Ace Hardware 2005 Annual Report Download - page 2

2005 ANNUAL REPORT NEW FRONTIERS. NEW OPPORTUNITIES.
Ace’s rise in
wholesale sales
of 5.4 percent
represents the
largest sales
increase in
our company
since 1998.
1
Once again Ace turned in a solid
financial performance for the year.
Wholesale sales in 2005 reached a
record level of $3.466 billion, a 5.4
percent increase over the prior year.
Net earnings exceeded $100.4 million,
and our rebate will be the largest in
company history, totaling $103.6
million and resulting in a patronage
dividend of 4.46 percent.
Along with your tireless efforts at retail,
our fellow Ace team members in Oak Brook
and around the country in the retail support
centers and in the field once again showed their
commitment and determination in driving these
results. I know you join me in our admiration of
their performance.
We’ll remember 2005 as a year when our
corporation reached a new level of retail
intensity and focus. During this second year of
our Growth Strategy, Ace significantly elevated
its investment in the retail side of the business.
Ace is distributing a robust $16.9 million in the
form of Achievement Awards designed to help
us improve our stores. And, working together,
we continued to invest in the next generation of
retail technology with a record number 548 new
EagleVision®and EagleTM for Windows systems
being installed at retail.
Our retail investments are also focused on
new store growth and increasing market share.
In addition to the Branching Out funding, Ace
added the Equity Match Financing opportunity
in 2005. Through these programs, millions
of dollars were invested in retail in 2005,
contributing to the highest number of new
branch stores and new investors ever to join
the Ace family.
Today, Ace remains one of the retail industry’s
most successful networks of independent
businesses. While other independent retailers
such as drug stores, office supply outlets and
video rental stores have by and large succumbed
to the dominant chain stores in their industry,
Ace continues to grow and prosper. Being
named the fourth largest franchise in the
world by Franchise Times magazine in 2005 is a
testament to the power of the brand, the solid
position we have in the marketplace and the
bright future ahead of us.
The interdependency of our retailers
and our corporation combines the best of
both worlds – the individual retailer’s
entrepreneurialism and our corporation’s buying
power and operational efficiencies. Add to that
one of the world’s strongest brands, and it’s easy
to see why Ace is a force to be reckoned with.
Our vision of being the most helpful
retailer on the planet has remained
consistent through the years. And,
our passion for our customers is only
rivaled by our belief in the importance
of the role of small business in our free
enterprise economy.
Your Board’s confidence in Ace’s future
has never been greater. Management
shares our view. We believe there is
still great unlocked potential in our
enterprise. We see our wholesale
infrastructure being revolutionized
through the supply chain initiative
that we kicked off in 2005. And, we’re
working to further improve our retail
store model and increase the financial
return at retail. You, the Ace retailer,
will ultimately be the beneficiary of
these efforts.
Of course, our success wouldn’t be possible
without the hard work you put forth each day
on the front line at retail. Thanks for your
support and for your commitment to make
Ace “the place.”
Sincerely,
J. Thomas Glenn
Chairman of the Board