Aco Hardware
ACO Hardware sells NHD stores to Ozer GroupSarah Demaster
Consulting company acquires 29-unit Mass. chain, which had incurred heavy losses
FARMINGTON HILLS, MICH. -- After three years of trying to turn a profit on a once-promising acquisition, ACO Hardware recently decided it was time to give up on the Stoughton, Mass.-based NHD stores. The 62-unit Michigan chain has sold the 29 NHD stores it bought in 1995 to a Massachusetts company that plans to resell NHD's assets.
Sheldon Woolf, who co-founded NHD and stayed on as president when ACO bought the company, chose to step down when the sale went through earlier this month. However, Woolf has been active in bringing in potential buyers, according to Mark Stein, president of Needham, Mass.-based retail consulting company Ozer Group, which NHD hired to oversee the stores until the units are sold. Woolf could not be reached for comment.
Stein also is one of the principals of Stoughton, Mass.-based MSB Acquisitions, which was formed to buy the NHD stores. Stein declined to name the other partners.
"We thought [NHD] is a business that has some valuable assets," he said of the decision to buy the chain. "ACO bad put a very large amount of money into the business to try to turn it around, and when it became clear they could not turn it around, it became beneficial to turn to a company like MSB. Fortunately for ACO they're a successful business, and do not have much experience with winding down a company."
When Aco acquired NHD, the latter's sales were already on a downward spiral, having fallen to $44 million in 1994 from $57 million in 1991.
Once ACO purchased the company, NHD began replacing stores in unprofitable markets and adding point-of-sale scanners, new product sources and ACO's private-label lines. NHD's sales rebounded slightly to $48.6 million in 1995, but despite efforts to rejuvenate the company, sales declined after that year, eventually falling to $40.8 million in 1997.
"When ACO acquired NHD three years ago, NHD was ailing, they were not a profitable company. They were feeling the impact of competition, they needed technology improvements," said Dennis DaPra, president of ACO.
"We felt we could turn it around, because ACO has been and still is operating successfully in an arena with the big box [stores]," DaPra said. "But we might have underestimated the impact of the market, and maybe NHD lost some customer loyalty over the years."
DaPra said that after several months of analyzing its options, ACO company realized that even with significant cuts in overhead, NHD was not likely to turn a profit.
One Ace-affiliated dealer who competed against NHD in Massachusetts said he believes it was poor management, not big-box competition, that caused NHD to fail.
The dealer said he was impressed with ACO employees he bad met in Detroit and had heard ACO is a sharp, well-run company. He was therefore shocked when ACO announced it was buying NHD stores, a company that in his opinion had never been well-managed.
"They never did anything. They never serviced people. The stores seemed to be haphazard. When ACO came to town, we thought they would revamp them, but they just let NHD kind of run the way they'd been running before, said the dealer who requested that he not be identified. "I haven't been in all their stores, but I've been in three or four of them, and when they say in our papers around here that NHD is going or gone because of the big stores, they're crazy. It has nothing to do with that - they just weren't doing what they were supposed to be doing, I don't think, because you can compete very, very handily with the Home Depots of the world."
Neither DaPra nor Stein would disclose how much MSB paid for the chain, but DaPra said that with the sale, "We feel ACO is in a strong position to go forward. We're stable, we're still enjoying success."
The company reported sales of $102 million in 1997.
ACO is not looking to acquire any other companies now but has not ruled out future acquisitions, DaPra added.
NHD's future as a company is uncertain. Ozer Group is talking to a variety of buyers who want to buy one or several units, some of whom are interested in acquiring the NHD name, according to Stein. Ozer is selling NHD stores, real estate, inventory, equipment and assets, and will liquidate any stores that it can't sell, Stein said.
"I don't know what will happen with the stores," Stein said. "It depends on who the buyers will be and what direction they'll take."
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