Ace Hardware's 2006 Annual Report - Home Page
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Ace: Helpful Hero


Ace's rise in wholesale sales of 5.4 percent represents the largest sales increase in our company since 1998.


Ray A. Griffith, President and CEO

J. Thomas Glenn, Chairman of the Board From J. Thomas Glenn, Chairman of the Board:

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 Eagle™ 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

J. Thomas Glenn
Chairman of the Board

New Frontiers.  New Opportunities.