets to try to reel in some good help! Thanks to our wonderful governor, minimum wage has gone up for the third time in two years, so that means all staff wages (not just minimum) will go up as well as our fees for service.”

Pennsylvania: (Hearth, Patio, BBQ) “Customers are spending money. More installation than cash-n-carry. Installations scheduled to end of February. 2018 off to a good start.”


Weather Report

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

Although there were Below Average temperatures recorded in some northern tier states, and twelve other states posted Above Average or Much Above Average temperatures, the majority of states were at Near Average in December.

Hot, hot, hot. In the three-month period from October to December, Arizona, New Mexico and Colorado posted Record Warmest temperatures, and four neighboring states were at Much Above Average temperatures.

Arizona, New Mexico, Georgia, South Carolina, and North Carolina – experienced Record Warmest weather in 2017. The rest of the country was at Above, or Much Above Average temperatures. Nationwide, it was the third warmest calendar year since records began 123 years ago.

In December, only two states – Arkansas and Montana – experienced Above Average precipitation, but 15 states recorded Much Below Average precipitation.

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South

Arkansas: (Hearth) “Retail was much slower than typical December due to extremely cold weather. Customers did not get out to buy and installers could not install much this month. Hopefully, 2018 will bring stronger sales and profits.”

Florida: (Patio) “Economy is good; Internet continues to disrupt sales. Do not see this trend slowing.”

Oklahoma: (Hearth) “Very cold weather is bringing in a lot of foot traffic.”

Virginia: (Hearth, Patio, BBQ) “Wow, what a busy month.”

Midwest

Illinois: (Hearth, Patio, BBQ) “Seemed to sell a lot of grills as Xmas presents.”

Indiana: (Patio, BBQ, Spas) “We had a cool start to fall and then it leveled out and was decent temps ’til about a week or so before Christmas, then the cold wave hit and most traffic stopped except for grills and a few spas. We had a larger Christmas push for grills than we have ever had before, which we attribute to how well the economy is doing in our part of the country right now. Hope things keep rolling at this rate or even better as next year speeds along! I have a better outlook on the future as long as we can get the employees to manage the extra work that will be coming in.”

Michigan: (Hearth, Spas) “Thank goodness for spas and gas fireplaces/inserts. Wood and pellet appliances are as dead as a stone.”

Michigan: (Spas) “Interesting month. Detroit area is roaring on all cylinders. Outstanding three weeks of December. Great foot traffic on every product line – hot tubs, game tables, accessories, supplies and service – then December 22 sales fell off the cliff. Snow and extremely cold weather have frozen what I thought would be great after Christmas. Not so. Had a tough but great year. Employee’s Christmas stockings were a little fuller this year. Looking optimistic about 2018. My crystal ball says so. Happy New Year.”

Michigan: (Hearth, BBQ) “Slow sales. Lost our installer – heart attack. Salesperson quit. New employees. Hope for better year.”

Ohio: (Hearth, BBQ) “The mad dash to Christmas was fantastic. We were slamming out direct-vent insert installations almost as much as gas logs. It’s amazing how many customers you can upgrade from a log set to a direct-vent insert when you have your staff trained properly. It’s taken three years to slowly turn that corner, but the numbers tell the story.”

Wisconsin: (Hearth, Patio, BBQ, Spas) “Spent most of December trying to find expenses, or making purchases so we don’t have to pay so much tax.”


Consumer Confidence

The Consumer Confidence Index decreased in December, following a modest improvement in November. The Index now stands at 122.1 (1985=100), down from 128.6 in November.

“Consumer confidence retreated in December after reaching a 17-year high in November,” said Lynn Franco, director of Economic Indicators at The Conference Board. “The decline in confidence was fueled by a somewhat less optimistic outlook for business and job prospects in the coming months. Consumers’ assessment of current conditions, however, improved moderately. Despite the decline in confidence, consumers’ expectations remain at historically strong levels, suggesting economic growth will continue well into 2018.”

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

California: (Hearth, Patio, BBQ, Spas) “The whole year went by so fast and December was extremely busy. The year was good and made enough to do improvements on the store, which is a plus. Hoping for more of the same next year. December we had a lot of customers calling us back to install another stove, or they have recently bought a new home in the area. The economy seems to be taking a step in the right direction.”

California: (Hearth, Patio, BBQ, Spas) “We have to look at the weather! We’re selling a lot of grills and barbecues instead of heating appliances. A direct reflection of very slow hearth sales this month.”

California: (Hearth, Patio, BBQ) “December was a good month overall. We are into our season and sales are continuing at a brisk pace.”

Oregon: (Hearth) “December was the best month in company history. In a year where records are constantly broken, we didn’t think we would be able to do it again. Keep it coming!”

Oregon: (Hearth) “Season came on a little later than normal, but finished this year strong. We have had three other service companies in our area quit doing gas service, so we are real busy right now.”

Washington: (Hearth, Patio, BBQ, Spas) “Best sales year yet.”

Washington: (Hearth) “It has been one of the strongest Decembers we have had in a while, and it has not stopped. Customers didn’t mind if product could not be installed ’til January.”

Canada

British Columbia: (Hearth, Patio, BBQ, Spas) “December exceeded our expectations by a wide margin with overall sales up 39% on what had been a record December in 2016. Fireplace sales led the way and have provided work for January that should push our sales up this month. Overall, we’re very happy with 2017 and the start to 2018. Happy New Year everyone!”

Ontario: (Hearth) “Strong sales going into new year.”

Ontario: (Hearth, Patio, Spas) “Hoping for a good spring and summer weather wise. That will fuel the customer’s enthusiasm.”

Ontario: (Hearth) “Even though we are higher than our average, we are lower than last year. So we are still pleased. We had a clear month for weather - it was great until a week before Christmas, when suddenly everything died. That was great for us – we were able to finish all our jobs that we had promised. We’re optimistic.”

Quebec: (Hearth, Patio, BBQ, Spas) “We sold fewer units but bigger ticket!”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 1-Nov-17 29-Dec-17 4 WEEK 26 WEEK 52 WEEK ($000,000)
Standard & Poor’s 500 (a) S & P 2,690.16 2,191.94 2,642.22 2,673.61 1.2% 10.3% 19.4%  
HNI Corporation (b) HNI 56.94 31.16 34.24 38.57 12.6% -3.3% -31.0% $1,700.00
Pool Corporation (c) POOL 132.29 97.25 126.84 129.65 2.2% 10.3% 24.3% $5,270.00
Restoration Hardware (b) RH 109.53 24.41 101.97 86.21 -15.5% 33.6% 187.8% $1,910.00
Wayfair, Inc. (b) W 84.19 34.30 70.23 80.27 14.3% 4.4% 129.0% $7,120.00

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

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