Ace Hardware released its financial report for the first quarter of 2023, marking first quarter revenues of $2.1 billion, a decrease of 5.8% from last year. Net income for Ace in Q1 2023 was $66.2 million, down 44.7% from the same time last year. Wholesale gross profit Q1 was $252.6 million, a decrease of $9.4 million from the first quarter of 2022. The wholesale gross margin percentage was 13% of wholesale revenues in the first quarter of 2023, up from 12.7% in the first quarter of 2022.
The revenue decline was primarily the result of the mild winter across most of the U.S., combined with the late arrival of spring-like weather, which led to declines in the sale of winter and spring goods, says John Venhuizen, president and CEO. Net income was also negatively affected by incremental expenses related to the expansion of warehouse space, higher payroll wage rates and higher health insurance costs.
“We believe an unusually cold, wet winter in California, a particularly warm, mild winter in the Midwest and Northeast and the significant reduction in direct stimulus payments to individuals by the government were the primary drivers of our first sales and profit decline in nearly six and a half years,” Venhuizen says. “Despite those headwinds, we continue to invest for future growth as evidenced by our two newest Retail Support Centers in Georgia and California.”
The approximately 3,600 Ace retailers who share daily retail sales data reported a 4.4% decrease in U.S. retail same-store sales during the first quarter of 2023, which was the result of a 3% decrease in same-store transactions and a 1.4% decrease in average ticket.
Total retail revenues for the quarter were $148.2 million, a decrease of 5.4% from 2022. The decrease was partially due to the closure of The Grommet during the third quarter of 2022, resulting in the absence of any revenues from Ace Ecommerce Holdings LLC (“AEH”) in the first quarter of 2023 compared with $3.6 million in the first quarter of 2022.
Ace added 50 new domestic stores in the first quarter of 2023 and canceled 16 stores, for a total of 4,901 domestic stores at the end of the first quarter 2023.