Dive Brief:

• Ace Hardware on Wednesday reported a 6.8% year-over-year increase in fourth quarter revenue, to $1.3 billion, according to a company press release. Same-store sales rose 3.1% in Q4.
• Sales for the fiscal year were solid as well, with revenue, at $5.4 billion, up 5.1% compared to the previous year. Same-store sales were up 3.6% for 2017.
• The hardware retailer’s net income in Q4 was $14.2 million, down more than $7 million from the year-ago period because of a $4.1 million tax charge — owed after Republican tax legislation passed last year — and costs associated with Ace’s warehouse "reconfiguration." For the full year, net income was $147.4 million, down more than 8.5% from 2016 mainly because of the Q4 expenses, the retailer said.

Dive Insight:

Ace has posted higher customer transactions for five continuous years, net store additions for six years and positive same-store sales for eight straight years, according to Ace President and CEO John Venhuizen.

Adding to Ace’s strong Q4 performance was the acquisition of e-commerce curation retailer the Grommet last fall. The e-tailer was folded into a subsidiary, Ace Ecommerce Holdings, which brought in $21.6 million in Q4, according to Ace.

The companies said at the time of the acquisition that the Grommet’s customers visited Ace over 50% more often than the average Ace Rewards customer and spent 2.8 times as much. It’s a "high quality path to meaningful growth, without having to bow down to the altar of Amazon," Venhuizen said in October.

Along with its online acquisition, Ace has been adding brick-and-mortar stores. In fiscal 2017, it added a net of 55 stores to its domestic network and finished out the year with 4,418 domestic locations.  

Ace could ring up even more sales in the future if the reported talks with Kroger pan out. According to the Street, the grocer and hardware retailer were in talks to build Ace store-within-a-store locations inside Kroger markets.

The hardware chain has made grocery partnerships a key focus and currently operates inside, or adjacent to, dozens of stores, mostly independents, across the U.S. The hardware giant has promoted its express locations as a way for supermarkets to compete with larger chain stores.

Venhuizen has also indicated the company would be interested in a potential buyout of fellow hardware co-op True Value, which reportedly was seeking potential suitors last year.

Both Ace and True Value operate 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 they don’t face competition. Lowe’s, Menards, Home Depot and Ace are all fighting for their piece of the pie.