Optimism In The Hardware Store

Here is a link to an article I wrote for the Winter 2009 issue of The Hardware Connection, a slick online magazine aimed at helping hardware retailers grow their businesses.

As I mention in the article, it’s hard to imagine a group more tied to the outlook for housing in this country than hardware retailers. What I didn’t mention is that I’d spent a decent amount of time looking at Home Depot shares last spring. Though I ultimately passed, there were still some useful takeaways from the work I did that were also of interest to hardware store owners. That’s one of the things I most like about being an investor…you never know when all that data in your cranial hard drive will come in handy.

And I suppose I should explain how someone with no obvious connection to the hardware industry got published in a nationwide trade journal. My office is a converted dynamite warehouse that shares a back wall with an Ace Hardware store (MM92, B/S), so I tend to wander over there often for renovation tips and, well, to shoot the bull. The store owner is a very savvy local businessman who also publishes the Connection, and after several long discussions about credit default swaps, he offered me the chance to write a column. That’s one of the things I most like about being in the Keys…you’d never guess how far people will go out of their way to help you be successful – until you see it with your own eyes.

In any case, click here to see the online version of the magazine. My article starts on page 47.

Cale Smith

About Cale Smith

Portfolio Manager at Islamorada Investment Management.
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2 Responses to Optimism In The Hardware Store

  1. Kirk Kinder says:

    Great article. I would think the local hardware guys would do well even during a downturn as homeowners fix their current home, rather than buy new. Also, the customer service component would carry more weight as the homeowner attempts to do projects themselves to save money as opposed to paying a contractor.

    Hopefully, the success of hardware owners isn’t tied to home sales as there is another pig coming down the python when the option arms recast. The government is doing all they can to stave this off, but guv duct tape only holds so long. This also assumes rates don’t rise, which would, once again, crush home affordability.

    Hopefully, the local hardware guys do well and won’t have to rent their garage apartment to leather jacket wearing cool guyz (blatant Happy Days reference).

    • Cale Cale says:

      Brilliant, bringing it back to the Fonz like that. And if the local stores down here are any indication, you’re right in that there is a steady but low baseline of revenue from the fix-what-ya-got crowd…it’s not much, nor is it growing. Boom of a few years back makes that much harder to swallow, I imagine.

      And you just gave me an idea for my next article. “Guns and Butter: What To Sell If The Country Collapses.”