| MEET THE BUYERS BREAKFAST SEMINAR 2003 |
| Want to expand into Canada's $30 billion home improvement industry? Here's your chance to meet top buyers from Canada's leading retailers: Home Depot, Canadian Tire, Sears, Rona and more. For more information, click here! |
| AVRIL LAVIGNE TAKES TIME TO VISIT HOME HARDWARE |
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 St. Jacob's, ON — Pop star Avril Lavigne took time out of her North American tour last week to visit Home Hardware's Spring Dealer Market. There, she presented a cheque for $35,000 to the Hospital for Sick Children Foundation. The funds were raised from the sale of Napanee Home Hardware t-shirts, made famous by Lavigne's appearance on Saturday Night Live back in January.
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| CANADIAN TIRE GOES UP-MARKET WITH NEW TOOL LINE |
Toronto, ON — Canadian Tire Corp. has launched a line of premium tools and accessories aimed at DIYers and tool enthusiasts. Called Mastercraft Maximum, it is a step-up line to CTC's existing Mastercraft house brand. Featuring more than 500 products, the new line extends across a wide assortment of product categories, including portable and stationary power tools, power tool accessories, carpentry hand tools, mechanics' tools and tool storage.
The Mastercraft brand first appeared in Canadian Tire catalogues in 1946 and has since become one of Canada's most recognizable private labels. The lines are now in all 451 of Canadian Tire's stores across the country, but will receive a big promotional push, including flyer presence, running up to Father's Day in June.
Exactly a year ago, Canadian Tire employed a similar strategy on the housewares side, introducing Persona, a private-label brand of cookware and small kitchen appliances. The line features more stylish elements, better quality - and, of course - a higher price point. |
| PAINT DEALERS PULL OUT OF CHS, FORM OWN SHOW |
| St. Louis, MO - Another dealer association has pulled its support from the Canadian Hardware and Building Materials Show. The Paint and Decorating Retailers Association, which joined with the shows' owners, the Canadian Retail Hardware Association, three years ago, will not participate in 2004, but rather launch their own event a month later.
The news comes only two weeks after another sponsoring association, the Lumber and Building Supply Dealers Association of Ontario, announced its intention to pull out of CHS and form its own LBM showcase. The "Winter Buying Show" will take place in London, ON February 7-8, only one week after the Canadian Hardware Show.
Under the partnership with the PDRA, the show created a décor showcase, and this feature will remain in place at next year's show. In fact, CHS has been quick to assure the industry that Décor Focus, its pavilion devoted to paint, home décor and home interiors, will be part of its show in 2004.
However, it won't have the imprimatur of the paint dealers. The PDRA's new event, a conference with emphasis on dealer education and training, will take place March 19-21 near the Toronto Airport, and compete against CHS to attract dealers.
Despite the décor showcase, says Nick Cichielo, executive vice-president and vp of sales for the PDRA, "the format wasn't addressing the needs of our dealers. We feel as an association we have to create an event which is more geared to education and workshops."
The PDRA, based in St. Louis, MO, has 460 members in Canada. |
| WICKES EKES OUT A PROFIT IN 4Q |
| Vernon Hills, IL - Wickes Inc., the 59-store chain of building centres, managed to earn a profit in the fourth quarter, posting net income of US$9.5 million, or $1.10 a share, compared with a net loss of $2.3 million a year ago. Sales from continuing operations, however, fell to $128.8 million from $173.2 million. The company also managed to make a profit for the year of US$9.1 million on sales of US$577.7 million. That's up from a loss of US$7 million on sales of US$710 million in 2001.
A week earlier, the company reported that Riverside Group sold its outstanding shares of Wickes to Imagine Investments, a Dallas-based holding company, for the assumption of US$13.9 million in debt.
Meanwhile, Wickes faces delisting on Nasdaq since the bid price of its common stock has closed at less than $1.00 per share over the previous 30 consecutive trading days. As a result, it has failed to comply with marketplace rules requiring a listed company to get its stock price up within l80 days.
The deadline for Wickes to comply with the ruling was April 9, 2003, but since it meets the initial listing requirements for the Nasdaq SmallCap Market, the company will now be provided an additional 180 days, or until October 6, 2003, to regain compliance. If, at anytime before that date, the bid price of Wickes common stock closes at $1.00 per share or more for a minimum of 10 consecutive trading days, its compliance status will be restored. |
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COMPANY |
52-WEEK HIGH |
52-WEEK LOW |
CLOSE (THURSDAY) |
| Canadian Tire |
33.65 |
26.80 |
30.35 |
| Canfor |
11.70 |
6.83 |
9.06 |
| Costco |
43.05 |
27.00 |
34.60 |
| Emco |
16.90 |
8.55 |
16.60 |
| Goodfellow |
13.99 |
9.88 |
10.00 |
| Home Depot |
49.91 |
20.10 |
27.37 |
| Hudson's Bay |
15.33 |
5.87 |
8.20 |
| Lowe's Cos. |
49.99 |
32.50 |
45.65 |
| Rona Inc. |
14.75 |
11.75 |
14.30 |
| Sears Canada |
25.10 |
13.60 |
14.48 |
| Sodisco-Howden |
1.95 |
1.06 |
1.40 |
| Taiga Forest |
7.00 |
5.75 |
6.80 |
| Wal-Mart |
60.71 |
43.72 |
55.41 |
| West Fraser |
39.45 |
26.27 |
33.99 |
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| MARKET INDICATORS |
| Sales by large retailers in Canada were up 5% overall in February, compared with the same month in 2002, says Stats Canada. Hurt by bad weather, hardware and lawn and garden were the only categories that did not post gains in February. Overall sales for the group of large retailers were $5.7 billion. Sales of home furnishings and electronics increased only 1.8% in February, while furniture sales declined 0.7%. Household appliances were up 2.1% and home electronics were up 1.7%. Suffering from bad weather across the country, sales declined 3.1% for hardware, lawn and garden products. Most of the weakness was in hardware and home renovation products, which dropped 6.7%, but sales of hand and power tools were especially weak, down 10.0%.
Spending on new residential housing units in the U.S. was at a seasonally adjusted annual rate of US$328.1 billion in February, up 0.3% from January's estimate of US$327.2 billion. The value of non-residential building construction reached US$158.8 billion, also up 0.3%. Housing starts in March in the U.S. reached a seasonally adjusted rate of 1,780,000, up 8.3% from the revised February estimate of 1,644,000 and up 6.3% over March 2002, says the U.S. Census Bureau. Single-family starts were up 7.7%. However, looking ahead, the value of building permits in March dropped 7.0% from February, although it's still up 3.4% from the same month a year earlier. |
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| COMPANIES IN THE NEWS |
| Atlanta, GA — Home Depot continues to invest in smaller format stores with the opening last Thursday of its third "urban neighborhood" store. This one, in Chicago's Lincoln Park area, was also the company's first two-storey outlet. The 80,000-sq.ft. store includes a parking deck and an interior escalator. The smaller urban stores have already been opened up in Brooklyn and Staten Island, NY and Home Depot Canada will open its first one in Canada this year in Vancouver. The Lincoln Park store will cater to the young, upwardly mobile demographic of the area, including a high proportion of renters. The store focuses more on portable living products such as lamps and area rugs, at the expense of wall-to-wall carpet and extensive lawn and garden.
Toronto, ON — Sales for Sears Canada in its first quarter were $1.282 billion, down 8.7% from the same quarter last year. Merchandise sales decreased 12.7% and same-store sales fell 14.1%. Net earnings for the first quarter reached $11.4 million, a healthy swing from the net loss of $115.9 million it suffered in the same period last year. However, last year's results included an after-tax expense of $124.3 million, primarily related to the conversion of Eaton's stores to the Sears banner. Excluding these non-comparable items, operating earnings in the quarter were $7.1 million, compared with $8.4 million last year. Sales were also affected by substantially lower seasonal inventory and unusually bad weather throughout much of Canada.
Toronto, ON — Home Outfitters opened its eighth Toronto store and its fourth in Calgary last week. Another opening slated for Laval, QC will bring the chain's total number of outlets in Canada to 40 by month's end. A division of Hudson's Bay Co., Home Outfitters was launched in 1999 with three stores in the Greater Toronto. The 34,000-sq.ft. units break out the housewares and home décor assortments of The Bay and Zellers into one focused format.
Wilkesboro, NC - Lowe's Cos. increased the bonus of its chairman, Bob Tillman, by 57% in 2002. The increase, based on the company's strong performance, will result in Tillman getting a bonus of US$3 million for the fiscal year ended Jan. 31. That's up from US$1.9 million.
Vancouver, BC - West Fraser Timber Co. had first-quarter earnings of $11 million on sales of $385 million. That's a swing from earnings of $27 million on sales of $379 million in the first quarter of 2002. EBITDA was $41 million, or 11% of sales, compared with $86 million, or 23% of sales, in 2002. |
| WORLD NEWS ROUNDUP |
London, UK - Kingfisher, the retail group that owns Castorama and Réno-Dépôt, could face costs of up to the £226 million in its efforts to demerge its electrical division. A currency exchange contract alone will cost £79 million as the euro falls in value, while a £100 million French tax charge will further bite into the company's coffers. The company hopes to recoup much of the tax charge, but will also lay out an additional £60 million to consultants who are working on the deal. Kingfisher expects that the division, which will be named Kesa, will be demerged with around £400 million of debt by July of this year.
San Marcos, TX - Next winter, McCoy's Building Supply Centers will open a 20,000-sq.ft. store in its headquarters city that will replace a store McCoy's built here in 1986. But opening new stores is not driving this dealer's business strategy anymore. In fact, McCoy's - one of the 20 largest home improvement retailers in the U.S. - has been steadily trimming its store count from 1999, when it peaked at 110 units. Instead, the company has been upgrading its existing units, including everything from repairing cracks in the parking lots to buying new delivery trucks.
 Frankfurt, Germany - Hornbach Holding AG increased sales for the year ended February 28 by 14.4% to €1.70 billion, up from €1.49 billion a year earlier. Net sales at its Hornbach-Baumarkt-AG subgroup rose by 13.1% to €1.63 billion, up from €1.44 billion a year earlier. Hornbach plans to open up to nine of its DIY superstores this year, and sales are expected to reach €1.9 billion, surpassing the negative 2% growth anticipated for the German home improvement sector. Hornbach ended the fiscal year with 102 retail outlets, comprising 78 in Germany, 10 in Austria, seven in the Netherlands, four in the Czech Republic, one in Luxembourg and two in Switzerland.
Brookfield, WI - Atlas Copco, the parent of Milwaukee Electric Tool Corp., has announced the acquisition of DreBo Werkzeugfabrik GmbH, a German manufacturer of carbide-tipped masonry drilling products. DreBo has sales of €25 million and 160 staff. Details of the acquisition were not disclosed, but the company's distribution centre in the U.S. was included in the deal. According to David Aubel, general manager of Milwaukee in Canada, business will remain more or less unchanged north of the border, but he does anticipate that, long term, the company will be in a more competitive position, especially in light of the production of carbide that DreBo will provide.
Newton, IA - Maytag had first-quarter consolidated sales of US$1.136 billion and operating income of US$68.2 million, compared with 1Q results in 2002 of US$1.178 billion in consolidated sales and operating income of US$107.2 million. The closing of a manufacturing plant and product recalls affected results. Restructuring will result in 500 job cuts and other changes that are expected to result in US$20 million in savings per year.
Newport Beach, CA - Water Pik Technologies had first-quarter sales of US$55.4 million, down from US$57.0 million in 1Q 2002. The loss from continuing operations was US$1.8 million, compared with income of US$0.4 million a year earlier. The company suffered a net loss of US$1.8 million, versus a loss of US$0.3 million in 1Q 2002. |
| NOTED… |
| Two lawn and garden associations, Landscape Ontario and Flowers Canada, have formed a partnership to create a new component of the trade show Garden Expo. Called Florist Expo, it will provide a buying forum for florists seeking new products and services. The combined show will take place at the Toronto Congress Centre from October 22-23, 2003.On May 1, 2003, the Women's Consumer Products Network will hold it's annual dinner at the Mississauga Golf & Country Club, with guest speaker Janet Laughton Mackay. For more information, contact Janet Oh at 416.208.0688, events@wcpncanada.org or go to http://www.wcpncanada.org/events/alchemy.php to register. |
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John Caulfield, Contributing Editor
vol. ix, 16 April 21, 2003
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