vol. ix, 5 February 3, 2003

* Rona, Sodisco-Howden and Richelieu earn Newsmaker Awards * Home Depot Canada expects continued growth as U.S. parent refocuses * TSC extends Villager hardware experiment with Castle dealer * Rona's injunction against Matco Ravary sale gets turned down * Home Depot combines two more divisions

"Against stupidity the gods themselves struggle in vain." — Friedrich von Schiller (1759-1805)
More than 250 people gathered on Sunday morning for the first-ever Industry Awards Breakfast, presented jointly by Hardware Merchandising and Hardlines. Special thanks to our sponsors, who really came through for us!: · 3M · JDA Software · Zircon · Sterling Commerce · Dimensions Retail Systems · IKO · CGC
Toronto, ON — Two of Canada's leading retail home improvement companies have earned the Hardlines Newsmaker of the Year Award, presented Sunday at the Sheraton Centre Hotel. Sodisco-Howden Group Inc. and Rona Inc. were both recognized in the retail category, which awards companies that have had the most impact on the hardware/home improvement industry over the past year. In the same ceremony, Montréal-based Richelieu Hardware Ltd. won the Vendor Newsmaker Award. "Each of these companies has made a huge impact on the retail landscape over the past year," said Michael McLarney, editor and publisher of Hardlines. "Rona made headlines across the country for the bold launch of its IPO when other companies were pulling back. The aggressive consolidation efforts of Sodisco-Howden Group have changed indelibly the character of hardlines distribution in Canada. Richelieu has sustained rapid growth while maintaining the infrastructure to deliver superior products and services." In February, Sodisco-Howden acquired the hardware and building materials assets of Marchands Unis Inc., potentially increasing its annual revenues by 25% and making it the strategic partner of choice for an increasing number of independent retailers. But that was only the beginning of a year in the headlines. In June, Sodisco-Howden announced a partnership with Aeroplan, becoming the first retailer to reward Aeroplan Miles for home improvement purchases. Then in October, the company announced that it would purchase all shares of Ace Hardware Canada Ltd. The purchase of Ace is pending regulatory clearance and is expected to close in the first quarter of 2003. Rona began the year by creating more than 1,200 new jobs and announcing that 2001 had been a record year, with a 36.8% increase in net income. By the end of its second quarter in 2002, Rona boasted a record performance, increasing its net earnings by a whopping 113.1%. Rona's staggering growth continued, and by the end of the year, Rona Inc. was officially welcomed into the Toronto Stock Exchange. Richelieu began the year with its 27th consecutive quarter of growth. First-quarter sales were up by 15% from the same period in 2001. Richelieu's exceptional growth continued throughout 2002, and in September, the company made its latest acquisition, 75% of Menuiserie des Pins Ltée, a Québec manufacturer and distributor of products for window and door manufacturers. "Our Vendor Award winner, Richelieu Hardware, has been a key consolidator in the hardware industry," said McLarney. "At the same time, it has proven itself an innovator in both products and merchandising for home improvement retailers."  

Toronto, ON - Even as Home Depot in the U.S. battles bad press and worsening stock prices, the Canadian division, now one of only six in North America, shows no signs of letting up. After opening 14 stores in 2002, another 14 are planned for this year. Although, says Canadian president Annette Verschuren, her CEO is pushing for even more. "Bob Nardelli wants me to open more," she says. "I'll see if I can get [a 15th store] opened this year."

Nardelli has already announced Home Depot will open 200 stores this year. That's the same number it opened last year, down from the highs of the late '90s, when a new store was opening, on average, every 36 hours and the stock split five times over the last decade. Nardelli is relying on much of that expansion from its international divisions, including Canada. In fact, the Canadian division leads the pack. "Our sales performance still exceeds that of the whole company," Verschuren says. While Nardelli expects less than 10% growth company wide, Verschuren is confident Canadian growth will stay in the mid to high double digits in the year ahead. A number of factors are driving the sustained growth north of the border. Verschuren's team faces a less mature big box market than in the U.S. In addition, there's a lack of aggressive expansion by competitors like Lowe's stateside. While Rona is bent on expansion, its big box plans are not as ambitious as Home Depot's, and Réno-Dépôt is keeping quiet about its plans for at least a couple of more weeks (we'll keep you posted—MM). But Verschuren also knows that not all of her new stores will necessarily be as big as their predecessors. Home Depot Canada is actively developing store footprints up to 20% smaller than the standard 135,000-sq.ft. size. It's also looking for inner city sites to develop what Verschuren calls "Home Depot light" stores. Called "urban neighbourhood" stores in the U.S., where pilot sites have been erected in Chicago and Brooklyn, they weigh in at no more than 65,000 sq.ft. While she's alluded to an urban store in Toronto's West end, to relieve pressure on the Stockyards store at St. Clair and Keele, the first confirmed urban location will be in Vancouver's Park Royal shopping complex in North Vancouver. In fact, says Verschuren, that city can accommodate another four Home Depot stores.
London, ON - An experiment in hardlines merchandising begun last year in the town of Forest, ON has so far proven a success for both the supplier and the building centre that's hosting the program. Prout's Castle Building Centre houses a 6,000-sq.ft. store-within-a-store, supplied and merchandised by TSC Stores Ltd. Called TSC Villager, the section carries a selection of farm and hardware products, providing add-on sales for Prout's traditional LBM trade, while carving out a new niche for the 21-store TSC chain. Nor has the quiet experiment gone unnoticed. "We've had a lot of interest in this concept, from quite far afield," says Roy Carter, president of TSC. "From the U.S. and from local operators, too." The Villager program has been in place for just one year. However, both companies have enough confidence in the concept that they've extended their operating agreement for another two years.
The BSDA of B.C. has moved Westcoast 2003, its trade show and convention, to the Vancouver Conference and Exhibition Centre in downtown Vancouver. The event, March 13-14, 2003, will use the Delta Pinnacle as its convention hotel. For more information, contact: 604-513-2205.
"This is absolutely the best buying show in Canada - certainly from the building supply side." - Dane Sutherland, region general manager, Western Canada for Weyerhaeuser Building Materials, on the value of the WRLA's 10th annual Prairie Showcase, held recently in Saskatoon.
Canadian Tire 33.65 23.96 29.08
Canfor 11.70 6.83 9.24
Costco 46.90 27.09 29.32
Emco 14.23 6.65 13.85
Goodfellow 13.99 9.00 11.00
Home Depot 52.60 20.38 20.97
Hudson's Bay 15.55 5.87 8.63
Lowe's Cos. 49.99 32.50 34.62
Rona Inc. 14.75 12.95 12.75
Sears Canada 25.10 15.15 17.99
Sodisco-Howden 2.20 1.06 1.55
Taiga Forest 7.00 4.95 6.70
Wal-Mart 63.94 43.72 48.10
West Fraser 44.42 28.90 36.03
The Quebec Superior Court has refused an injunction application by Rona Inc. against the sale of one of its member companies to competitor Le Groupe BMR. The Rona injunction sought to require Matco Ravary to obtain two-thirds of its shareholders to ratify the BMR offer. Rona effectively owns 30% of Matco Ravary shares. Rona CEO Robert Dutton expressed concern that once the sale to BMR is concluded Matco Ravary "will become nothing but a holding company, with no stores and no products." Home Depot Canada has registered in the province of Prince Edward Island. The registration is standard procedure for any company intending to do business there. Annette Verschuren, president of Home Depot Canada, once told this Editor that Charlottetown is a city she's considering. Over the Christmas holidays, the retailer also had pollsters evaluating customer habits at its store at Highway #7 and Yonge Street in Thornhill, just north of Toronto. Appears a store at Bayview and Elgin Mills is under consideration to tap into the lucrative community of Aurora, north of there. In the West, Prince George, BC is slated to get a Home Depot, probably a smaller store. We'll keep you posted… A.E. Hickman Co. Ltd., which sold off its three building centres to Chester Dawe Ltd. in June 2001, is being sued by John Deere Ltd. for more than $2 million owed to the tractor manufacturer by bankrupt Hickman Equipment Ltd. According to the St. John's Telegram, Hickman had guaranteed all debts to John Deere back in 1985. The suit applies to purchases of heavy equipment, as well as to amounts owing under a lease/finance agreement with Hickman Equipment. TSC Stores Ltd. has relocated its head office in London, ON. The new address is: 1950 Oxford St. E., London, ON N5V 2Z8. Phone stays the same (519-453-5270). The warehousing, from two facilities at the old Industrial Rd. address, is expected to begin consolidation into the new location in about three months. Weyerhaeuser's Saskatchewan forestlands operations have been certified to meet the Canadian Standards Association's standard for sustainable forest management. The CSA Z809 standard covers 4.9 million hectares (12.1 million acres) of forest in the Prince Albert and Pasquia Porcupine Forest Management Areas. In its continued effort to centralize its operations, Home Depot has announced it will roll its New England division, which includes stores from New York to Maine, into the Atlanta-based Eastern Division. The Eastern Division will be expanded accordingly to support 600-plus stores. The consolidation will take place over the next 60 days, leaving the company with six divisions, down from nine when Bob Nardelli took over the company two years ago. Home Depot is about to begin construction of a new western distribution centre in Stockton, CA, according to a report in Home Channel News. The 756,000-square-foot facility will cost an estimated US$27 million, and is expected to be finished by August. The new warehouse will serve Home Depot stores in Northern California. Selectone Paint Ltd. has partnered with specialty paint producer Devine Color, a new premium paint from Oregon, to handle the manufacturing and distribution of the line in Canada. The launch, at this year's Canadian Hardware and Building Materials Show in Toronto, features a selected palette of 115 colours developed by the line's innovator, Gretchen Schauffler. Sinclair-Erie Ltd., one of the existing supplier partners of Waterloo, ON-based Supplierpipeline Inc. has purchased the assets of Erie, a manufacturer of wheelbarrows and contractor tools. This follows the addition last Fall of a new Supplierpipeline stocking warehouse in Mississauga, ON. Kmart Corp. has received judicial approval to close 316 stores. The judge overseeing the ailing retailer's bankruptcy proceedings granted final approval for the closure of 316 stores and gave permission to proceed with a US$2 billion exit financing package. The sell off should leave Kmart with about 1,500 stores, compared with about 2,200 before it went into bankruptcy one year ago.
Chris Henwood, formerly senior buyer for paint & home decor products at Ace Hardware Canada, is now sales manager for Prosel Marketing. (416-661-1414) Robert Niblock has been promoted to president of Lowe's Cos. Niblock joined Lowe's in 1993 and currently serves as executive vice-president and CFO. In his new role, he will be responsible for store operations, merchandising, logistics and distribution, reporting to chairman and CEO Robert Tillman Larry Stone, executive vice-president operations, has been promoted to senior executive vice-president operations … Dale Pond has been promoted to the position of senior executive vice president merchandising. He was formerly executive vice-president merchandising. (1-800-445-6937)
The housing boom of the past year will continue to spur more borrowing, with the residential mortgage market in 2003 expected to surpass $517 billion in mortgage credit. According to the latest issue of CMHC's Mortgage Market Trends. Continued economic growth, job creation and low mortgage rates are among the reasons demand will stay high for home ownership in new and resale housing markets. The monthly growth rate of Canada's composite leading indicator rose to 0.4% in December. This upturn was led by the firming of the stock market, as well as strong domestic demand. Two components fell, four were unchanged and four rose. Services employment was up 0.7%, while durable goods, especially furniture and appliances, continued to increase gradually, with housing remaining strong.

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HELP WANTED KEY ACCOUNT MANAGER Olympia Group USA is a leading worldwide manufacturer and importer of Hand Tools, Striking Tools, Lawn and Garden Tools, Automotive Tools and Abrasives, with offices all around the world. Its Canadian branch is expanding its sales team in the Quebec province. We are looking for a Key Account Manager. This team player will report directly to the Vice-President of Sales and will represent Olympia Canada to large customers in Quebec. His/her key role will be to; develop and implement sales and marketing strategies to increase our customer base and increase product listings for his/her accounts; provide forecasts to our purchasing team, provide feedback, store shop and competitiveness report to our product development team, budget customers and give weekly call and project progress report. Mandatory qualifications and experience: You must have a minimum of 5 years in key account representation, in the retail hardware industry, with proven track record. Strong analytical skills, highly develop communication and inter-relations skills and excellent in presentations and line review. Experience in merchandising is a must. The candidate must be bilingual written and spoken, computer literate; Excel, Word, Outlook, willing to travel, have a car with valid drivers license. We thank in advance all candidates and wish to inform that we will contact only the individuals retained for an interview. Please submit a resume by email, stating qualifications and income expectations to sales@olympiagroup.qc.ca. ***********************************************************************************  KEY ACCOUNT EXECUTIVE Our continued growth in the United States has opened up an opportunity for an energetic and self-motivated individual to join our sales team. We are looking for a Key Account Executive to help grow our business within our Tier 2 accounts in the USA and to assist in developing our secondary markets. Necessary qualifications: 3-5 years account management experience, highly developed interpersonal and communication skills, good analytical skills and experience with Mass Merchandise retailers is preferred. This is an intermediate position and the successful candidate will be working out of our world-wide headquarters in Woodbridge, Ontario. Please submit a resumé by email or fax stating qualifications and income expectations to: Camillo Caperchione, Vice President Sales & Marketing, Better Living Products, Telephone: 905-264-7100 Fax: 905-264-3690 Email: camillo@dispenser.com

*********************************************************************************** REP/AGENCY WANTED

National Manufacturing & Distribution Company requires Sales & Marketing Organization to sell Lawn & Garden Product lines to Independent Dealers networks in Ontario. Reply in strictest confidence to: bev@hardlines.ca (put Box 327 in your subject line); or fax in strictest confidence c/o Box 327, 416-489-6154. *********************************************************************************** EQUIPMENT FOR SALE Totem Building Supplies has twelve Vidir 8-roll Carpet machines available at the outstanding price of $3000.00 Cdn. each F.O.B. Calgary. Totem also has four (Two Vidir and two Floormaster) 16-roll linoleum racks at the great price of $2000.00 Cdn. each F.O.B. Calgary. As well, Totem has four Vidir cutting beds at $2000.00 Cdn., each F.O.B. Calgary. If interested, please contact Ed Mah at edmah@totem.ab.ca or contact via telephone at: 403-247-5599.


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Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 © 2003 by Michael McLarney. HARDLINES™ the electronic newsletter hardlines.ca Phone: 416.489.3396; Fax: 416.489.6154 Michael McLarney, Editor & Publisher: mike@hardlines.ca Beverly Allen, Marketing Manager: bev@hardlines.ca Nancy Wright, Circulation Manager: nancy@hardlines.ca ______________________________________________ THE HARDLINES "FAIR PLAY" POLICY: Reproduction in whole or in part is very uncool and strictly forbidden and really and truly against the law. So please, play fair! Call for information on multiple subscriptions or a site license for your company. We do want as many people as possible to read Hardlines each week – but let us handle your internal routing from this end! ______________________________________________ Subscription: $199+$13.93 GST = $212.93 per year (GST #13987 0398 RT). Secondary subscriptions at the same office are only $34 + $2.38 GST = $36.38. Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to McLarneyCom.