St. Louis -- The tone at the opening general session was noticeably more enthusiastic than that of last year’s event in Denver, the first Ace market in the wake of the company’s unpleasant accounting error reported in 2007. Spontaneous applause broke out several times during Griffith’s 35-minute speech here at the America’s Center.
“Most of you say it’s time to move on, time to move this company forward, and that’s what we plan to do,” Griffith said. “It’s time to get back to work.”
When the audience applauded, Griffith responded: “I’m all in.”
The Oak Brook, Ill.-based hardware co-op that sits atop the Home Channel News Top 150 Distributors list, hosted thousands of dealers to its fall market here. And the event kicked off with Griffith explaining how the co-op is going to get to work.
• Point of sale strategy: The company intends to develop an alliance with an additional point of sale technology provider. “You told us we needed to inject competition for improved rates and service, and we plan to do so,” he said.
• Loyalty program: Griffith also said the co-op is planning to make Ace Rewards available to more dealers by integrating it with more “authorized systems.”
• Supply chain: The company is in the third year of a supply chain transformation that Griffith describes as “One of the largest, most comprehensive reengineering projects in your company’s history.” SAP technology will replace 150 home-grown software systems.
Griffith didn’t directly mention the 2007 accounting error, which stemmed from a $150 million dollar difference between the company’s general ledger inventory balances and that of its perpetual inventory records. But he did describe some macroeconomic challenges. For instance, the cost of shipping a 40-foot container from Shanghai to the West Coast jumped 150 percent since 2000. Steel is up 30 percent so far in 2008. And petroleum is rising.
Griffith described the economy as the “800-pound gorilla” in the room and a challenge as tough as the retail competition. “Many of you are working harder for less,” he said.
On the positive side, Ace’s operating expenses are expected to be some $16 million below 2007. Comp-store sales at Ace were down in the second quarter, but not as far down as big-box competitors. Through August, bottom line income stands at $57.3 million, ahead of last year’s $52.7 million.
“Ace financially is rock solid, and the brand is vibrant, folks,” he said.
Ace has opened 66 new stores so far this year, with 29 branch stores, 24 new investors and 13 conversions, and 109 prospects registered at the St. Louis convention.
Several dealers in St. Louis said they were responding to economic conditions with a conservative merchandising strategy. “We’re not looking to gout on a limb and try fancy new products,” said Jim Lee, manager of one of two Kings Ace Hardware stores in Billings, Mont. “We’ll stick with what we know and do our very best.”
Some of the areas include zone heating, programmable thermostats and weather stripping, he said.
“We were very happy with [Griffith’s] message,” Lee said. “You can’t dwell on the past.”