True Value revenue, profits rise in third quarter
Despite the depressed economy and home market, True Value reported positive results for the third quarter ending Sept. 27, including revenue of $493.1 million for an increase of 3 percent -- or $14.6 million -- from $478.5 million for the same period a year ago.
Comp-store sales to members rose 0.5 percent in the quarter, driven primarily by an increase in the lawn and garden category. New store revenue exceeded lost revenue from member terminations by $8.8 million in the quarter, which the co-op attributes to the success of the new Destination True Value format.
True Value posted a quarterly net margin of $20.5 million, an increase of 70.8 percent, or $8.5 million, versus $12 million a year ago. The profit increase was the result of higher sales, a higher gross margin rate, continued control of overhead expenses and the effect of $1.7 million of non-recurring expenses in 2007 related to a facility lease and a legal matter.
“I am pleased with the strength of our third-quarter financial performance,” said president and CEO Lyle Heidemann. “Positive comp-store sales growth and the opening of 14 new True Value stores in the third quarter is a very positive statement about the health of the co-op given the condition of the U.S. economy.”
Compiled results for the first three quarters of 2008 were not as positive. For the nine months ending Sept. 27, True Value reported revenue of $1,529.2 million, a decrease of 2.1 percent, or $32.2 million, from $1,561.4 million for the same period a year ago. Comp-store sales to members decreased 2.5 percent year-to-date. Categories with the largest declines include hand and power tools, seasonal, paint and electrical. New store revenue exceeded lost revenue from member terminations by $2.4 million for the year-to-date.
The 2008 year-to-date net margin was $44.2 million, down 7.3 percent, or $3.5 million, from $47.7 million in 2007. The year-to-date profit decline was driven primarily by lower sales volume and higher fuel costs, offset in part by $2.9 million in recoveries related to arbitration proceedings.
“Clearly, the Destination True Value store format has been well received by our retail members and consumers, alike,” said Heidemann. “The solid performance of these stores played a part in offsetting the impact of the slowing economy and the unfavorable sales comparison of a late spring in many areas of the country.”