We got an email at the World Headquarters last week asking which Lowe’s stores are closing in Canada. We hadn’t heard of any such closings—after all, retailers are not eager to share bad news with us. But our job is to get the facts and help our Faithful Readers, whether retailers or suppliers, to understand this industry better.

So we dug into it. A quick online search confirmed that the Lowe’s in Vaughan, Ont., will close. A call to the store gave us an approximate timeline: “one to two months.” Then we contacted the ever-helpful PR team at RONA inc. for further information and they committed to keep us in the loop. Once we had confirmed the facts, we ran the piece in our Daily News and picked it up here, in Hardlines Weekly Report (see under “Retailer News” in this issue).

This is typical of how the news is found, researched, and reported here at Hardlines. We have many publications now, so once we get the news, we have to decide which newsletter and which audience it is best suited for.

In another case, I made a call to the Home Building Centre in Osoyoos, on the British Columbia border adjacent to Washington state. I had been asked to tell the store manager about our 27th annual Hardlines Conference. It will be held in Whistler Oct. 17 and 18 and we want as many folks as possible on the West Coast to join us.

My conversation with that dealer soon revealed that his store operates in one of the hottest and driest climates in the country. Yeow! Another story possibility.

But as we worked to finalize the story, nature added a new twist. A wildfire crept up from Washington state and came perilously close to Osoyoos, forcing evacuations and alerts that kept the whole town, and the dealer, on alert. We put a call into the other Home Hardware dealer in town, a hardware store on the main street, for further input.

What started out as a courtesy phone call to a dealer became a real human interest story, then morphed into a breaking news item that could have resulted in tragedy. That story became a lead item in our sister publication, Hardlines Dealer News.

And yes, sometimes we share stories among the different titles. But we always try to add a new spin to the stories when we do. Take a recent story about making mental health awareness a part of any company’s health and safety policies.

Our editor, Steve Payne, had attended an HR conference held by the Retail Council of Canada. His coverage of one speaker on this topic was a perfect fit for the July edition of our Hardlines HR Advisor newsletter. But the message, we felt, warranted a wider audience. So we tweaked the story and included a version with additional info two weeks later in Hardlines Weekly Report.

(The news can come fast and furious to Hardlines, and we work hard to sift through the clutter to provide you with the best reading experience in all of our publications. Thanks for reading!—Michael McLarney)

Canadian Tire, Home Depot second-quarter results reflect a softening market

The latest quarterly results from two of North America’s largest hardlines retailers this month bear out the concern that 2023 has become a year of slowdown.

Canadian Tire Corp.’s second-quarter net earnings fell by 28.5 percent to $126.9 million, from $177.6 million a year earlier. Profits were hit by $74.6 million in costs associated with a fire in March at one of CTC’s Brampton, Ont., distribution centre, as well as by lower discretionary spending amid continued high inflation.

The Home Depot reported sales of $42.9 billion for the second quarter of fiscal 2023. That number is down two percent from Q2 2022. Comparable sales for the quarter were likewise down two percent. Net earnings slipped as well, to $4.7 billion from $5.2 billion, a drop of about 10 percent.

Canadian Tire saw revenues for the retail segment, excluding petroleum, dip by 0.5 percent to $3.7 billion. However, one bright spot was comp sales at the company’s eponymous flagship banner: they edged up by 0.1 percent, as higher sales in automotive and living categories offset declines in gardening, seasonal, and hardware.

Home Depot reported that sales of smaller projects continued to grow during the second quarter, but there remained “continued pressure in certain big-ticket, discretionary categories.” The retailer reaffirmed its forecast of an overall sales dip of between two and five percent for fiscal 2023.

Lowe’s Cos., which will issue its second-quarter results tomorrow, had previously forecast that its comp sales for 2023 would be down from two to four percent.

Last year, Canadian Tire issued a long-range forecast for growth of about four percent per year through to 2025. But current conditions have the company setting that forecast aside.

“The cumulative effect of increasing inflationary pressure and higher interest rates on consumer spend and financing costs, along with higher inventory costs, has significantly impacted the company’s ability to deliver against its previous expectations,” says the Q2 results release from Canadian Tire. “Given the slower pacing of growth, and the noticeable slowdown in retail sales during the second quarter of 2023, the company is withdrawing its previously disclosed financial aspirations at this time.”

Wholesalers still face fallout from B.C. port strike, though LBM not as affected

The effects of the recent strike among British Columbia port workers are expected to have repercussions that will last for months to come. For manufacturers awaiting products from Asia, the impacts are vexing. For wholesalers, the port strike does not appear to be as big a concern. But it has certainly caused some hiccups for companies, especially the smaller players.

Russ Permann, CEO of Taiga Building Products, says the situation certainly caused some inconvenience, especially with architectural goods like mouldings, millwork, and flooring. “I suspect you'll see more impacts in those small-pack items that go on store shelves, rather than large, bulky building materials that we mostly deal with.”

Nevertheless, Permann says, his company had a number of containers stacked up at the ports and more products sitting on ships offshore. “There were a few options to divert to other ports but not many, so we’re really at the mercy of those docks to clear up this backlog as quick as they can.”

Michel Walsh, director of product management and marketing at CanWel Building Materials, said the impact on CanWel has not been as dramatic as it has been for manufacturers. Walsh works out of CanWel’s Montreal-area offices, but the company is based in Vancouver and is a division of Doman Building Materials Group.

“Most containers we bought in the fourth quarter of 2022, we received them in Q1 to Q2. We diverted a few other ones around the world the other way, expecting the strike would last … As the strike is over, CN-CP’s backlog will take months to reabsorb.”

Permann observes that there weren’t too many acute shortages in the market as the strike came to an end, but he expects backlogs to take a few months to clear up. “A good estimate of returning to ‘normal’ supply flows is likely mid-fall. We don't anticipate anything like what we saw during the pandemic. This will be more temporary in nature and much shorter in duration, if there is any disruption.”

Thomas Foreman, president of the Building Supply Industry Association of B.C., acknowledges that the delays will have a long-lasting effect on many of his organization’s supplier-members. “There are numerous ships and containers on hold and the delay will impact the freight that will arrive in the next months. A number of members have containers scheduled to arrive in August in preparation for the fall buying cycle and they’re uncertain on their ETA.”

The smaller companies will feel the brunt of the delays, he says. “This stoppage has a domino affect, creating more stress on small and medium-sized enterprises that our industry relies on for a multitude of building supply products.” And that will no doubt impact prices. “These types of delays cause unbudgeted expenses that will be pasted on to the consumer in some form or fashion.”

Kent Homes, the sister company of Kent Building Supplies, builds modular housing at its plant in Bouctouche, N.B. This year, production has been ramped up by both the Nova Scotia wildfires and an effort to provide social housing on Prince Edward Island.

Earlier this summer, the province of Nova Scotia bought 25 fully-furnished modular homes from Kent Homes and made them available to rent for people whose houses were destroyed by the Shelburne County and Halifax region wildfires. The project cost the province $7.4 million.

Now Kent Homes is providing modular homes in rural P.E.I. The company is partnering with that province’s division of the Canadian Mental Health Association and a contractor partner, 720 Solutions, to provide housing for vulnerable individuals with mental health and addiction issues. It’s constructing a two-storey, 10-unit modular apartment complex in Alberton, which is in the northwest part of the province.

The modular homes will be about 84 to 93 square metres (900 to 1000 square feet) in area and will include furnishings, appliances, and connection to services such as wells, septic, and telecom.

Orgill invests in growth with expanded field team and new DC

U.S. hardware wholesaler Orgill is making investments to elevate the company’s position in the home improvement industry. To accommodate the strong growth it has experienced through Covid, Orgill will expand its field sales team by as much as 10 percent. It already has more than 400 field service people working with its retailer customers in North America and around the world.

The company has seen a surge in both new customers and needs from existing customers.

“We really put an emphasis on consultative selling,” says David Mobley, Orgill executive vice-president of sales. “We want our team of sales professionals to serve as an extension of our customers’ businesses—an extra set of eyes and ears to help them find ways to grow and improve their operations.”

Earlier this year, Orgill announced plans to expand its retail campus in Collierville, Tenn. A large part of the expansion will include the construction of a 500,000-square-foot “Concept Centre.”

The new facility is expected to be completed in 2024 and will replace Orgill’s existing, 250,000-square-foot Concept Centre in Olive Branch, Miss.

“Having access to a Concept Centre is critical to how we help our customers,” says John Sieggreen, executive vice-president of retail at Orgill. “The Concept Centre is a real-world retail laboratory, where we can build and test retail concepts. We use this facility for everything from building and experimenting with the model stores we set up at our Dealer Markets, to setting up full categories or departments for our customers to see prior to implementing in their stores.”

Meanwhile, construction of a new, 800,000-square-foot distribution facility in Tifton, Ga., has continued through the summer. The DC will replace Orgill’s existing Tifton facility, which opened in 1995.

The new DC promises to include leading-edge distribution technology to streamline the order receiving and fulfillment process, says Randy Williams, Orgill’s EVP of distribution. The DC will use robots and feature a new goods-to-person picking system. “We are taking advantage of every opportunity to build technology and new distribution techniques into this facility that will help us create efficiencies for both our team and our customers,” Williams adds.

Orgill now operates eight distribution centres in North America, including one in Canada in London, Ont., with 6.7 million square feet of total capacity and more than 75,000 SKUs in each DC.

IKEA celebrates 80th anniversary, continues small store expansion

IKEA is 80 years old. The ready-to-assemble furniture business was founded on July 28, 1943, in Almhult, Sweden, by 17-year-old Ingvar Kamprad. His workspace was his uncle’s kitchen table and his first products were pens, wallets, and picture frames, which he delivered by mail. He got into furniture five years later.

There are 460 IKEA stores operating in 61 countries. IKEA’s revenues last year were €44.6 billion ($65 billion). IKEA has 15 full stores across Canada as well as several planning and design studios.

The company is also working on being accessible to more Canadians. That has included developing smaller, showroom-style outlets. The latest such small-format store will open Aug. 23 in Toronto’s eastern suburbs. The 7,489-square-metre store is in the Scarborough Town Centre. It will feature the same one-way flow layout familiar to shoppers at larger IKEA locations, with two entrance-exit points, each with their own check-out lanes.

The Scarborough store builds on the smaller urban model debuted at IKEA’s Downtown Toronto – Aura store (shown here), which opened last year.

Kristyl Lawson, formerly communications director at Orgill, has moved to the company’s HR team as director, talent development. She reports to Laura Freeman, EVP of human resources. Earl Bernard has stepped into the role of communications director. He joined Orgill in 2021, bringing with him prior experience in engineering, technology, and communications.

At Gillfor, Kent Finkbiner has been named to the newly created role of assistant division manager for the Calgary division, effective Aug. 7. He reports to division manager Clay Finkbiner, who was promoted to that position in May. Meanwhile, Bryan Payne has been appointed division manager for the Langley, B.C., division, effective Sept. 5. He joins Gillfor from Woodtone, where worked for the past decade, most recently as Canadian sales manager.

Gabriel Farias has been named VP of OSB manufacturing at LP Building Solutions. He brings 25 years of experience in the manufacturing industry to the role, including time at Armstrong Flooring and Armstrong World Industries. Landon Stephens, LP’s new director of OSB sales and marketing, joined the business in 2015 as an OSB account manager. He was promoted to the role of regional sales manager before serving as senior national OSB sales manager.

DID YOU KNOW...?

… that dealers ranked new products as the most important information Hardlines can provide? That’s why the next issue of our trade magazine, Hardlines Home Improvement Quarterly, will be our first-ever PRODUCTS ISSUE. If you have new products that you want to get out to our audience of 11,000 buyers, dealers, and managers, send their information today to our editor, Steve Payne. (We need print-quality pics and up to 100 words of text.) There is no charge for this! But act fast: we need your product info by this Friday, Aug. 25.

RETAILER NEWS

Sexton Group member Stettler Building Supplies in Stettler, Alta., will take on the Ace banner. Under the terms of a joint supply agreement between Ace Canada and Sexton, Ace dealers have access to Sexton’s LBM offerings while Sexton members are invited to join the Ace banner. Stettler Building Supplies is owned and operated by Ralph Wiebe.

Charlie Donevan turned 98 on July 31. And his entire town, including the mayor, was invited to the celebration, which included an official reopening of Donevan’s Hardware. The store sits on the main street of Gananoque, Ont., situated alongside the St. Lawrence River. Donevan’s Hardware started as a general store in 1795 and was eventually purchased by James Donevan, Charlie’s grandfather.

RONA inc. is in the middle of changing its Lowe’s stores to the new RONA+ banner. Some 25 locations, all in Ontario, have been scheduled to switch. But one store will not make the cut. The Lowe’s in Vaughan, Ont., just north of Toronto, is scheduled to close sometime over the next couple of months. For its final weeks, it will carry a lot of clearance products as it winds down.

Peavey Mart has started accepting PayPal and Apple Pay for its online shopping platform. The retailer says the move is designed to guarantee “a frictionless and secure online shopping experience” as part of Peavey’s technology advancement strategy.

The Home Building Centre in Waterford, Ont., will host a grand opening of its revamped operations from Aug. 24 to 26. Owned and operated by Cortney and Jesse Buchan, the store was previously known as Riddoch Lumber. It was purchased by the Buchans in January 2022 and they began a full renovation in March of that year.

A Real Canadian Superstore in Red Deer, Alta., is the latest store in the Loblaw Cos. family to add heavy appliances. The program is being rolled out in partnership with Canadian Appliance Source using a store-within-a-store model. Loblaw announced its first foray into appliance sales in May at its store in Milton, Ont., and has since added the program to a store in Richmond, B.C.

Castle Building Centres’ newest member is Everything Exterior, a locally owned building materials store in Edmonton. In business for more than 10 years, it specializes in decking, siding, and stone. Owners Gagan Prince and Harp Thind are investing to move to a new location.

A new home and décor retail brand, “rooms + spaces,” held its first grand openings earlier this month in Woodbridge, Ont., and Vancouver. A further 22 rooms + spaces stores will host openings through September across the country. Canadian entrepreneur Doug Putman, who also owns Toys “R” Us and Sunrise Records in Canada, among other brands, acquired the leases to some of the spaces vacated by bankrupt retailer Bed Bath & Beyond (which had 55 stores in Canada) and Buy Buy Baby (11 stores in Canada).

Gillfor Distribution has partnered with Weyerhaeuser to distribute the manufacturer’s line of Trus Joist engineered wood products in western Canada. The line will be distributed through Gillfor’s six DCs from British Columbia to Manitoba. The two companies are finalizing logistical details and have set a target launch of Jan. 1, 2024.

Canfor Corp. reported a Q2 loss of $67 million, compared to profits of $531.6 million a year earlier. That was the third consecutive quarterly loss for the company, and includes a net $57.4 million reversal of a previously recognized inventory write-down. Sales of $1.45 billion were down from $2.17 billion a year earlier.

Western Forest Products reported a Q2 net loss of $20.7 million, compared to a $17.7 million loss in the previous quarter and net income of $38.6 million in the comparable period of 2022. Lumber sales fell to $212.4 million from $351.8 million. The 40 percent decline was attributed to lower prices and reduced shipment volumes.

Sales of existing homes dipped by 0.7 percent in July from the previous month. Despite sales gains in more than half of all local markets, declines in the Greater Toronto Area and B.C.’s Fraser Valley offset gains in Montreal, Edmonton, and Calgary. The actual (not seasonally adjusted) number of transactions came in 8.7 percent above the previous July—the largest year-over-year national sales increase in more than two years. (Canadian Real Estate Assoc.)

The value of building permits rose 6.1 percent in June to $11.6 billion, but residential permits fell by 1.8 percent to $6.9 billion. Ontario contributed to most of the decline, plunging by 11.4 percent. Across Canada, permits for 22,000 new dwellings were issued in June. (StatCan)