True Value Announces Second Quarter Results

Monday, August 01, 2011

Second-quarter revenue increased 0.4 percent; Net margin down 16.8 percent mainly due to increased fuel and medical costs

CHICAGO, Aug. 1

True Value Company today reported revenue of $529.5 million for the quarter ending July 2, 2011, an increase of 0.4 percent or $2.0 million from $527.5 million for the same period a year ago. The cooperative posted a quarterly net margin of $21.8 million, a decrease of 16.8 percent or $4.4 million versus $26.2 million one year ago.

For the six months ending July 2, 2011, True Value reported revenue of $977.3 million, an increase of 2.2 percent or $21.2 million from $956.1 million for the same period a year ago. Comp store sales to core domestic hardware store outlets were down 0.1 percent in the six-month period. The 2011 year-to-date net margin was $29.8 million, down 13.1 percent or $4.5 million from $34.3 million one year ago. Total debt increased $34.8 million to $179.8 million compared to a year ago.

"I am pleased with our revenue increase for the year, particularly given the poor spring season in April and May, as well as softening consumer confidence," said President and Chief Executive Officer Lyle Heidemann.

The overall revenue increase was driven by higher vendor-direct shipments to certain affiliate and international members. Vendor direct shipments have very low margins and as such the revenue increase had a minimal impact on profit. However, True Value retailers were down 0.6 percent in the first half of this year and the company's handled sales out of warehouse were down 0.4 percent.

The profit decline was primarily the result of three issues: first, for the benefit of True Value members, the company absorbed $2.2 million of outbound transportation cost increases, primarily fuel; second, inbound freight costs from suppliers were up $1.2 million and; third, the co-op experienced a $1.3 million increase in employee medical expenses. The debt increase was primarily due to notes issued to retailers as part of the patronage dividend, increased capital spending and additional loans to member for store remodels, expansions and relocations.

"In spite of the economy, our retailers are continuing to invest in their stores," said Heidemann. "They have implemented approximately 606,000 square feet of the Destination True Value format so far this year and with the projects currently scheduled for the last half of the year, we should achieve our goal of implementing 1.25 million square feet for this year."

True Value Company, headquartered in Chicago, is one of the world's largest retailer-owned hardware cooperatives with sales of $1.8 billion in 2010. The True Value cooperative includes approximately 4,600 independent retailer locations worldwide operating under the store identities of True Value, Grand Rental Station, Taylor Rental, Party Central, Home & Garden Showplace and Induserve Supply. Additional information on True Value Company and its retail identities is available at www.truevaluecompany.com.

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