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Hearth & Home December 2019

2019 October Business Climate


October Sales

In early November, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, patio, and barbecue products, asking them to compare October 2019 sales to October 2018. The accompanying charts and selected comments are from the 209 usable returns.


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Weather Report

Consumer Confidence

Stock Watch


MONTH-TO-MONTH

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

In October, 57% of Spa retailers were UP, 51% of Hearth retailers were Up, and only 24% of Barbecue retailers said they were UP, and 18% of Patio retailers.


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

In October, Spa retailers led the way with a 12% gain in sales, followed by Hearth retailers with 7% gain, and Patio retailers with a 5% gain. Barbecue retailers were down in sales by 1%.



Retailer Comments

Northeast

Delaware: (Hearth, BBQ) “This year has really been in the doldrums. Finally, a month comparable to last year’s!”

Maine: (Hearth, Patio, BBQ) “October is a transitional weather month, and this October delivered two severe wind and rain storms within a week, cutting power to 180,000 homes. That has consumers’ attention! Demand for wood and gas supplemental heat has been strong, with lead times increasing as colder weather approaches.”

New York: (Hearth) “We are surrounded by the Big Box stores on all sides. It gets more difficult to sell quality products at a fair price. We often get customers who have tried the Big Box stores and were not only disappointed in their quality but in the service as well. We look forward to a cool winter and the opportunity to serve.”

New York: (Hearth, Spas) “October has been a pleasant surprise in the hearth area. Our sales have exceeded projections by 15%. We’re not seeing much traffic for fireplace accessories, and the wood stoves have had a lot more interest than last year. That said, let’s all keep our fingers crossed for some cold weather, to keep the store traffic high!

“I have noticed a huge selection of pellet and wood stoves on Wayfair.com. None of them mention being 2020 compliant. In fact, Amazon has a lot of them, too, but 2020 compliance is not mentioned anywhere. Is anyone policing these junk stoves on the Internet selling platforms? Who monitors that? Just wondering.”

Pennsylvania: (Hearth) “Unusual October. Warm temperatures allowed us to complete chimney repairs. Cool nights increased foot traffic in the showrooms. Wood and pellet sales are up.”

Pennsylvania: (Hearth) “This could be our best year ever. Last year at this time we were up 25% over 2017. Now, at an 11% gain over that, it’s just a super year. This is a 39% change since 2017.”


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 October, Idaho set a Record Coldest month, while 11 eastern states had Much Above Average temperatures.

For the three-month period of August–October, the states of Alabama, Georgia, and Florida experienced Record Warmest temperatures.

In October, Mississippi posted a Record Wettest month, while the states of California, Arizona, and Utah, where precipitation was needed, experienced only Much Below Average.

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South

Arkansas: (Hearth) “Finally getting some decent retail business due to cooler weather. People are waiting till the last minute to buy and install this year, but at least a few are buying. Unfortunately, we will probably not make up for low sales in the April-May-June 2019 period.”

Florida: (Hearth, Patio, BBQ) “September was a very quiet month; we had some good sales but fewer of them. I don’t know if more customers are shopping online or just thinking about fall. The weather could be a factor, it’s been extremely warm here in Florida.”

Mississippi: (Patio) “Slow start and then picked up with special orders toward the end of the month.”

North Carolina: (Hearth) “It has been a slow spring and summer – more people are waiting for cool weather than normal, so only six slots left for installations before end-of-year break.”

Texas: (Hearth, Patio, BBQ) “We have been blessed and found by staying true to our business model instead of trying to be all things to everyone. Of course, the communities we serve are well-established with disposable income. We believe we are lucky as well.”

Virginia: (Hearth) “October’s sales were good, but were dwarfed by annual maintenance calls for the upcoming fall and winter seasons. For three weeks straight, we were averaging five service calls a day.

“That’s more than any of the past years. Sales are picking up as well. Especially, direct-vent conversions to our ever-popular vent-free gas inserts. As several customers said, ‘I want real heat, not just looks.’”

Virginia: (Hearth, BBQ) “Down, but still a good year. Booked out to mid-January.”

Virginia: (Hearth) “A more refined marketing plan seems to be paying off.”

Midwest

Illinois: (Hearth, Patio, BBQ) “Weather was good and people seem to be still catching up from a bad spring when you couldn’t sit on your patio!”

Indiana: (Patio, BBQ, Spas) “Seeing constant traffic in the store for grills and spas the last two months, which has turned into some extra sales. Our economy in this area is still on the uptick.”

Michigan: (Hearth) “We experienced record hearth sales in October. The economy in Michigan is very healthy.”

Missouri: (Hearth, BBQ) “A rough start to the year due to many factors that includes spring/summer flooding, has paved the way for a strong fall. The prediction of above-average precipitation in the Midwest for the winter has also helped quite a bit. While we are normally scheduling two to three weeks out at this time of the year, we are currently scheduling over a month out. All other hearth companies in a 60-mile radius are doing the same thing.”

Wisconsin: (Patio, BBQ, Spas) “Consumer confidence is still there, but with staff changes our sales in general were down. Beyond that we had a very late start to our spring, if you can call it that, and a quick shutdown in the weather for fall. Way too short of a season, period.”

Wisconsin: (Hearth, BBQ) “Even though the hearth unit increase is small, the actual dollars of product sold is up 25%. So we’re selling higher-end products.”

Wisconsin: (Hearth, BBQ) “Hard to give you accurate information this time. We are in a retirement mode for this month and last month. So part of the sales are going to the new ownership. I will not be doing the books for them – not that anything is hidden. The combined sales are up. The super cold has amped up the business and demand. Installations are now booking into January.”


Consumer Confidence

The Consumer Confidence Index decreased marginally in October, following a decline in September. The Index now stands at 125.9 (1985=100), down from 126.3 in September. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 170.6 to 172.3. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – declined from 96.8 last month to 94.9 this month.

“Consumer confidence was relatively flat in October, following a decrease in September,” said Lynn Franco, senior director of Economic Indicators at The Conference Board. “The Present Situation Index improved, but Expectations weakened slightly as consumers expressed some concerns about business conditions and job prospects. However, confidence levels remain high and there are no indications that consumers will curtail their holiday spending.”

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, BBQ) “One hundred and eighty thousand people were evacuated from our area this month because of fires. We’re still five weeks out on our install schedule.”

California: (Hearth, Spas) “It’s been very unseasonably warm in California, with wildfires north and south of us. Our first three quarters were up, but this quarter has been down as we wait for the weather to change and the season to start. I do feel it will be a great season as we cool down.”

California: (Hearth, Patio, BBQ) “October was busy; November is very busy.”

California: (Hearth, BBQ, Spas) “Great month of October, keeping the crews busy with installs and repairs. Should be a great year. Customers are coming into the store more informed than ever, sometimes too informed.”

Colorado: (Hearth) “Strong growth in wood stoves and inserts; gas and pellet units are selling well also. Very close to having all of our wood products changed out to 2020 models.”

Oregon: (Hearth, BBQ) “A competing store for grilling products opened locally in May 2019. Our hearth business for 2019 really just began.”

Oregon: (Hearth) “Sales were brisk, even though there were issues because of the 2020 changes that are coming. It has been a challenging year due to supply and demand. It’s pretty much a price war between dealers trying to move pre-2020 units.”

Canada

Alberta: (Patio, BBQ, Spas) “One of our best Octobers in our 36-year history!”

British Columbia: (Patio, BBQ) “The weird year continues – last minute shoppers to the extreme this year. We have been either dead quiet or backed up two months.”

British Columbia: (Patio, BBQ, Spas) “October was up and down with flat sales at the end. The federal election may have played a part as traffic was down, but the weather was bad as well so it’s hard to say. Happy to come out with sales equal to last year.”

British Columbia: (Hearth) “Lots of tire-kicking for hearth, but only about 25% are purchasing installed systems. No DIY sales for a change, possibly due to tighter regulations at the local level.”

British Columbia: (Hearth, BBQ) “Hearth sales are consistent – but we now have one more front-line salesperson so we can expect increases to come.”

Ontario: (Hearth, BBQ) “Less foot traffic than normal, but high closing rate on gas fireplace sales.”

Ontario: (Hearth, BBQ) “Forty years ago our customers’ average age was the same as mine, today the same thing. Seems the young people have little interest in solid fuel. However, sales are the same as last year. The thrill is going quickly...”

Ontario: (Hearth) “We were one of the lucky ones; a willing buyer came in this summer and bought our store. I was asked to stay on to manage this location.

“The current hearth market is a tough one, for these three reasons: It’s very difficult to hire anyone with a gas ticket to work in our business. It’s also hard to compete against fuel suppliers who believe they should be in the hearth industry. And there is a lack of commitment in protected territories from suppliers – even after three decades of loyalty to their products.

“While we still have our health, my wife and I will step back and spend time with family. Retail was good, but became increasingly difficult within the last decade. This will be the last time that we can report on this survey.”


Stock Watch

COMPANY – EXCHANGE SYMBOL 52 WEEK Week Ending % CHANGE MARKET CAPITALIZATION
    High Low 4-Oct-19 1-Nov-19 4 WEEK 26 WEEK 52 WEEK ($000,000)
Standard & Poor’s 500 (a) S & P 3,066.91 2,351.10 2,952.01 3,066.91 3.9% 4.1% 12.6%  
HNI Corporation (b) HNI 42.28 29.90 34.37 38.54 12.1% 2.9% -0.3% $1,650.00
Pool Corporation (c) POOL 228.19 137.02 201.66 207.21 2.8% 12.3% 42.8% $8,030.00
Restoration Hardware (b) RH 192.00 84.11 170.29 175.84 3.3% 61.6% 40.8% $3,280.00
Wayfair, Inc. (b) W 173.72 76.60 106.77 83.74 -21.6% -43.7% -9.9% $7,800.00

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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More Industry Data

2019 November Business Climate

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

» Continue

2019 September Business Climate

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.

» Continue

2019 August Business Climate

In early August, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, patio, and barbecue products, asking them to compare August 2019 sales to August 2018. The accompanying charts and selected comments are from the 182 usable returns.

» Continue

2019 July Business Climate

In early August, Hearth & Home faxed a survey to 2,500 specialty retailers of hearth, patio, and barbecue products, asking them to compare July 2019 sales to July 2018. The accompanying charts and selected comments are from the 206 usable returns.

» Continue