HARDLINES™
Five years serving Canada's home improvement industryApril 3, 2000 - Volume vi, #13
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154
E-mail: buzz@hardlinesfax.com Check out our incredible Classifieds section at the end of this issue!* * * * * *
* Sodisco-Howden's year end positions it for more acquisitions
* Emco builds its distribution network in the West
* Management successful in takeover bid at Cameron Ashley
* Lowe's gets a new vp of operations and merchandising
* More Americans planning to do their own renovations
* * * * * *STRONG YEAR SPURS GROWTH FOR SODISCO-HOWDEN Sodisco-Howden Group ended 1999 with a strong 16.5% increase in its sales, marking a year of aggressive selling and deal-making and paving the way for future expansion. Sales for the year ended December 31 totaled $423.5 million, up from $363.6 million in 1998. Earnings before taxes more than doubled, from $3 million to $6.5 million, while net earnings rose from $2.7 million to $10.9 million,including a recording of future income tax assets that total $4.5 million. The results created considerable activity on the Montréal exchange, with 12* million shares trading over two days last week following the news of the results. In 1999, SHG focused on its selling function, making deals with buying groups, resurrecting the Spancan buying group, and introducing new loyalty programs such as Air Miles and Welcome Neighbour. Anticipating the strong results, SHG expanded its reach into Western Canada recently with the acquisition of Smith- Barregar, a hardware wholesaler based in Langley, B.C. But this is by no means the end of the company's growth, says Tony Molluso, president and CEO of SHG. "We are going to help consolidate the marketplace further, " he says. "We are actively pursuing other opportunities." * * * * * * *EMCO EXPANDS ITS WESTERN PRESENCE Emco Ltd. has opened a 120,000-sq. ft. distribution centre in Richmond, B.C., as part of its plan to improve customer service and increase the efficiency of its Emco Distribution operations across Canada. The plumbing wholesaler is also in the process of replacing its manual warehouse systems with new technology. Distribution centres are being established across Canada and will provide a centralized supply of inventory for each region, using new warehouse management system technology that includes barcoding. This anticipated efficiencies are expected to support Emco's smaller branches and allow for fast cross-docking of shipments. A site has recently been chosen for a similar facility in Edmonton that is expected to open by the end of the year. The redesign of existing facilities in Moncton, N.B., and in Montréal as distribution centres began in1999 and will also be completed early in 2000. A planned distribution centre in Toronto is expected to be fully operational in 2001. * * * * * * *WEB-BASED MARKETPLACE WILL REPRESENT US$300 BILLION IN RETAIL SALES More and more companies are attempting to consolidate their presence on the Web with "portals" or online facilities for building sales, especially business-to-business. The latest is an international consortium of 11 retailers that intend to form a collaborative partnership to establish the WorldWide Retail Exchange. The new web-based, business-to-business exchange is expected to begin operating mid-2000. It is designed to facilitate and simplify trading between retailers and their 100,000-plus suppliers, lowering costs in the supply chain for all participants. The participants are Albertson's (U.S.), Auchan (France), Casino (France), CVS (U.S.), Kingfisher(UK), Kmart (U.S.), Marks & Spencer (UK), Royal Ahold (The Netherlands), Safeway Inc. (U.S.), Target (U.S.) and Tesco (UK). Together the group operates over 30,000 stores and had 1999 combined sales of more than US$300 billion. Other retailers are also expected to join. The WorldWide Retail Exchange is a web-based marketplace, enabling transactions between retailers operating in the food, general merchandise and drugstore sectors. It is an open exchange and provides an information highway of publicly available item data together with private price and promotion information between multiple buyers and sellers. The exchange also will provide the means for auctioning products.COMPANIES IN THE NEWSThe first store in Ontario to carry Rona's Ambience Boutique department has been installed in the Rona Hardware in Newcastle, east of Toronto. The Boutique, which features a broad assortment of decorative furnishings such as linens, furniture, vases, drapes and candles, comprises about 10% of the 5,800 sq.ft. store, about a third of the size of an average Ambience Boutique. The program has its own semi-annual flyer; Newcastle's is so far the only one in English. Management at Cameron Ashley Building Products has succeeded in its bid to buy the company after it raised its offer to buy out the shares of CABP from US$15.10 per share to US$18.25. Total value of the deal, which was made with the backing of CGW Partners IV, a subsidiary of Citicorp Venture Capital, is about US$348 million. Another bid, at US$17 per share from Guardian Industries, was rejected. For the second quarter ended February 29, Goodfellow Inc. had a 21% increase in sales over last year to $89 million, generating a net profit of $478,000, compared with $57,000 last year on sales of $73 million. For the first six months of its fiscal year, Goodfellow reported a net profit of $2 million on sales of $186 million, versus a net profit of $1 million on sales of $158 million. This represents an 18% increase in sales and a 92% increase in profits over the same period last year. Dimensions Retail Systems Inc. has developed a dedicated retail management system for Home Hardware dealers called Home- Select. The program will be launched at Home Hardware's market in two weeks. The computer software company already has similar programs for TruServ Canada, Sexton Group and Howden. CANADIAN STOCK WATCH