In Houston, Ace recaps a strong 2013
Houston -- Ace executives took the stage to deliver rousing speeches at the General Session of the Ace 2014 Spring Convention & Exhibits, congratulating retailers on a strong 2013 and outlining the co-op's vision for 2014 and beyond.
Ace even had a proprietary rock 'n' roll theme song dedicated to its strategic initiative, "20/20 Vision," which added a spirited component to a slide show presented at the session. "The view is worth the climb," crooned the singer.
The company looked back at the recent Emery-Waterhouse acquisition, the roll-out of new B2B wholesaling program The Supply Place, the launch of the Ace-Valspar Paint Studio, the Helpful 101 customer service certification program, exceeded sales and profitability goals, and Ace's 90-year-anniversary.
CEO John Venhuizen pointed out that the Emery Waterhouse acquisition benefits retailers in at least three ways: via financial benefits, the addition of new SKUs, categories and suppliers, and a generally lower cost of goods thanks to combined buying power and price synchronization. A handful of products will even realize double-digit cost reduction by March 1st, he said.
EVP, CFO and "chief hero officer" Bill Guzik -- who Venhuizen introduced by way of an anecdote in which an 18-year-old Guzik made headlines after he brazenly went after a robber in a parking lot -- pointed out that same store sales exceeded Ace's goal by 1.3%, marking a 4.3% increase for the co-op in 2013.
"This was the best performance we've had this century," said Guzik. "And it didn't just come from price inflation -- it came from having more customers in our stores."
The Supply Place itself generated small business revenue growth of 7.3%.
Additionally, Ace's bottom-line profitability came in at $104.5 million, exceeding its target of $100 million. Worldwide total store count performed similarly, weighing in at 4,829 (compared to a goal of 4,742). At a 102-store net growth rate, it was "a number we haven't seen in decades," said Venhuizen.
Finally, Guzik highlighted Ace's strengthening debt-to-equity ratio, which fell from 96 cents of debt for every dollar of equity to a mere 58 cents in two years.
One thing that didn't go quite as planned was the launch of ACENET, Ace's product management platform, which is now slated for a third-quarter release. According to Guzik, it was a case of "biting off more than we can chew" and the ephemeral nature of "bleeding-edge technology."
What else is on tap for 2014? For one, Ace plans to ramp up its advertising and media budget by 30%. Financial goals for the co-op largely match 2013 goals at a 3.0% increase in same-store sales, 5.2% for wholesale, and a $100 million bottom-line profitability, with net store growth of 25 domestic and 40 international stores.
Ace's John Surane, executive VP of marketing, merchandising and sales, stressed the importance of getting at least 3,000 more retailers to be certified in Helpful 101, as well as rolling out Helpful 201. Additionally, a greater focus on Ace's digital presence -- including an in-store pickup feature on Ace's website -- is of paramount importance, he said..
All in all, it's about "productive paranoia," as he put it. "We better be paranoid, or a little bit scared. The market is not getting any easier, and in fact, we expect it to be fierce. [Our competitors] are trying to do the things we do best, and if we're not cognizant, they will get better than us."
Venhuizen put it this way: "The number one best thing we can do for our stores is to give them lower costs to deal with the behemoths like Lowe's and Home Depot...the heart of Ace beats big, and it beats strong," he said, citing a 60% increase in donations for the Ace Foundation and its continued support for the Children's Miracle Network. "And in my view, we're just getting started."