True Value reportedly for sale
- Hardware retail co-op True Value might be searching for a seller. According to Bloomberg, the company is working with an investment bank to explore a potential buyout that could fetch around $800 million. A True Value spokesperson would not confirm to Retail Dive that the company is for sale, except to say that the company regularly assesses opportunities, and said the Bloomberg report came out of “left field.”
- A possible sale could attract private equity buyers among others, according to Bloomberg. True Value competitor Ace Hardware might also be interested. "It is our understanding that True Value is evaluating or conducting a formal auction process for the sale of its business," Ace President and CEO John Venhuizen told the Chicago Tribune in an email. "At this point, we have received no contact to participate in that auction process. If contacted, we would have interest in exploring it." A spokesperson for Ace did not reply to a request for comment.
- The True Value spokesperson said the reported interest from competitors was a sign of strength in the retailer. Of Venhuizen's comments specifically she said, "I cannot speak for the company and where they get their information."
True Value operates in a category that has been riding a continually improving housing market and remains relatively insulated from e-commerce’s explosive push into retail. But that doesn’t mean it doesn’t face competition. Lowe’s, Menards, Home Depot and Ace have all been fighting for their piece of the pie.
In May, True Value reported a 2.6% decrease in first quarter revenue to $347.6 million as compared to the prior-year period. Comparable store sales for True Value’s retail category fell 1.9% in Q1. That followed a fiscal year for 2016 where net margin grew 24.4%, comparable retail store sales rose 2.5% and revenue increased 1.1% to $1.5 billion.
True Value President and CEO John Hartmann said in a March statement, following the company’s Q1 sales declines, that the company was working to stay relevant through a strategic plan now two-years-old. He cited more than 100 store remodels, the conversion of three distribution centers to allow for two-day shipping, an increase in international sales and $3 million in transportation cost cuts.
“We have broken a nearly decade-long trend of negative net new sales growth; for the past three consecutive years, the sales volume from our new stores has exceeded sales from terminated stores,” Hartmann said. “I am proud of our accomplishments in the areas of growth, infrastructure improvements, product assortments and operations.”
True Value, as a relatively strong retailer in a relatively strong sector, could be a catch for a buyer. For the independent shop owners making up the True Value co-cop, and who would presumably have to vote on a buyout or merger, Ace might be an attractive suitor, as it too is a network of independent retailers. Even their headquarters are relatively near each other, with both located in the Chicago area. Customers also regard both companies highly.
- Bloomberg True Value Weighs Sale, Could Fetch About $800 Million
- Chicago Tribune Column: Ace eyes True Value hardware buyout deal
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