December 13, 1999 - Volume v, #50
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

I want to thank you for your tremendous support over the past five years (yes, it's been that long!). I look forward to many more years reporting on this very exciting industry. On behalf of Beverly Allen, Business Manager at Hardlines, and me, your trusty typo-challenged Editor and Publisher (no more calls about "Atlanta-based Lowe's," puh-leez!), have a safe and happy holiday. See you in Y2K! &emdash; Michael.

HOME DEPOT'S ANNETTE VERSCHUREN: THE EXCLUSIVE MILLENNIUM INTERVIEW

Canada will eventually have 120 Home Depot stores, and 30-40 of them will be in Québec, says Annette Verschuren, president of Home Depot Canada. That growth means the company will erect another 17 or 18 in 2000, after finishing off this year with 52 (the last one opens officially this Friday in Peterborough, Ont.).

Worldwide expansion:
Home Depot expects to increase the number of its stores worldwide from 928 at the end of the current fiscal year (which is January 30, 2000) to 1,900 in 2003. The company expects its share of the North American market to increase from 8% to 18% in 2003, based on current sales growth of 25% annually.

Growth in Canada has typically been slightly ahead of the company average and sales for the year will exceed $2 billion, up from an estimated $1.85 billion last year (Home Depot doesn't break out its sales by country).

While Home Depot has gone toe to toe with Revy Home Centres in the west, in southern Ontario it has pretty much had the big box market to itself &emdash;until now. Revy's first store, in Mississauga, has opened, while the second one opens this week in Vaughan, north of the city. Now Réno-Dépôt has started picking up sites in Toronto. It already has two confirmed, in Brampton and Scarborough, which will open next year under the The Building Box name.

Verschuren acknowledges the competition, saying, "I'm always running scared. I have to be." Réno-Dépôt's parent, Castorama of France, is backing Réno-Dépôt's expansion in Ontario to the tune of $350 million over the next four or five years. Castorama is perceived as being up for the fight: it is now part of U.K.-based Kingfisher, which in turn owns home improvement giant B&Q, with combined sales of CDN$22 billion.

RONA, meanwhile, has committed to expanding its presence in Ontario from 40 stores to 250 in the next five years, including at least 15 big boxes. It already has one in Ottawa and another planned for Cambridge.

Competitive strategies:
To stay ahead of this competition, Verschuren says Home Depot's forté is innovation. Each new store contains new wrinkles learned from what works in existing stores. One of the most radical stores to open so far is the "Type Six" store in Brampton, on Highway 7 near Highway 410. Its emphasis on boutiques for home fashion and décor, and an overall attempt to brighten up the warehouse concept in general, are gambits aimed at attracting a bigger chunk of the lucrative female spending dollar. They are also experiments, the elements of which may turn up in later Home Depot outlets.

"Each store we open is brighter, smarter, more attractive to our customers," Verschuren says.

However, more radical experiments such as Villager's Hardware will not arrive in Canada until at least 2001. "We'll let it test in the U.S. and if it goes forward corporate-wide, it will end up in Canada."

Home Depot in Québec:
Verschuren wants between 15 and 17 Home Depot stores in the Montréal market eventually. She also expects a total of 30-40 in the province of Québec. Besides nailing down key locations, the Québec strategy involves everybody at the executive level taking lots of French lessons, although Verschuren, a native of Nova Scotia, claims to be bilingual.

Acquisition remains unlikely:
In an earlier interview with Hardlines, Verschuren stated unequivocally her commitment to expanding only through new stores. Now she's softening her stance a bit on an eventual acquisition. "There's always a possibility," she admits.

But she adds that the likelihood of taking over a company like Kent Building Supplies in Atlantic Canada is problematic: It has only five big boxes; the rest are smaller stores, which do not fit the Home Depot mould. Home Depot's first two outlets down east will open in Halifax and Dartmouth next fall; Moncton will open soon after. "We think [Atlantic Canada] is a five, six, or seven store market," she says, adding that she'd like to see a store in St. John's eventually, as well.

* * * * * * * *

REVY CONFIRMS QUÉBEC EXPANSION

Revy Home Centres Inc. has announced its intention to enter the Québec market in 2001 and it's not averse to making an acquisition to do so. The company had planned to enter Montréal in 2003, to coincide with the termination of the non-compete clause between Réno-Dépôt and Home Depot. But that agreement ended prematurely.

"That leaves us having to go into Québec right away," says Carl Grittner, president of Revy.

Revy had intended to finish expanding in Toronto before making the move, but now wants to get some sites sewn up and one store open quickly. "We want to get one store to get a wedge in there, but then continue in Toronto until it's completed. Then we'll go back in with four or five stores," he says. "But if it works out in Montréal, we could open them there faster." Revy intends to have a total of 16 stores in the GTA, with 10 of them open or in development by the end of 2001.

Besides the need to secure good urban sites that can accommodate a big box, Grittner sees Revy's presence in Montréal as a competitive strategy in the battle back in Toronto. "It makes sense, since [the competition] could start a price war in Toronto and live off their presence in Montréal."

Grittner says Revy could open in Québec "very cheaply," by using the expertise of another I.L.D.C. member in that province to assist with advertising and buying. He also wouldn't mind buying another company in Québec to facilitate the growth there, including Réno-Dépôt. "It makes sense if we could get together or merge the two companies," Grittner says candidly. "But we haven't talked to them. It's just obvious to want to put the two [companies] together."

USG Corp. will purchase Sybex Inc., the holding company of Beadex Manufacturing Co. Inc. and The Synkoloid Co. of Canada, two paper faced metal corner bead and joint treatment businesses. The acquisition will expand USG's product offerings to the contractor market, including its offerings in Canada through CGC, and strengthen its presence in the West. The two companies had 1998 sales of US$54 million, employ 170 and operate four plants and three distribution centres, primarily in the Northwest U.S. and Western Canada. Terms of the agreement were not disclosed.

The BSDA of B.C.'s second annual trade show and conference has been given the go-ahead, with 125 dealers already registered and another 100 expected. The event will be held March 3-4, 2000, at the Delta Pacific Resort and Conference Centre in Richmond.

Hudson's Bay Co. will buy three former Eaton's locations in Ontario: Upper Canada Mall in Newmarket, Masonville Place in London and Square One in Mississauga. It has also acquired the Eaton's in the West Edmonton Mall. By the spring of 2000 the stores in Newmarket and London will be converted into Bay Stores; the Mississauga Square One and West Edmonton Mall locations will become Zellers stores.

Westburne Inc. has purchased three Ohio branches of Michigan-based All-Phase Electric Supply. These branches are expected to generate sales in excess of $65 million in fiscal 2000. It has also executed letters of intent to buy two unnamed independent plumbing distributors in Colorado and Arizona, and 50% of a third in Sept-Iles, Qué., Distribution J.R.V. Inc.

Procter & Gamble Canada is launching a line of products under the direction of John Elliott, business development manager for the national hardware/home improvement channel. The lineup will include many items, such as fabric conditioners and cleaning products, already in the marketplace, and position the company for the launch of more lines now under development.

OSRAM Sylvania is now on the web at www.sylvania.com. The site includes information on the company and locations of retailers that sell its products.

Salton Inc. will pay US$137.5 million for the rights to use the name and image of former boxer George Foreman in marketing its products. Salton, which sells Toastmaster, Maxim, Breadman, Juiceman, etc., says George Foreman grilles are among its best-selling products. The deal means Salton will no longer have to pay Foreman and his partners 60% of the profits from sales of George Foreman products. Foreman will continue to assist in the company's marketing efforts.

Atlanta-based (never mind!) Home Depot will expand its sales of General Electric and Whirlpool appliances. The appliances are now in about 15% of the company's stores. They'll be in 95% of them by the end of next year. The move takes aim at major appliance retailers such as Sears and Circuit City. the expanded program will include refrigerators, stoves, dish washers, microwave ovens, washers and dryers. Home Depot doesn't plan to sell consumer electronics items such as television sets and audio gear, however. Home Depot in Canada is already selling hot water heaters. According to Ronald M. Brill, Home Depot's chief administrative officer, the stores will keep only about 60% of available appliances in stock. The rest can be ordered by viewing computer screens. Orders would be delivered directly from the manufacturer, typically within 48 hours.

Home Depot will open four units in Buenos Aires next year, marking the company's first move into Argentina.

Borders, the bookstore chain in the U.S., has developed an electronic return card that takes some of the agony and indignation out of customer returns. The card, which looks just like a shiny platinum credit card, will hold a prepaid balance in the amount of the customer's return credit up to $500. Nothing could be easier.

Salton Inc. will pay US$137.5 million for the rights to use the name and image of former boxer George Foreman in marketing its products. Salton, which sells Toastmaster, Maxim, Breadman, Juiceman and other appliances, said the George Foreman grilles are among its best-selling products. The deal means Salton will no longer have to pay Foreman and his partners 60% of the profits from sales of George Foreman products. Foreman will continue to assist in the company's marketing efforts.

CANADIAN STOCK WATCH

COMPANY	52-WEEK HIGH	52-WEEK LOW	CLOSE (FRI.)
Canadian Tire	46.00	29.00	36.00
Canfor	16.40	4.25	16.15
Goodfellow	11.80	6.00	10.60
Hudsons Bay	23.85	4.00	18.50
Sears Canada	39.05	15.25	39.05
Taiga Forest	14.75	8.65	13.00
West Fraser	41.00	9.05	31.75

"A man does not have to be an angel in order to be a saint."
&emdash; Albert Schweitzer

PEOPLE ON THE MOVE

Jon Louch has joined Alliance Mercantile Inc. as Ontario sales manager. He was formerly with Record Tools. (905-669-9064)

Richard Mickel Smith has been appointed vice-president responsible for the consumer products division of Agri-Tel Grain Ltd. He continues in his duties as CIO … Kareen Duma has been appointed consumer products co-ordinator responsible for logistics and customer service. (204-268-1415)

Sam Mitchell, director of branded and international sales for Waterloo Industries, Waterloo, Iowa, is new chairman of the Worldwide DIY Council, a trade association of active exporting manufacturers from the U.S. and Canada … Tom Delph, retired publisher of Hardware Age and former executive with Do It Yourself Retailing magazine in the U.S., has taken over as executive secretary of the Worldwide DIY Council, succeeding Bob Vereen, who retired after serving since 1981. Vereen will continue in the council as Director Emeritus.

CORRECTION: Last week I gave the wrong title for John Alston at Hoover Canada. He's the marketing manager. Upon his retirement next month he'll be replaced by Les Pulchinski, whose title is sales and marketing administration manager. (905-335-3311)

* * * * * * *

HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 1999 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.

December 13, 1999 - Volume v, #50
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

I want to thank you for your tremendous support over the past five years (yes, it's been that long!). I look forward to many more years reporting on this very exciting industry. On behalf of Beverly Allen, Business Manager at Hardlines, and me, your trusty typo-challenged Editor and Publisher (no more calls about "Atlanta-based Lowe's," puh-leez!), have a safe and happy holiday. See you in Y2K! &emdash; Michael.

HOME DEPOT'S ANNETTE VERSCHUREN: THE EXCLUSIVE MILLENNIUM INTERVIEW

Canada will eventually have 120 Home Depot stores, and 30-40 of them will be in Québec, says Annette Verschuren, president of Home Depot Canada. That growth means the company will erect another 17 or 18 in 2000, after finishing off this year with 52 (the last one opens officially this Friday in Peterborough, Ont.).

Worldwide expansion:
Home Depot expects to increase the number of its stores worldwide from 928 at the end of the current fiscal year (which is January 30, 2000) to 1,900 in 2003. The company expects its share of the North American market to increase from 8% to 18% in 2003, based on current sales growth of 25% annually.

Growth in Canada has typically been slightly ahead of the company average and sales for the year will exceed $2 billion, up from an estimated $1.85 billion last year (Home Depot doesn't break out its sales by country).

While Home Depot has gone toe to toe with Revy Home Centres in the west, in southern Ontario it has pretty much had the big box market to itself &emdash;until now. Revy's first store, in Mississauga, has opened, while the second one opens this week in Vaughan, north of the city. Now Réno-Dépôt has started picking up sites in Toronto. It already has two confirmed, in Brampton and Scarborough, which will open next year under the The Building Box name.

Verschuren acknowledges the competition, saying, "I'm always running scared. I have to be." Réno-Dépôt's parent, Castorama of France, is backing Réno-Dépôt's expansion in Ontario to the tune of $350 million over the next four or five years. Castorama is perceived as being up for the fight: it is now part of U.K.-based Kingfisher, which in turn owns home improvement giant B&Q, with combined sales of CDN$22 billion.

RONA, meanwhile, has committed to expanding its presence in Ontario from 40 stores to 250 in the next five years, including at least 15 big boxes. It already has one in Ottawa and another planned for Cambridge.

Competitive strategies:
To stay ahead of this competition, Verschuren says Home Depot's forté is innovation. Each new store contains new wrinkles learned from what works in existing stores. One of the most radical stores to open so far is the "Type Six" store in Brampton, on Highway 7 near Highway 410. Its emphasis on boutiques for home fashion and décor, and an overall attempt to brighten up the warehouse concept in general, are gambits aimed at attracting a bigger chunk of the lucrative female spending dollar. They are also experiments, the elements of which may turn up in later Home Depot outlets.

"Each store we open is brighter, smarter, more attractive to our customers," Verschuren says.

However, more radical experiments such as Villager's Hardware will not arrive in Canada until at least 2001. "We'll let it test in the U.S. and if it goes forward corporate-wide, it will end up in Canada."

Home Depot in Québec:
Verschuren wants between 15 and 17 Home Depot stores in the Montréal market eventually. She also expects a total of 30-40 in the province of Québec. Besides nailing down key locations, the Québec strategy involves everybody at the executive level taking lots of French lessons, although Verschuren, a native of Nova Scotia, claims to be bilingual.

Acquisition remains unlikely:
In an earlier interview with Hardlines, Verschuren stated unequivocally her commitment to expanding only through new stores. Now she's softening her stance a bit on an eventual acquisition. "There's always a possibility," she admits.

But she adds that the likelihood of taking over a company like Kent Building Supplies in Atlantic Canada is problematic: It has only five big boxes; the rest are smaller stores, which do not fit the Home Depot mould. Home Depot's first two outlets down east will open in Halifax and Dartmouth next fall; Moncton will open soon after. "We think [Atlantic Canada] is a five, six, or seven store market," she says, adding that she'd like to see a store in St. John's eventually, as well.

* * * * * * * *

REVY CONFIRMS QUÉBEC EXPANSION

Revy Home Centres Inc. has announced its intention to enter the Québec market in 2001 and it's not averse to making an acquisition to do so. The company had planned to enter Montréal in 2003, to coincide with the termination of the non-compete clause between Réno-Dépôt and Home Depot. But that agreement ended prematurely.

"That leaves us having to go into Québec right away," says Carl Grittner, president of Revy.

Revy had intended to finish expanding in Toronto before making the move, but now wants to get some sites sewn up and one store open quickly. "We want to get one store to get a wedge in there, but then continue in Toronto until it's completed. Then we'll go back in with four or five stores," he says. "But if it works out in Montréal, we could open them there faster." Revy intends to have a total of 16 stores in the GTA, with 10 of them open or in development by the end of 2001.

Besides the need to secure good urban sites that can accommodate a big box, Grittner sees Revy's presence in Montréal as a competitive strategy in the battle back in Toronto. "It makes sense, since [the competition] could start a price war in Toronto and live off their presence in Montréal."

Grittner says Revy could open in Québec "very cheaply," by using the expertise of another I.L.D.C. member in that province to assist with advertising and buying. He also wouldn't mind buying another company in Québec to facilitate the growth there, including Réno-Dépôt. "It makes sense if we could get together or merge the two companies," Grittner says candidly. "But we haven't talked to them. It's just obvious to want to put the two [companies] together."

USG Corp. will purchase Sybex Inc., the holding company of Beadex Manufacturing Co. Inc. and The Synkoloid Co. of Canada, two paper faced metal corner bead and joint treatment businesses. The acquisition will expand USG's product offerings to the contractor market, including its offerings in Canada through CGC, and strengthen its presence in the West. The two companies had 1998 sales of US$54 million, employ 170 and operate four plants and three distribution centres, primarily in the Northwest U.S. and Western Canada. Terms of the agreement were not disclosed.

The BSDA of B.C.'s second annual trade show and conference has been given the go-ahead, with 125 dealers already registered and another 100 expected. The event will be held March 3-4, 2000, at the Delta Pacific Resort and Conference Centre in Richmond.

Hudson's Bay Co. will buy three former Eaton's locations in Ontario: Upper Canada Mall in Newmarket, Masonville Place in London and Square One in Mississauga. It has also acquired the Eaton's in the West Edmonton Mall. By the spring of 2000 the stores in Newmarket and London will be converted into Bay Stores; the Mississauga Square One and West Edmonton Mall locations will become Zellers stores.

Westburne Inc. has purchased three Ohio branches of Michigan-based All-Phase Electric Supply. These branches are expected to generate sales in excess of $65 million in fiscal 2000. It has also executed letters of intent to buy two unnamed independent plumbing distributors in Colorado and Arizona, and 50% of a third in Sept-Iles, Qué., Distribution J.R.V. Inc.

Procter & Gamble Canada is launching a line of products under the direction of John Elliott, business development manager for the national hardware/home improvement channel. The lineup will include many items, such as fabric conditioners and cleaning products, already in the marketplace, and position the company for the launch of more lines now under development.

OSRAM Sylvania is now on the web at www.sylvania.com. The site includes information on the company and locations of retailers that sell its products.

Salton Inc. will pay US$137.5 million for the rights to use the name and image of former boxer George Foreman in marketing its products. Salton, which sells Toastmaster, Maxim, Breadman, Juiceman, etc., says George Foreman grilles are among its best-selling products. The deal means Salton will no longer have to pay Foreman and his partners 60% of the profits from sales of George Foreman products. Foreman will continue to assist in the company's marketing efforts.

Atlanta-based (never mind!) Home Depot will expand its sales of General Electric and Whirlpool appliances. The appliances are now in about 15% of the company's stores. They'll be in 95% of them by the end of next year. The move takes aim at major appliance retailers such as Sears and Circuit City. the expanded program will include refrigerators, stoves, dish washers, microwave ovens, washers and dryers. Home Depot doesn't plan to sell consumer electronics items such as television sets and audio gear, however. Home Depot in Canada is already selling hot water heaters. According to Ronald M. Brill, Home Depot's chief administrative officer, the stores will keep only about 60% of available appliances in stock. The rest can be ordered by viewing computer screens. Orders would be delivered directly from the manufacturer, typically within 48 hours.

Home Depot will open four units in Buenos Aires next year, marking the company's first move into Argentina.

Borders, the bookstore chain in the U.S., has developed an electronic return card that takes some of the agony and indignation out of customer returns. The card, which looks just like a shiny platinum credit card, will hold a prepaid balance in the amount of the customer's return credit up to $500. Nothing could be easier.

Salton Inc. will pay US$137.5 million for the rights to use the name and image of former boxer George Foreman in marketing its products. Salton, which sells Toastmaster, Maxim, Breadman, Juiceman and other appliances, said the George Foreman grilles are among its best-selling products. The deal means Salton will no longer have to pay Foreman and his partners 60% of the profits from sales of George Foreman products. Foreman will continue to assist in the company's marketing efforts.

CANADIAN STOCK WATCH

COMPANY	52-WEEK HIGH	52-WEEK LOW	CLOSE (FRI.)
Canadian Tire	46.00	29.00	36.00
Canfor	16.40	4.25	16.15
Goodfellow	11.80	6.00	10.60
Hudsons Bay	23.85	4.00	18.50
Sears Canada	39.05	15.25	39.05
Taiga Forest	14.75	8.65	13.00
West Fraser	41.00	9.05	31.75

"A man does not have to be an angel in order to be a saint."
&emdash; Albert Schweitzer

PEOPLE ON THE MOVE

Jon Louch has joined Alliance Mercantile Inc. as Ontario sales manager. He was formerly with Record Tools. (905-669-9064)

Richard Mickel Smith has been appointed vice-president responsible for the consumer products division of Agri-Tel Grain Ltd. He continues in his duties as CIO … Kareen Duma has been appointed consumer products co-ordinator responsible for logistics and customer service. (204-268-1415)

Sam Mitchell, director of branded and international sales for Waterloo Industries, Waterloo, Iowa, is new chairman of the Worldwide DIY Council, a trade association of active exporting manufacturers from the U.S. and Canada … Tom Delph, retired publisher of Hardware Age and former executive with Do It Yourself Retailing magazine in the U.S., has taken over as executive secretary of the Worldwide DIY Council, succeeding Bob Vereen, who retired after serving since 1981. Vereen will continue in the council as Director Emeritus.

CORRECTION: Last week I gave the wrong title for John Alston at Hoover Canada. He's the marketing manager. Upon his retirement next month he'll be replaced by Les Pulchinski, whose title is sales and marketing administration manager. (905-335-3311)

* * * * * * *

HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 1999 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.