RONA acquires major specialized plumbing chain
, Que. — RONA has acquired Noble Trade Inc., a plumbing and heating supply wholesaler that serves a large commercial and professional customer base in Ontario.
A private company with annual sales of about $150 million, Noble has more than 300 employees in 19 branches and one distribution centre. More than half its branches are located in the Greater Toronto Area, with the remainder in Barrie, Belleville, Guelph, Hamilton, Kitchener, Kingston, London, St. Catharines and Windsor. The distribution centre is located in Concord. The company has posted average annual sales increase of 27% since 1998.
The move is in line with RONA’Äôs strategic development plan to boost its presence in the specialized commercial and professional market. Last year, it acquired Matˆ©riaux Coupal, Chester Dawe and Curtis Lumber, all major pro dealers in their respective markets; Montreal, St. John’Äôs and B.C.’Äôs Lower Mainland.
"The transaction will also allow us to diversify our customer base and smooth the cyclical variations inherent to the retail market," said RONA president and CEO Robert Dutton in a prepared statement.
The deal is expected to close in the second quarter of 2007.
Canadian Tire posts strong annual results
— Despite warm weather in the fourth quarter, which drove quarterly earnings down by 8.4%, Canadian Tire Corp. managed to generate a 7.4% increase in net earnings for the year, to $354.6 million. Basic earnings per share were $4.35 in 2006, an increase of 7.7%.
For Canadian Tire’Äôs Retail business, sales in the fourth quarter grew to $2.16 billion from $2.07 billion, an increase of 4.4%. Same-store sales were up 2.2% in the quarter, led by strong sales in kitchen and home appliances, Christmas seasonal decor, toys and sports equipment. However, sales of weather-related merchandise in December, which typically account for 20%, declined in the fourth quarter due to warm weather in Ontario and Quebec.
For the year, CTR’Äôs retail sales grew 5.4% to $7.23 billion, up from $6.86 billion in 2005. Same-store sales increased 3.5%. For the year, CTR’Äôs pre-tax earnings were up 5.5% to $306.1 million.
Castle bundles — and brands — its non-retail services
, Ont. — Castle Building Centres Group was featuring a new brand at the recent LBMAO Winter Buying Show. But it wasn't a product brand.
Castlecare is a new catch-all for a bundle of non-retail services available to Castle members. While buying power is the focal point of any buying group offering, it is just part of an overall equation that focuses — now more than ever — on marketing and services. The Castlecare services include employee benefits such as health and dental, retirement and wealth management, and — perhaps most importantly given the rate of consolidation among independents — succession planning. By leveraging the collective clout of the Castle members, the Castlecare program is designed to flatten renewal rates and limit increases in premium costs.
The program has been developed for Castle by Bencom Financial Services Group, a Kitchener, Ont.-based company that has been working with Castle since 1998.
Value-added products help wholesalers capture reno market
— The trends that drove business in 2006 show signs of persisting in 2007, and that optimism is reflected at the wholesaler level, according to Tom Donaldson, president and CEO of CanWel Building Materials.
"For example, the robust home market in the West continues, with some softening in the East," says Donaldson."We expect overall housing market to stay reasonable — anything over 200,000 starts [per year] is good news."
CMHC predicts that housing starts will moderate this year to 209,500.
Bill Kushlick, president and COO of Taiga Forest Products — CanWel’Äôs major competitor — agrees. Housing will keep strong, he says, "as long as interest rates stay low."
Along with new housing, Donaldson foresees strong growth in the repair and renovation market. That’Äôs why CanWel has been investing in new lines recently, such as composite decking and pre-finished panels. "The ability to increase our value-added product offering has helped keep CanWel’Äôs sales up," he says.
That investment in specialty products will help offset soft commodity prices, which still account for 40% of CanWel’Äôs business.
Kushlick agrees that renovation spending will stay strong. "Consumers today have access to capital unlike any time in the past," he notes. Credit is now available in an array of financial products, and, along with the increase in double-income families, people have the resources to invest in their homes like never before, he adds.
Like CanWel, Taiga has been decreasing its reliance on commodities, with value-added products, such as flooring and mouldings.
TruServ CEO says second homes will drive reno spending
, Ont. — Although new housing construction remains strong, it is falling off slightly in many parts of the country, compared with the torrid rate of starts over the past three years. But smart dealers will be able to benefit from the repair and renovation market for cottages and second homes. The so-called "weekend belt", says TruServ president and CEO Bill Morrison, is one to watch.
Speaking to Hardlines
at the recent Winter Buying Show, held here by the Lumber and Building Materials Dealers Association of Ontario, Morrison observed that million-dollar cottages are already common in popular Southern Ontario destinations such as the Kawarthas and Muskoka. But that kind of investment, says Morrison, is now being made in more far-flung cottage destinations. "We think the arrow is going to shift from new homes to renovations — and really renovations for that second home."
He also pointed out that Canada's population growth is slowing, except in centres like Toronto or Vancouver, where immigration is strong. "I think renovation is where it’Äôs at."
MIBRO gets award for good management
The MIBRO Group has been named one of Canada’Äôs 50 Best Managed Companies by a program that recognizes excellence in Canadian-owned and managed companies with revenues over $10 million. Sponsored by Deloitte, CIBC Commercial Banking, National Post and Queen’Äôs School of Business, the program was established in 1993.
MIBRO, which supplies power tool accessories to retailers across North America, won the recognition because of its "innovation, leadership and a laser focus on their customers and employees," said John Hughes, of Deloitte’Äôs Private Company Services Group. "These companies clearly demonstrate that focusing on business fundamentals while pursuing a clearly defined strategy is key to achieving exceptional results," he added.
Asian sourcing show will offer biz tips
, Germany — The upcoming Asia-Pacific Sourcing show, being held here March 4-6 at the giant Koelnmesse trade show facility, will feature more than just aisle after aisle of exhibiting Asian factories.
The Sourcing Asia Workshop, which will be held for the first time during Asia-Pacific Sourcing, will include workshops on know-how, locations and best practices. Participation is free for fair visitors, exhibitors and press. For detailed information on the program, go to www.asia-pacificsourcing.com.
Community support vital to growth in China
— Since arriving in China, U.K.-based Kingfisher plc, which owns B&Q, has made community outreach a cornerstone of its growth strategy in China. "Time is as important as money if you are in for the long term," Mark Ladham, retail managing director of B&Q China, told the online newsletter ChinaCSR.com.
B&Q, which has supported non-profit organizations such as Save the Children, Hands on Shanghai and Home Sweet Home, currently has over 10,000 employees, 1200 suppliers, and 58 stores located in 26 Chinese cities.