ACE HARDWARE REPORTS 1ST QUARTER 2023 RESULTS.

OAK BROOK, Ill: Ace Hardware Corporation ("Ace" or the "Company") today reported first quarter 2023 revenues of $2.1 billion, a decrease of $127.4 million, or 5.8 percent, from the first quarter of 2022. Net income was $66.2 million for the first quarter of 2023, a decrease of $53.6 million from the first quarter of 2022. Excluding the $21.4 million, gain on sale of the former Gainesville, Georgia retail support center ("RSC") from the first quarter of 2022, net income decreased $32.2 million. 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. 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," said John Venhuizen, President & CEO. "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 percent decrease in U.S. retail same-store-sales during the first quarter of 2023, which was the result of a 3.0 percent decrease in same-store transactions and a 1.4 percent decrease in average ticket.

Revenues

Consolidated revenues for the quarter ended April 1, 2023 totaled $2.1 billion. Total wholesale revenues were $1.9 billion, a decrease of $119.0 million, or 5.8 percent, as compared to the prior year first quarter. Decreases were seen across many departments with outdoor power equipment, outdoor living and lawn and garden showing the largest losses. Wholesale merchandise revenues to new domestic stores activated from January 2022 through March 2023 contributed $54.7 million of incremental revenues during the first quarter of 2023, while wholesale merchandise revenues decreased $10.0 million during the first quarter due to domestic stores whose memberships were cancelled. Wholesale merchandise revenues to comparable domestic stores decreased $182.4 million for the quarter. The Company's Ace International...