| WILL KINGFISHER BE HOME DEPOT'S NEXT CONQUEST? |
ATLANTA — In 2004, Home Depot is reportedly planning to open 125 stores. Its rival, Lowe's, plans to open 150. If analysts' predictions are correct, this would be the first time in a generation that Lowe's one-year store growth exceeds Home Depot's. But that doesn't mean the industry's largest dealer is standing still. Continued growth could come from acquisition, a step the giant retailer has resisted inside the United States, but has undertaken with success in both Mexico and Canada.
Meanwhile, the giant European market beckons.
So when Home Depot reportedly met with representatives from Europe's largest home improvement retailer before Christmas, the persistent rumor about Home Depot's interest in acquiring London-based Kingfisher resurfaced with a vengeance last week.
Analysts and investors may be sceptical. Kingfisher's stock price rose only 3% on the day the rumor broke and the U.S. dollar's sinking value against the euro and the British pound sterling would make such a deal more costly for Home Depot than even a year ago. But such a blockbuster merger would immediately position Home Depot as the number-one retailer in several European countries, and provide it with a firm footing in Asia, where Home Depot has tread cautiously to this point. This deal would also place under Home Depot's reins a corporation that has been at great pains in recent years to shore up both its balance sheet and market position.
Through the nine months ended November 1, 2003, Kingfisher was operating 601 home centers in 10 countries — the United Kingdom, France, Germany, Turkey, Italy, Spain, China, Taiwan, Korea and Poland — either directly or through joint venture agreements. Those stores represent 4,066,000 square meters of selling space and 57,492 employees. Through nine months, the company's sales were up nearly 13% to 5.82 billion euros, and its profit rose 26.2% to 518.2 million euros.
Over the past year, Kingfisher has been exiting markets where it has decided it cannot secure dominant market share. Consequently, it sold its Réno-Dépôt chain in Quebec to Rona Inc. and sold off its Nomi stores in Poland. It has also agreed to sell its three stores in Brazil to Casa e Construcao in a 4 million-euro deal that should be completed this month, and it's closed the stores it operated under the Castorama banner in Germany, where it has a joint venture agreement with the Hornbach chain.
 Kingfisher's Eastleigh, U.K.-based B&Q division, with 326 units, generates nearly two-fifths of Kingfisher's revenue, and has boldly staked its claim in the Pacific Rim. As of November 1, it operated 14 stores in China (including the largest B&Q in the world, in Beijing), and 16 in Taiwan. It also operates stores in Korea. B&Q has stated its intention to be operating 58 home improvement warehouse outlets in China by 2005, and 126 by 2010.
With the DIY part of the business being cleaned up, one may wonder what would be left of Kingfisher if this were sold off. But even other parts of the company have been restructured to stand alone. Last July, Kingfisher spun off its electricals business into a separate company called Kesa, which includes the Comet chain in the U.K. and Darty in France. |
| RONA CONSOLIDATION: NO TAKERS FOR SHERBROOKE STORE |
 BOUCHERVILLE, QC — Rona Inc. is moving ahead with the consolidation of the Réno-Dépôt business, a chain of 20 big box stores in Quebec and Ontario. Six of them are in English-speaking Ontario, and they will all be converted to Rona Home & Garden by the end of the first quarter. In Quebec, which is largely French speaking, the stores will continue to operate under the Réno-Dépôt name, which is well established there, at least until the end of 2004.
The buyout, which was completed last September, brought the total number of big boxes within the 530-store Rona network to 62, and established Rona as the number-two home improvement retailer in Canada. However, one of the conditions of the acquisition, as laid out by the Competition Bureau, was to sell off a Réno-Dépôt store in Sherbrooke, QC to a competitor. To date, no buyers (read: Home Depot) have come forward to take the store off Rona's hands. The store is unionized, which may have been reason enough for Home Depot Canada president Annette Verschuren to pass on the deal.
Rona remains committed to expansion: as many as seven new Rona big boxes will be announced in the year ahead, in addition to five traditional DIY-oriented building centres under the Rona Home Centre banner. |
| TAIGA LOOKS FOR ADDITIONAL U.S. DISTRIBUTION FACILITIES |
| BURNABY, BC — Taiga Forest Products, one of Canada's largest lumber wholesalers, is expanding its treating operations, as well. Taiga currently has treating plants in Alberta and Ontario, and intends to open or buy another plant, either in Ontario again or in Quebec.
"We know we have to be national," says Jim Bradshaw, vice-president building materials for Taiga, "or else." The numbers bear out the growth, with sales in 2003 exceeding $1 billion for the first time.
Quebec, he adds, is a natural move for the LBM wholesaler. Last fall, industry veteran Pierre Racette was hired on to develop the distribution centre network in that province, which already consists of distribution centres in Boucherville and St. Augustine. Racette has a long history on the distribution side, having worked for both Sodisco-Howden Group and Rona Inc.
Besides Central Canada, however, Taiga remains strong in the West, says Bradshaw, and the U.S. remains ripe for expansion, where its first facility in the United States opened about 20 miles outside of Sacramento. Says Bradshaw, "It's going extremely well. And we will expand there. " |
| TOTEM OPENS 14TH STORE IN ALBERTA |
 ST. ALBERT, AB — Calgary-based Totem Building Supplies opened its 14th store in this city adjacent to Edmonton last Friday. Totem, a major independent chain in the province, has been on an expansion track in recent years, despite the incursion of big boxes into its key markets of Calgary and Edmonton. Sales last year hit an estimated $225 million in sales, and Totem is one of the top 10 home improvement companies in Canada.
But the last three Totem stores that opened — in Camrose, Sherwood Park and Airdrey — were slightly smaller than the newest one, a 31,000-sq.ft. store with 12,000-sq.ft. drive-through lumber yard, sits on 51/2 paved acres, including a two-acre parking lot, adjacent to a Wal-Mart. According to Colin Robertson, Totem's vice-president marketing, the increased size is not due to the expansion of departments or an increase in SKUs. "We've just used more space, widened the aisles, to make it more customer friendly. " |
| EXPO HEAD SEEKS INCREASED PROJECT SALES |
| TORONTO — The head of Home Depot's Expo Design Center division is taking a hard look at the retailer's upscale design concept before expanding it too quickly. Holding fast with 54 stores in 17 states, Annette Verschuren thinks the concept needs some work and believes project sales will be integral to Expo's success.
"This year will be a great opportunity for us to fine-tune Expo," says Verschuren, who is also president of Home Depot's Canadian division. "We continue to refine the strategy and we're working to improve the project management side of the business."
Expo operates more as a showroom geared to buy-it-yourself (BIY) customers than a source for materials, and most sales are on a special-order basis. In fact, more than two-thirds of Expo's revenue is generated by installed or pro sales, catering to a higher-end customer than the DIY orientation of a typical Home Depot customer. "These are the people who want projects that are managed by a pro. They come into Expo stores for project ideas, design tips," she says.
Where once upwards of 200 stores were envisioned for the Expo chain, Verschuren adds that she has no immediate plans to open any more, nor will any be opened in Canada in the near future. However, two traditional Home Depot stores in California have attracted attention for implementing a large number of Expo features. |
| NORTH AMERICAN EXPORTERS EXPLORE
EUROPEAN OPPORTUNITIES |
| BARCELONA, Spain — An association of American and Canadian exporters gathered here last month to hear firsthand from Europe's leading retailers about their expansion plans around the world.
Nearly 70 members of the Worldwide DIY Council heard from Juan Jose Jaen, president of Brico Group, comprised of 17 building material distributors; Manfred Maus, president of Germany's OBI; and Hans-Jorg Greimel, a key executive and board member of Austria's Baumax, and other retail leaders.
European retailers are looking eastward for their expansion, said Maus and Greimel, whose firms already have dominant positions in those emerging markets. Eastern European homes need modernizing and updating, and consumers in most of those countries are sophisticated DIYers with a pent up demand.
OBI is operating now in 11 countries, including China, while Baumax is in six countries.
Eastern European countries are beginning to enjoy bright new stores, shopping centers and improving retail productivity as western European retailers bring advanced merchandising and marketing techniques to the region.
Both Maus and Greimel explained that their stores are tailoring merchandise assortments and brand selections to the needs of each country, with a high concentration of purchases being made locally, though customers in those lands are eager to accept western brands and are looking for "new things" previously not available to them.
More information about the DIY Council and its activities, including its group pavilion at the upcoming DIY & Garden Show in London this month can be found at: www.wdiyc.org. |
| N.J. UNIONS PROTEST NEW LOWE'S STORE |
| MILLVILLE, NJ — A new Lowe's outlet that will anchor a $200 million shopping mall here is drawing flak from union workers protesting the use of non-union workers from different parts of the country for this job.
Last week, about 50 workers from several unions, joined by two local freeholders, picketed the construction site, where Lowe's began building this 142,000-sq.ft. store last July. The workers vowed to continue picketing the store after it opens, and promised to boycott its products. One freeholder, Louis Maguzza, said that the state should rescind taxpayer-funded incentives and other benefits that Lowe's is scheduled to receive for building in this market.
The Vineland Daily Journal quoted Jennifer Stansberry, a Lowe's spokesperson, as saying that it was up to the general contractor on the project to decide which workers it uses, and that, in fact, union earth movers, ironworkers, brick masons and painters were part of the crew. At least one union representative, however, disputed that claim.
Large retailers such as Wal-Mart, Lowe's and Home Depot have been careful to keep unions out of their stores. Many observers believe that Home Depot passed on buying Quebec-based Réno-Dépôt because its stores are unionized. |
| ISRAEL'S LARGEST DEALER EYES SWEDISH EXPANSION |
| RISHON LE ZION, Israel — Home Centers DIY Ltd., Israel's largest home improvement retailer, is in negotiations to acquire BYGGmax, one of Sweden's largest operators.Globes, the online news service in Israel, quoted Aharon Meidar, Home Centers' president and CEO, as saying that the acquisition of the decade-old BYGGmax could serve as springboard for his company's expansion into other European countries. BYGGmax's 16 stores generated 55 million euros in sales in 2002, or about 5% of Sweden's total market. Meidan is quoted by Globes as saying that his company would like to increase BYGGmax's store count to 32 and its sales to 110 million euros by 2005.
In an interview with Hardlines, Meidan insisted that the deal with BYGGmax was "very premature" at this stage. He did not elaborate or return other phone messages requesting more information.
Home Centers operates 44 stores in Israel (where it controls an estimated 13% of the market's sales) and a 35,000-square-foot home center in Cyprus, in which it has a 49% stake. |
| ACE AND GE FUND COLLEGE SCHOLARSHIPS |
| OAK BROOK, IL — A charitable foundation supported by dealer-owned wholesaler Ace Hardware Corp. has joined forces with GE Sealants to provide Ace's customers and employees college scholarships.For each of the next three years, Ace Hardware Foundation will select 20 incoming freshmen to receive a $2,000 scholarship towards their education. The Foundation intends to award scholarships each year to students related to five Ace customers, five of its corporate employees, and 10 at the retail store level.
To qualify for the scholarship, high school seniors must have a 3.5 grade-point average and demonstrate some level of community service. They must also fill out an online application as well as an essay about what they feel will be the most critical issue facing the country over the next five years and how they would solve it. |
| INDUSTRY STOCK WATCH |
|
COMPANY |
52-WEEK HIGH |
52-WEEK LOW |
CLOSE FRIDAY |
| Canadian Tire |
42.60 |
27.85 |
39.00 |
| Canfor |
11.68 |
7.60 |
10.84 |
| Costco |
39.02 |
27.00 |
37.96 |
| Goodfellow |
14.75 |
9.75 |
14.60 |
| Home Depot |
37.89 |
20.10 |
35.69 |
| Hudson's Bay |
12.97 |
7.75 |
12.15 |
| Lowe's Cos. |
60.42 |
33.37 |
53.00 |
| Rona Inc. |
31.80 |
11.75 |
29.55 |
| Sears Canada |
21.50 |
13.60 |
16.65 |
| Sodisco-Howden |
3.35 |
1.30 |
3.00 |
| Taiga Forest |
8.10 |
6.28 |
8.00 |
| Wal-Mart |
60.20 |
46.25 |
52.40 |
| West Fraser |
39.05 |
29.25 |
37.55 |
|
|
| COMPANIES IN THE NEWS |
| ATLANTA — Home Depot has purchased Creative Touch Interiors, which operates six design centers supplying flooring, countertops, window treatments and design services to large homebuilders in Southern California and Las Vegas. CTI becomes part of Home Depot Supply's Builder Solutions Group, which targets the $25 billion U.S. market for finished products and services in new home construction.CHARLOTTE, NC — Lowe's has finalized its plans to open an expanded distribution center in the Hagerstown, MD market. The 228,061-sq.ft., $17.8 million DC in an industrial park in that area will supplant an existing nearby facility. Lowe's has negotiated a $150,000 loan for land acquisition and construction from the Maryland Economic Development Assistance Fund, which will provide another $10,000 in the form of a grant for employee training in 2005. Lowe's has also negotiated loans of $45,000 and $50,000 from, respectively, the City of Hagerstown and Washington County.
VANCOUVER — Daiso is a "high-end" bargain retailer with 2,500 stores and $6.3 billion in sales in Japan. But it's virtually unknown on this continent. Now Fairchild Property Group entered a joint venture with Daiso-Sangyo Co. of Japan and opened the first Daiso store in Richmond, BC, a suburb of Vancouver. The 30,000-sq.ft. store sells some 50,000 SKUs, everything from kitchen utensils, hardware, cosmetics, snack food and fabric flowers, all for only $2.
HOFFMAN ESTATES, IL — Emerson Electric was given some of Sears' Craftsman benchtop tools in 1998 to develop private label products for Sears, but the company didn't bother to return them. Sears later charged Emerson with knocking off the Craftsman products for the benefit of Sears' competitors. Now Sears has won a lawsuit worth $10.8 million. Emerson did not admit to any wrongdoing.
NATIONAL REPORT — Lumber dealers in the U.S. began voluntary compliance last week to an agreement to eliminate chromated copper arsenate-treated lumber from its yards. CCA is an inexpensive and effective treatment against rot and insects, but major dealers like Saginaw, MI-based Wolohan Lumber have been weaning themselves off it for months. Under the agreement, which is similar to one in Canada, dealers can continue to sell CCA-treated wood as long as their existing supplies last. New forms of treated wood are expected to cost as much as 50% more than CCA.
TOWSON, MD — In a deal that will expand the tech applications of its wireless car control systems, Johnson Controls has forged a partnership Black & Decker to produce a new wireless remote control system that will be compatible with HomeLink. With it, homeowners will be able to turn on their lights, Black & Decker coffee pots, door locks and more from their vehicle.
BENTONVILLE, AK — Wal-Mart Stores has authorized a new $7 billion share repurchase program that replaces a previous program valued at $5 billion. The giant retailer had already repurchased $3.1 billion in common shares through its third quarter. |
| PEOPLE ON THE MOVE |
| At 3M Canada, Roland Boivin has been moved into the company's Six Sigma program in a two-year development role. He was formerly business manager for consumer markets, overseeing sales and marketing for all consumer products ... Boivin's former duties have been reorganized as follows: Penny Wise has been promoted to business manager for construction/home improvement markets. She was formerly marketing operations manager ... Tara Lawrence has been promoted to the position of sales and marketing manager for the Home Care and Consumer Specialties Division, which covers drug grocery. She was most recently marketing manager for home care ... Kathie Bavota has been named business manager for retail key accounts. She moves up from her former role as national sales manager for retail key accounts. (519-451-2500)Kim Whitehouse has left Bakor, the Mississauga, ON-based manufacturer of roofing and building supplies. Whitehouse served there as residential business unit manager, handling sales, marketing and national accounts. No replacement has been named yet. (800-387-9598) |
| U.S. MARKET INDICATORS: |
| Construction spending in the U.S. jumped 1.2% to $934.5 billion seasonally adjusted for the month of November, reports the Commerce Department. That's up from $923.8 billion in October. It was the fifth consecutive month of record highs in construction spending. Private residential construction spending rose 2% to $495.7 billion from $486.2 billion.Consumer confidence slipped in December, reports the Conference Board. The index fell to 91.3 following a surge in November to 92.5, the highest level in more than a year, but economists consider the pullback a normal course of events as the economy recovers.
Wholesale inventories in November were valued at $292.7 billion, says the Commerce Department. That's up 0.5% from last month and up 2.2% from the same month a year ago. Wholesale sales were up 0.3% from October to $247.4 billion, and up 5.5% from November 2002. |
| CANADIAN MARKET INDICATORS: |
| Housing starts ended the year on a strong note, at 217,600 seasonally adjusted in December, up from 215,000 in November, says Canada Mortgage and Housing Corp. Total housing starts for 2003 hit a 15-year high, reaching an estimated 217,800,up 6.2% over 2002. Some analysts believe Canada's becoming oversupplied with housing stock, so starts are expected to ease to just over 204,000 units in 2004. Urban single starts decreased 2.2% in December to 103,500 units seasonally adjusted. The decrease was reflected in all regions of the country from Ontario westward, but Quebec and the Atlantic region actually experienced slight increases. Canada wide, actual urban single starts for 2003 are estimated to be 2.7% lower than in 2002. The seasonally adjusted annual rate of urban multiple starts rose 5.9% to 88,200 units in December, while actual urban multiple starts for 2003 are estimated to be up 20.5% over 2002 levels.Home furnishings and electronics led the way in retail sales, which were up 3.6% in the third quarter as Canadians spent $81.7 billion on goods and services, reports Statistics Canada. However, the year-to-date level was also 3.6%, down from the 6.5% increase in the first nine months of 2002. |
| NOTED... |
| Hardlines will be in Saskatoon January 23-24, 2004 to attend the WRLA Prairie Showcase Trade Show & Annual Convention. It will be held at the Saskatoon Prairieland Park. If you haven't already made plans to be part of this very strong regional buying show, then contact: Gary Hamilton, WRLA, at 204-957-1077; or email: wrla@wrla.org. |
| MARK YOUR CALENDAR FOR THESE INCREDIBLE EVENTS IN 2004: |
|
• Cologne International Hardware Fair/Practical World, March 14-17 (including the Amazing Hardlines Canada Night Reception, kindly sponsored by Koelnmesse);
• Our mind-blowing Meet the Buyers Seminar on April 28;
• International Hardware Trends, two seminars by Hardlines at the National Hardware Show in Las Vegas, May 10-13;
• The Hardlines Conference Series, September 8-9, including the Hardlines Gala Dinner on the evening of September 8. |
|
John Caulfield, Contributing Editor
vol. x, #2 January 12, 2004
Bakor is the leading innovator and manufacturer in North America of a broad range of building construction and maintenance products for industrial, commercial, institutional and residential use.
Bakor has an immediate opening for an energetic Business Unit Manager to be responsible for all aspects of our sales to building supply dealers. You will be responsible for bottom line objectives, vender negotiations and the managing of the residential products sales force.
The ideal candidate will have a solid knowledge of the marketplace and the players in the market, a building products background and demonstrated sales experience within the industry. Strong customer presentation skills and computer literacy are essential and you must be able to interact within a team environment.
Bakor offers an attractive compensation and benefits package and the opportunity for career development. To apply, please forward your resume in confidence to: Vice President, Bakor, 375 Pendant Drive, Unit 2, Mississauga, ON L5T 2W9. Fax: 905-890-4866
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NATIONAL ACCOUNTS MANAGER
As a major North American manufacturer of tools and equipment, Porter-Cable/Delta is committed to quality in the products and services it provides.
Contribute your talents as: NATIONAL ACCOUNTS MANAGER
A hands-on and innovative professional who interacts at all levels, you'll prepare product proposals, price quotations, and promotional offerings for assigned accounts. You will plan, budget, and organize promotional advertising, shows, training, and demonstrations, and forecast sales volumes.
Customer focused and a superb communicator, you have 5 years' related experience, a Business/Economics degree, and a valid driver's license. Ideally, you have a supervisory background, product and technical expertise, and knowledge of AS/400 applications and PC's. Bilingualism (French & English) and a willingness to travel 4-7 days per month are required.
We thank all applicants in advance and advise that only those invited for an interview will be contacted. Please send your resume to: Human Resources, Porter-Cable / Delta, P.O. Box 848, Guelph, Ontario N1H 6M7
Fax (519) 836-9303; www.pentair.com
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