Ace Hardware said this week it saw record Q4 revenues of $2.1 billion, an increase of $577.6 million or 39.2 percent, from the fourth quarter of 2019. Net income for the quarter was $43.1 million, up $39.6 million from a year prior. Full-year revenues rose by $1.7 billion (27.9 percent) to a record $7.8 billion. Net income for fiscal 2020 was $316.9 million, which was $176.5 million higher than in 2019.
Sales of existing homes climbed by two percent in January, according to the Canadian Real Estate Association (CREA), setting a new all-time record.
The seasonally adjusted activity was running at an annualized pace of 736,452 units, already beating CREA’s total forecast of 583,635 sales for 2021. Actual (not seasonally adjusted) sales activity posted a 35.2 percent gain, year over year, in January. The number of newly listed homes dropped by 13.3 percent, led by double-digit declines in the Greater Toronto Area, Hamilton-Burlington, London and St. Thomas, Ottawa, Montreal, Quebec, and Halifax-Dartmouth.
Retail sales in the U.S. rose 5.3 percent in January, exceeding economist expectations of a 1.2 percent increase. Excluding automobiles, sales were up 5.9 percent, compared to a forecast of just one percent. Additional stimulus funding approved by Congress a month prior furnished American consumers with cheques for $600, which they used for a wide range of goods. Gains were logged across all major categories, with sales LBM and garden supply dealers spiking by 13.7 percent.
WASHINGTON — Housing starts in the U.S. declined by 11.2% in December to a rate of 1.08 million, according to the Commerce Department, the lowest since September 2016. The drop affected both single-family dwellings and apartment buildings. In the past 12 months, housing starts have fallen a total of 10.2%. Meanwhile, building permits edged up 0.3 per cent in December, with single-family permits down 2.2% from November and 5.5% from the previous year.
MISSISSAUGA, Ont. — King Marketing moved this year from holding regional sales meetings to a single national sales meeting, which took place in Niagara Falls earlier this month. King invited 10 of its key manufacturers to present to the 55 King sales representatives and managers in attendance. Key manufacturer principles provided training sessions that included hands-on workshops. After team-building events in the evenings, the week concluded with King’s annual awards, including the presentation of the Peddler of the Year award to Jim Calce, a key account manager based in Ontario.
HOFFMAN ESTATES, Ill. — Sears Holdings chairman Eddie Lampert is in talks with investment firm Cyrus Capital Partners about financing part of a $300 million bankruptcy loan, sources have told Reuters. Cyrus currently holds a portion of Sears’ debt. The loan is separate from another $300 million loan the company’s banks have offered. According to the sources, Lampert is also being urged to replace the bank loan with his own funds, which would leave him potentially contributing to bankruptcy loans of $600 million in total.
WEST CHESTER, Ohio ― Steel framing products maker ClarkDietrich announced this week that it has acquired 50% ownership of Structa Wire Corp, which manufactures welded wire products for the lath and plaster industry. Vancouver-based Structa Wire was founded by Abe and Jeff Sacks more than 20 years ago. Today, it designs and manufactures products to improve the performance of stucco for steel and wood-framed construction, including brands such as StructaLath, MegaLath and Structa Corner. It will continue under its own management.
We anticipate that close to three-quarters of Canadian home improvement and hardware dealers have ended 2011 with flat or negative growth (and, yes, most of them are in the latter category). And 2012 looks to be only moderately better. Housing starts are forecast to dip in 2012. Reno spending should be a bit more positive, affected as it is by sales of existing homes. In 2012, resales are expected to move up 4.6%.
Growth, then, will have to come from stealing market share.
But which retail formats will fare best? According to our 2011 Home Improvement Market Report, each retail format fared differently coming out of the recession of 2008, and each will face its own challenges in the coming year. Hardware stores can expect some growth in 2012, especially after seeing their collective sales drop by almost 10% in 2010. Some recovery will occur as consumers look to local markets as the “shop local” movement gains momentum, and as ageing consumers place more value on the convenience that smaller stores offer.
Building centres will make modest gains in 2012, though not as aggressive as the 3.1% gains made in 2010.
The retailers best positioned to grow are the big chains. And considering that the big boxes were most adversely affected by the slowdown of the recession and the two years that followed, they are expected to make the most significant gains in 2012.
RONA had a tough first quarter. Sales were down 4.0%, while same-store sales were down a whopping 12.6%. But guess what? The entire industry had a terrible first quarter. It’s just that RONA has had to bare all because it’s a public company. But don’t kid yourself: dealers across the country are experiencing similar negative results.
It does not take a proverbial rocket scientist to understand why. The first quarter of last year was a strong one, driven by the spillover of consumer activity around the Jan. 31 deadline for the Home Renovation Tax Credit. That economic incentive was coupled with a cold winter that drove seasonal sales, followed by a spring came early. Canada had weathered the economic downturn better than any other country in the Western World. Consumers felt good – almost cocky about their good fortune.
But somewhere around the middle of July 2010, someone pulled the plug on that recovery. Overnight, the economy – and this industry especially – skidded into a decline that has continued to this day. In fact, for most dealers, 2011 is only just starting, and even now consumers lack the confidence to spend.
So RONA’s poor results are nothing if not a bellwether of the industry at large. RONA anticipated these results by laying off dozens of people in operations, merchandising (including one buyer) and at corporate stores. A powerful message to shareholders, and certainly a dramatic one. But more concerning is the imminent departure of CFO Claude Guevin, announced right before the quarterly results were released. Keeping Guevin around for even a bit longer would have sent a more reassuring message to those shareholders – and to the industry at large.
Besides, RONA is not alone. Canadian Tire announced its results on Thursday. How bad were they? Not terrible, by any means, but inventory levels were too high as products for spring just didn’t sell. Regardless, the company chose this week to buy Forzani Group and its 500 Sport Chek stores coast-to-coast. A defiant shot across the bow of Bay St. analysts if there ever was one. Home Depot Canada, which pertinaciously passed over Gino DiGioacchino for the top job in favour of an American, let its top merchant go a few short weeks later. More cuts were made a few days later as new president Bill Lennie continued to clean house, appointing Jeff Kinnaird to replace DiGioacchino.
In the U.S., conditions remain ceaselessly dismal, as housing starts hit new lows and foreclosures continue to suppress existing home sales. But at least down there, dealers are getting used to it. For Canadian dealers, spoiled by a glimmer of hope in the first half of last year, it’s time to get re-oriented to a new kind of retail, one that’s light years away from the double-digit increases that marked so much of the first half of the past decade.
Dealers – both large and small – have to face the new economy and the new consumer with an unflinching eye on gradual, long-term growth, rather than looking for dramatic quick fixes that shore them up from quarter to quarter.