John Caulfield, Contributing Editor
vol. x, #33, August 16, 2004

* * * * * * IN THIS ISSUE: • Canadian Tire has strong 2Q despite bad weather • Rona hits $1 billion in sales for second quarter • West Fraser nears completion of Weldwood purchase • Canadian housing starts slip in July

* * * * * * SUMMER PUBLISHING SCHEDULE: The next full-sized issue of Hardlines will publish on August 30. See you at our Hardlines Conference Series on September 8 & 9! — Michael * * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher
"Most organizations bore me stiff. I can't imagine working in one of them. I'd be sad if my children chose to." —Tom Peters (from his book "Crazy Times Call for Crazy Organizations)
SPECIAL REPORT — If you haven't signed up yet for the Hardlines Conference Series, you risk missing the industry event of the year.Now in its ninth year, the Hardlines Conference Series is an executive-level gathering of North America's top retailers and vendors. Besides case studies from retail's front lines, the event features speakers who provide insights into the latest trends shaping the industry today. In fact, we've just signed Ira Kalish, global director with Deloitte Research's Los Angeles office. He'll give his amazing overview of the emerging markets, the next wave of consolidation, the changing consumer, and the international threats to national brands. Joe Scarlett, chief officer of Tractor Supply, will explain the power of the farm and hardware business that has contributed to his company's explosive growth. Jim Inglis, a former vice-president at Home Depot whose background includes Carpet One and Dekor, will give his insider's take on the industry. Guillermo Aguero, general manager of Sodimac in Chile, will tell the story of his company's successful battle against the arrival of Home Depot, a battle that resulted in Home Depot's withdrawal from that market! And Jos Wintermans, president and CEO of Sodisco-Howden Group, will detail the future of this national hardware distributor. The latest addition to the line-up of personalities participating in the Hardlines Conference Series is Red Green, star of television's popular "The Red Green Show." Green will offer valuable tips on using hardware — and duct tape — at the Hardlines Gala Dinner on September 8, 2004. The Dinner is just one of the events during the two-day Conference Series, being held in Toronto September 8-9, 2004. Home Depot, Rona, BMR, TSC, TruServ Canada, and many more have all booked for this incredible event. For more info, click here or call Nancy at 416-489-3396.
TORONTO — Canadian Tire Corp. had second-quarter net earnings of $82.8 million, an increase of 29.3% over the same period in 2003. Sales from Canadian Tire's retail division (CTR) were up 5.1% to $1.8 billion, while earnings were up 22.1% to $84.6 million. Same- store sales grew by 2.2% during the quarter. Increased sales were experienced across CTR's cornerstone segments of automotive, home and leisure products. Despite rotten weather through much of the country in 2Q, seasonal sales were up, especially for high-end items. The largest category increases were in tools, barbecues, patio furniture and car care and accessories.OAK BROOK, Ill. — Ace Hardware Corp. had a 6.3% increase in net earnings for the second quarter of 2004, over the same period in 2003. Consolidated sales for the second quarter totaled $871.0 million, up 4.7% from $831.8 million. During the quarter, Ace added 65 stores and 1.6 million sq.ft. of retail space to its network of 4,800 independent dealers. BOUCHERVILLE, Que. — Rona inc. posted second-quarter net earnings of $53.7 million, an increase of 99.1% over the same period a year, and the best quarter in Rona's history. The company's consolidated sales topped $1 billion for the first time, a 53% increase over the same quarter a year earlier. Same-store sales were up 9.2%... TORONTO — Target is reportedly vying for Hudson's Bay Corp., the Canadian mass merchant and department store retailer. Target is possibly in talks with U.S. industrialist Jerry Zucker, HBC's largest shareholder, to buy his 18.1% stake in the company. About half of 300-plus Zellers stores would be converted to Target outlets, while some Bay locations could potentially be changed over, as well. BENTONVILLE, Ark. — Wal-Mart Stores reported record sales and earnings for the second quarter ended July 31. Net sales were $69.7 billion, an increase of 11.3%, compared with the same period last year. Income from continuing operations for the quarter was $2.7 billion, an increase of 16.1% from $2.3 billion. Net sales for the six months ended July 31, 2004, were $134.5 billion, an increase of 12.7%. TROY, Mich. — Kmart has announced it will not sell quite as many stores to Home Depot as previously stated. The original deal called for Home Depot to pick up as many as 24 Kmart outlets, but now that number is down to 19. In addition, Kmart will slash 200 jobs at head office. The revised agreement has Kmart selling at least 13 stores — for $173 million in cash — and up to 19 stores for $288.5 million. Kmart said originally that it would sell up to 24 stores for a maximum of $365 million. MISSISSAUGA, Ont. — Wal-Mart Canada has managed to thwart the union again, following a vote by workers in a store in Thompson, Man., to reject being unionized by the United Food and Commercial Workers Union. The vote result was 67-44 against unionization. VANCOUVER — West Fraser Timber Co. is nearing the end of its due diligence review of Weldwood of Canada. It intends to proceed with the acquisition from International Paper, although the deal remains subject to regulatory approvals and conditions. Total distribution of the receipts will be 5,852,000, at a price of $47 each, representing the right to receive one common share of West Fraser upon closing of the Weldwood acquisition, for gross proceeds of $275,044,000.
Retail sales for July were $336.5 billion, up 0.7% from June and up 6.5% from one year ago. Excluding automobiles, retail sales were $258.3 billion, up 0.2% from last month and up 7.8% from July 2003Interest rates on 30-year mortgages dipped below the 6% level last week. Freddie Mac, in its weekly nationwide survey, said that rates on 30-year, fixed-rates mortgages fell to 5.99% for the week ending August 5.
Housing starts fell slightly in July, to 218,700 seasonally adjusted to from 232,100 in June, according to Canada Mortgage and Housing Corp. Urban starts were down 8.0%. The seasonally adjusted annual rate of urban starts was down 8.0% to 191,900 units in July. However, urban single starts increased 5.5% to 107,500, although urban multiple starts declined 20.8% to 84,400 on a seasonally adjusted annual basis.The value of building permits issued by municipalities surged by 27.1% in June to $5.3 billion, a new monthly record, says Statistics Canada. It's also the first time the $5 billion mark has been exceeded for the first time. After an 8.2% decline in May, a record value in the residential sector combined with a near record in the non-residential sector propelled permits well above the previous record of $4.6 billion set in July 2003. Builders took out a record $3.4 billion in housing permits in June, up 24.2% from the previous month. The new housing market remained red hot in June as housing prices rose at their fastest pace in more than 14 years. New housing prices were up 6.2% year-over-year, compared with June 2003, reports Stats Canada. This was the biggest 12-month gain since February 1990 when prices advanced 7.1%. On a month-over-month basis, housing prices were up 0.7% from May.
Hardlines is proud to host the illustrious Outstanding Retailer Awards Lunch, presented by Hardware Merchandising magazine, this year, in conjunction with our own Newsmaker of the Year Awards. These important Awards will be presented on September 8, as part of our incredible Hardlines Conference Series.
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