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Hearth & Home November 2019

2019 September Business Climate


September Sales

In early October, Hearth & Home faxed and emailed a survey to 2,500 specialty retailers of hearth, patio, and barbecue products, asking them to compare September 2019 sales to September 2018. The accompanying charts and selected comments are from the 194 usable returns.


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Weather Report

Consumer Confidence

Stock Watch


MONTH-TO-MONTH

RETAILER SALES – U.S. AND CANADA
September 2019 vs. September 2018

In September, 43% of Hearth retailers were UP, 33% of Spa retailers, and 25% of both Patio and Barbecue retailers were also UP.


13 MONTH YEAR-OVER-YEAR RETAILER SALES
September 2019 vs. September 2018

In September, Hearth retailers led the way with a 5% gain in sales, followed by Spa retailers with a 3% gain. Patio and Barbecue retailers were both down in sales by 4%.



Retailer Comments

Northeast

New Hampshire: (Hearth) “Good and steady. Weather is holding for now, which is holding off the frantic, last-minute customers.”

New York: (Hearth, Patio, BBQ) “Sales continue to be awesome! Service and installations booked solid into December. Wood stoves have been selling very well and we haven’t had to discount any of the non-2020 units yet. We are totally switched over on several brands. Only six small stoves left and we will be all done with all non-2020 products, including showroom. Glad we started early! Gas fireplaces and inserts also doing very well.”

New York: (Patio, Spas) “The weather was great in September and our customers’ patios were finally getting finished so they were still purchasing hot tubs and patio furniture to complete their space.”

New York: (Spas) “In August, cautious consumer spending has rolled over into September. Unit sales are down, however, some large swim spa sales have boosted revenue. In addition, service after the sale has helped. That’s the future.”

New York: (Hearth, Spas) “I suppose it would be foolish to expect customers breaking our doors down, when, on October 1, it’s 82 degrees in the Northeast. Nonetheless, we have experienced a greater than usual number of shoppers. Surprisingly, way more wood-stove shoppers than in recent memory. By the way, we are no longer carrying screens, kettles, tool sets, and similar accessories, as they just gather dust.

“Meanwhile, our friends at Amazon will be happy to take your money, my margin, and a portion of our livelihood for these items. And, if the BIG Vent folks are reading this, you need to do a better job implementing and enforcing MAP pricing in defense of the Mom-and-Pop, brick-and-mortars that got you where you are today. Heck, I can buy my venting on Amazon at wholesale prices with free shipping at a better price than the supplier. Just sayin'”

Pennsylvania: (Hearth, Patio, BBQ) “We feel that we are ahead of the curve with the new 2020 EPA regulations. We have most of the new stoves and inserts already in the showroom. Early signs show wood to be strong this season.”

Pennsylvania: (Patio) “Third quarter was about 30% off from last year.”


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.

In September, Colorado, New Mexico, Texas, Louisiana, and Ohio had Record Warmest temperatures. From coast to coast, it was the second warmest September since 1895.

For the three-month period July – September, only New Mexico and Colorado had Record Warmest temperatures. Nationwide, it was the fourth warmest July - September in 125 years.

In September, only North Dakota had Record Wettest precipitation, but Florida, Georgia, Alabama, Mississippi, Kentucky, and West Virginia had Record Driest precipitation.

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South

Arkansas: (Hearth) “Finally a good retail month for wood and gas products despite extremely warm days. Customers are finally thinking fall/winter heating and getting ready. Mostly remodeling jobs, which is OK with us. Come on cold weather.”

Florida: (Patio) “Moved to a bigger showroom this year; more space to show our awesome merchandise!”

Florida: (Hearth, BBQ) “Overall, sales have been consistent, the customer count has been the same as 2018. So we haven’t lost any customers but haven’t gained any new customers, even with significant housing turnovers. Plus, back-to-school affects customers’ priorities. Still, the holidays are coming!”

Oklahoma: (Hearth) “Still warm in September.”

Texas: (Hearth, Patio, BBQ) “Fireplace accessories continue to decline. Fireplace doors continue to explode in numbers, profits, and mistakes! We are our worst enemy. Doors are complex and detailed. Customers are demanding and sometimes don’t know what they want! Expensive gas units such as the DaVinci moved the profit needle. But all these units require knowledge and technical skills, with most sales in the demanding winter months.

“It’s very stressful. There are two kinds of misery – not enough business and too much. I wouldn’t trade with anyone! We have a great sales staff. Labor is a top concern. Millennials want a four-day work week, shorter hours, and more pay! Me too, and I have worked for it! Life is good – mostly!”

Virginia: (Hearth, BBQ) “This heat needs to go away! Traffic has definitely picked up, though. Even though we are down, it was a good month.”

Virginia: (Hearth) “From rain to drought. From comfortable temperatures to record highs for this time of year. With all that happening, sales dropped and now we all hope for normal autumn weather to return.”

Midwest

Illinois: (Hearth, Patio, BBQ) “Had a very strong month as we continue to make up for a miserable spring!”

Indiana: (Patio, BBQ, Spas) “Our grill sales seem to go in spurts; we go weeks without anybody really looking and then, in two days, we will sell three of them. Our spa sales have been steady but not as good as they could be. We are getting ready to have a spa sale so, hopefully, that will help move some tubs. Our furniture sales are pretty much down to nothing and we are actually thinking of getting out of that part of the market.

“There are other larger suppliers that we hadn’t had to work against before, and the Internet is also taking a large chunk. The main part of our company is the installation and servicing of in-ground pools and spas and when we go back for follow-up calls on the installations we notice all of the boxes and shipping tags that are in the garage or at the curb. Frontgate, Wayfair, and other sites are getting sales that used to come out of our showroom.

“I hear rumors of the downturn of the economy; they’re going to cause a recession just because they continue talking about it. I haven’t seen anything slowing down in our part of America and we have major manufacturing happening in our backyard, and they are still moving units at an incredible pace. I have almost the whole year of 2020 already booked and clients are asking what it will take to get in for the spring of 2021.”

Michigan: (Spas) “The Metro Detroit area was like an absolute roller coaster this spring, summer, and early fall; Mother Nature was at the controls. Coming out of September for the second and third quarter we managed to hit 2018 numbers – dollars to dollars. Don’t know how, but we’re even up against our best year ever. That’s somewhat the good news.

“The bad news is labor costs and financing credit-card sales all rose and chopped into profit. New employees that we hired didn’t perform to any kind of expectation, which also caused lower margins on service and counter sales. Then the Internet, though we have embraced it, remains a real sore spot that appears to be getting more and more attention and time defending our price and the services we offer even though we match legitimate Internet prices. So it was a rough year, but we’re standing tall and strong ready to do another day.”

Minnesota: (Hearth, BBQ) “The rainy weather affected new construction starts in the area over the summer, and we are feeling it now. We are optimistic about the coming months; traffic has really picked up.”

Minnesota: (BBQ, Spas) “Kamados are down.”

Missouri: (Hearth, BBQ) “Barbecue sales have dropped significantly this year. Portable gas grills are notably down. Pellet grills are dominating the marketplace but are still selling below last year’s level. Hearth products are strong.”

Ohio: (Hearth, BBQ) “Our little mini sales recession that started in August carried over into September. The weather has simply been too warm to prompt the reactionary customers to come into the stores. Chilly, fall weather is in the forecast. We’re hoping for that out-of-control, mad dash to the holidays to get into full swing soon!”

Wisconsin: (Hearth) “Retail and contractor sales are steady and strong. 2018 was our consumer spending “high.” Consumer confidence/demand is not at the “phenomenal” levels of 2018.”

Wisconsin: (Hearth, BBQ) “Good month. Sales are steady. Booked out about four to five weeks.”

Wisconsin: (Hearth, Patio, BBQ) “Still bouncing back from a wet, cold spring and summer. Contractor sales are down because of weather. Seeing some rebound – now, if it only will quit raining.”


Consumer Confidence

The Consumer Confidence Index Index decreased in September, following a slight decline in August. The Index now stands at 125.1 (1985=100), down from 134.2 in August. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased from 176.0 to 169.0. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – declined from 106.4 last month to 95.8 this month.

“Consumers were less positive in their assessment of current conditions,” said Lynn Franco, senior director of Economic Indicators at The Conference Board. “and their expectations regarding the short-term outlook also weakened.

“The escalation in trade and tariff tensions in late August appears to have rattled consumers. However, this pattern of uncertainty and volatility has persisted for much of the year, and it appears confidence is plateauing. While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers’ confidence in the expansion.”

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) “2019 has been very, very good so far!”

California: (Hearth, BBQ, Spas) “Great month for stove sales; the weather has been cooperating and it has been getting colder. We have two crews working and we’re still booked for two months. People are thinking ahead to when we lose power, so wood and gas stoves are big sellers, but we’re still selling lots of pellet stoves. Hopefully, we can keep this up until we catch up!”

California: (Hearth, Spas) “School starting and heavy vacationing this year hurt our traffic and sales. Looking for a good winter though!”

Colorado: (BBQ) “Grills up. Fuel down.”

Colorado: (Hearth) “Step 1 wood-stove sales are racing. The urgency of getting the current models has driven sales up 20% over last year, which was a great year!”

Oregon: (Spas) “Things stayed flat this month.”

Oregon: (Hearth, BBQ) “Seemed cooler the second half vs. last year.”

Washington: (Hearth, Spas) “Good September. Having a banner year!”

Canada

British Columbia: (Hearth, BBQ) “Hearth sales continue strong, but very similar to previous months.”

British Columbia: (Hearth, BBQ) “Eerily quiet, probably due to a mild September – hardly any foot traffic or requests for quotes. Will be interesting to see if it will change once it gets cold.”

British Columbia: (Hearth) “Consistent interest in hearth, but little in the way of purchases. No below-freezing temperatures yet, so that may change.”

British Columbia: (Patio, BBQ, Spas) “It has been an up and down year; sales are decent but we’re not overly busy. The federal election has had a dampening effect on the economy in general; we will see what happens after October 21. September started slow, but finished with a bang – good sales, up in all categories. Still a happy camper!”

Ontario: (Hearth, Patio, Spas) “Started the month very strong; slow shipments of EPA 2020 product left the month ending slow. Just another month in the hearth industry saga. Some people like roller coasters! Year-to-date increases don’t match the YTD expenditure increases. It’s been years – something has to change soon.”

Ontario: (Hearth, Patio, Spas) “Good to see an increase in sales across the board.”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 30-Aug-19 27-Sep-19 4 WEEK 26 WEEK 52 WEEK ($000,000)
Standard & Poor’s 500 (a) S & P 3,025.86 2,351.10 2,926.46 2,961.79 1.2% 4.5% 1.6%  
HNI Corporation (b) HNI 42.28 29.90 31.19 35.43 13.6% -2.4% -19.9% $1,460.00
Pool Corporation (c) POOL 204.97 136.83 196.38 199.52 1.6% 20.9% 19.6% $8,050.00
Restoration Hardware (b) RH 178.18 84.11 142.35 171.23 20.3% 66.3% 30.7% $3,240.00
Wayfair, Inc. (b) W 173.72 76.60 112.74 114.04 1.2% -23.2% -22.8% $9,650.00

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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