|WICKES FILES FOR BANKRUPTCY PROTECTION
|VERNON HILLS, Ill. — For the second time in its checkered history, Wickes Inc. has filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. The 52-year-old retailer listed $168 million in liabilities against assets of $155 million in papers it filed with the bankruptcy court.Wickes has been struggling with its debt load for several years. It terminated an attempt to restructure some of its long-term debt through a $20 million subordinated note swap on January 12 when only 50.8% of note holders agreed to tender their notes. Four days later, the retailer's bank lenders declined to extend a waiver for a line of credit after Wickes defaulted on a payment following its default on other notes.
At that point, the company retained New York-based Bridge Associates LLC, which specializes in restructuring and turnaround management. On January 20, it filed bankruptcy, and has since replaced its credit facility with debtor-in-possession financing totaling $100 million.
Jim O'Grady, Wickes' president and CEO, blamed his company's financial woes primarily on past capital expenditures it has made on what he called "non-core businesses," which he did not identify specifically, but could be referring to Wickes' "build a home in a day" turnkey framing program that failed to muster sufficient interest among home builders. (True believers will recall that Wickes presented this revolutionary concept at the Hardlines Marketing Conference in 1999—MM.)
O'Grady said that Wickes management made the decision to file Chapter 11 "reluctantly," but added that his team saw no other way to buy time while it worked out its debt-reduction and corporate refocusing strategies.
|BACKGROUNDER: RISE AND FALL OF WICKES
|SPECIAL REPORT — The recent announcement of Wickes' tumble into bankruptcy protection is just the latest chapter in the home improvement company's turbulent saga. The company has fended off creditors, on and off, since 1982, when as a much larger and more diverse corporation called Wickes Cos. (which included the now-defunct Builders Emporium chain and Sequoia Supply, the precursor to the distributor PrimeSource), it filed what at the time was the largest non-utility bankruptcy in U.S. history.Wickes sold or closed most of its other businesses, and sold its 223-yard Wickes Lumber to that entity's management in 1988. Since then, Wickes Lumber has been reducing its size, and in 2001 initiated a debt reduction and corporate restructuring plan that, one year later, seemed to be working: the company shaved its long-term debt to $95.5 million in December 2002 from $202.4 million in December 2001.
That year, Wickes sold 37 of its yards to Lanoga Corp. Currently, Wickes operates 52 yards and 10 component facilities.
But last November, Wickes reported that its stores had lost $18.5 million during the six months ended June 28, 2003, on sales of $228 million, which were off 23%. Through the first half of 2003, the company's long-term debt was stuck at nearly $100 million.
|FORMER TIM-BR-MARTS DEALER BECOMES RONA'S
FIRST WESTERN DEALER
|NEWTON, Man. — Newton Enterprises, a two-store chain with a mix of DIY and pro customers about 45 minutes outside of Winnipeg, has become the first independent dealer in Western Canada to sign on with Rona Inc. Actually, Newton's president Brad Dick, had to make a switch soon, anyway. He was one of the 50-plus customers of Sodisco-Howden Group flying the Do-it center banner in Canada. But that banner is being retired by Sodisco-Howden, a move necessitated by its acquisition of Ace Hardware Canada last year.
Dick certainly had no shortage of options. As a member of Tim-BR-Marts, he could have signed up for that Western buying group's own store merchandising and signage programs, and continued to get his hardware needs supplied through Sodisco-Howden. He also had the option of taking on the Ace banner and store programs — or those of TruServ Canada, Home Hardware — or even another buying group.
But by signing with Rona, Dick has caused a furor that has surprised even him. Rona continues to belie expectations of the industry, recruiting dealers in Ontario, and now Manitoba, all the while upgrading existing stores across the country.
Dick says the reason he chose Rona over other organizations had a lot to do with his desire to capture more DIY business. Although the nearest big box is in Winnipeg (where both Rona and Home Depot have warehouse-format stores), people in his town are prepared to make the 45-minute drive "to save a dollar," as he puts it. "How do you keep them in town? You have to offer them more," he says.
However, says Jos Wintermans, president and CEO of Sodisco-Howden, one defection, however disappointing, does not signify a trend. Of those 50-odd Sodisco-Howden customers operating under the Do-it center banner, significantly more than half of them have already converted, or agreed to convert, to the Ace banner.
"We really felt Rona had the marketing tools and the merchandising programs to take our business to the next level." And it wasn't just a matter of price, Dick adds, "but a total package that they were able to work with us on."
|HOME DEPOT STRIVES FOR IMPROVED PRODUCTIVITY
|ATLANTA — Home Depot this year is focusing on getting its customers to spend more in its stores, and giving them a reason to shop more frequently by promoting stronger product assortments and better presentations.
Depot officials recently told analysts and investors that a big part of that effort will be the expansion of its proprietary and exclusive brands, which currently account for 17% of its stores' product mix. The success of its supply agreement with John Deere Co. — in 2003, Home Depot sold 200,000 John Deere tractors and increased its share of total retail tractor sales to 15% from 9% in 2002 — could serve as the model for other brand extensions.
In the spring, Ortho is scheduled to launch a new chemicals and fertilizer line called "Basic Solutions" that will be exclusive to Depot's stores. The retailer will also develop proprietary brands on its own through global sourcing that, in the third quarter of 2003, accounted for 8.1% of its purchases, vs. 6% in third quarter 2001.
In 2003, one-third of Home Depot's stores had at least one of their departments reset. Six hundred stores got new kitchen department resets, and 475 stores got the company's new bilingual aisle and endcap signage program whose rollout is being accelerated. As previously reported, Depot intends to accelerate its store modernization program and spend more than $800 million this year on revitalizing its stores.
A typical store refreshening, which includes new paint, lights, etc., costs about $200,000 per unit. On the other hand, a total renovation, of which Depot did 14 units last year and will do 53 in 2004, runs $5 million per outlet.
The company projects that its sales in 2004 will increase by between 9% and 12%, which at the high end would bring Home Depot's revenue this year to $72.4 billion. The company has calculated that its sales increase by $3 billion every time it is able to increase its average customer ticket by 5%. In fact, it managed to do just that in the third quarter of 2003 when the average customer ticket rose 5% to $51.30.
|SODISCO-HOWDEN SIGNS NEW AGREEMENT WITH TIM-BR-MARTS
|SASKATOON, Sask. — A deal was signed here last Thursday on the eve of the WRLA's Prairie Showcase buying show, solidifying an existing relationship between Vancouver-based LBM buying group Tim-BR-Marts Ltd. and a key hardware supplier, Sodisco-Howden Group. It also follows hot on the heels of the announcement of Rona's signing of its first dealer west of Ontario — and a former Sodisco-Howden dealer who operated under the Do-it center banner.
But the new deal further secures Sodisco-Howden's position with Tim-BR-Marts and its 150 dealers throughout Western Canada, whose total retail sales are in excess of $1 billion. According to Jos Wintermans, president and CEO of Sodisco-Howden, the deal strengthens his company's existing supply agreement by rewarding dealer loyalty. The greater the percentage of dealer hardware purchases that are made through Sodisco-Howden, the higher the plateau of favorable pricing.
Wintermans says he has been pleasantly surprised by the response from dealers, many of whom approached him during the show to express their enthusiasm for the program.
|WEAK DOLLAR HELPS U.S. EXPORTERS ABROAD
|COLUMBUS, Ind. — The devaluation of the U.S. dollar in respect to foreign currencies has proven to be good news for exporters, boosting sales significantly for many.
A majority of members of the export group Worldwide DIY Council reported recently that the weak dollar has enabled them to increase their sales an average of 16% during the last few months. And those who haven't noticed its effect as yet are confident that their sales will rise at least an average of 12.5% in the future, as inventories get depleted or buyers realize how competitive American-made merchandise is now.
The dollar has fallen 26% against the euro since February 2002 and 14% against an index of all other trading partner currencies. Most of that decline has occurred in the last few months.
Sales increases registered so far range from a low of 4% to a high of 35%, with several manufacturers reporting gains of 30% or more. One building materials manufacturer said he was enjoying a 35% gain, while a tool manufacturer said sales were up 32%.
Sales into some countries are definitely benefiting from the dollar's decline more than others. Australia, New Zealand, Canada and, to a lesser extent, the UK have all benefited. In fact, Australia was mentioned most frequently as the number-one country benefiting from the dollar's devaluation. Spain was most frequently mentioned as the number-one European country for increased sales, as American products become much more competitive against European products.
Click here for more information on the Worldwide DIY Council.
|GROWTH OF CHINA HARDWARE SHOW REFLECTS
|SHANGHAI — The China International Hardware Show/Practical World Asia is already one of the most important hardware shows in the world. Now, a partnership with the International Hardware Fair/Practical World is expected to ensure its status even further on the global stage.
With production moving more than ever to the Far East, China's hardware industry has been developing rapidly in recent years, turning China into a production base for global hardware products. In turn, production here has benefited from Western input and joint ventures, as the quality of China's hardware products has been greatly improved. Global hardware sourcers such as Home Depot, Lowe's, Orgill, Ace Hardware and OBI all added buying offices in the Far East and steadily increased their sourcing of Chinese hardware products.
In response to the increasingly international nature of hardware production in the Far East, Shanghai became the site in 2001 for the China International Hardware Show. Organizers of Practical World-Koeln Messe GmbH, which mounts the largest show in the world — in Cologne, Germany — recognized the potential of CIHS, and brought Practical World Asia to CIHS in 2003. The two sides have formed a long-term cooperation agreement to create the China International Hardware Show/Practical World Asia.
After three years of development, CIHS/PWA has evolved into a leading trade show in China. Last year's show played host to 35,000 attendees, including more than 2,800 overseas buyers. By 2006, when the 49th International Hardware Association Congress convenes in Shanghai, CIHS/PWA is expected to grow into the second-largest hardware show in the world, with an exhibition area of 80,000 square meters.
|INDUSTRY STOCK WATCH
|COMPANIES IN THE NEWS
|SANTA CRUZ, Calif. — The Lumbermen's division of Lanoga Corp. has agreed to acquire San Lorenzo Lumber, a 68-year-old pro dealer based here with five yards and one lumber and door facility. San Lorenzo generated more than $100 million in sales in 2003. The California dealer, with 330 employees, will become part of the 50-yard Lumbermen's, which is based in Olympia, Wash., on March 1. The amount Lanoga is paying for San Lorenzo Lumber was undisclosed. However, by making this deal, Lanoga adds another beachhead in California to its Dixieline Lumber operation in the southern part of the state.WASHINGTON, DC — The World Trade Organization has upheld anti-dumping tariffs imposed by the U.S. government on softwood lumber imports from Canada. But Canucks are disputing whether in fact this one decision is pivotal. In addition, the U.S.'s punitive tariffs have been recalculated by Washington to 21% from 27%.
Sales for Fortune Brands increased 19% in its fourth quarter, while net profit reached $156.4 million, up from $131.4 million a year ago. Net sales rose 16% to $1.66 billion, with acquisitions adding 4%, and 3% coming from the benefit of the weak dollar. Home and hardware sales rose 27.8% in the quarter to $835.6 million.
MONTREAL — Tembec Inc. had gross sales for the first quarter of $766.3 million, down from $840.8 million in the same period last year. Net earnings were $52.2 million, compared to a net loss of $41.8 million a year earlier.
SLAVE LAKE, AB — Weyerhaeuser Co. has signed a letter of intent to sell its oriented strand board mill here to Tolko Industries for approximately $C56 million ($US43 million). The deal is expected to close on February 27, 2004 and is subject to necessary approvals.
MARKHAM, Ont. — Hammered by competition, White Rose Home and Garden Centres Ltd. has announced it will close nine stores in Ontario, leaving it with 12, by late February or early March. The stores in question are in St. Catharines, Barrie, Brantford, Sarnia, Kingston, Peterborough, Sudbury, Orleans and Bell's Corners. White Rose has been through bankruptcy protection twice in the past five years.
BUFFALO, N.Y. — Gibraltar, a metals and plastics processor and commercial heat treater, has acquired Renown Specialties, a manufacturer and distributor of construction hardware. Terms of the acquisition were not disclosed, but it's expected to add approximately $CD10 million from its 60,000-sq.ft. facility in Thornhill, Ont., near Toronto. This is the third building products company, along with Construction Metals and Air Vent, acquired by Gibraltar in the last year.
|PEOPLE ON THE MOVE
|Ed McLaren has joined Dundas-Jafine as director of sales and marketing. His background includes stints with Roxul and Jacuzzi. He replaces Ed Kotnjek, who left the company a number of months ago to join GE.Burnaby, B.C.-based Holland Imports Inc. has appointed Cameron Millar as eastern sales manager. A 31-year veteran of the industry, he spent the last eight years as national sales manager for Elmer's Products Canada Inc. Previous past experience includes 23 years with Erie Iron and LePage.
|U.S. MARKET INDICATORS:
|The economy in the United States continues to bounce back. And while it has yet to create new jobs in large numbers — Kodak just announced that it would lay off 15,000 employees over the next three years, and Roseburg Forest Products, which laid off 670 workers in 2003, recently announced it would lay off another 32 — fewer people are filing unemployment claims. Perhaps the biggest surprise, though, has been the resilience of America's home building industry, which has positive ramifications for suppliers, distributors and dealers of building materials and other home improvement products.The U.S. Labor Department reported on Friday that, for the week ended January 17, new applications for unemployment insurance fell by 1,000 to 341,000, the lowest level since December 2003. The four-week average of 344,500 claims per week, was the lowest since Jan 27, 2001.
During its most recent recession, the U.S. economy was buoyed by home building and sales that never faltered. 2003 was the best year for housing in a quarter of a century, according to Commerce Department estimates: 1.85 million homes were started, representing an 8.4% increase over 2002 and the highest start total since 1978. In December of 2003, housing starts were percolating at a 2.09 million unit annualized clip, which was 15% higher than in December 2002 and the fastest rate of growth since February 1984.
Contrary to their previous predictions that homebuilding will fall off a bit this year, economists are now stating their belief that the housing market may actually increase again in 2004, especially given the fact that housing permits rose 6.3% last year to 1.86 million units.
|CANADIAN MARKET INDICATORS:
|The composite leading index grew 0.8% in December, comparable with its revised increases of 0.9% in November and 0.8% in October. According to Statistics Canada, domestic demand remained strong, leading to further improvements in demand for labour.A total of $8.2 billion worth of goods were sold by Canada's large retailers in November, an increase of 2.6% from November 2002, says Statistics Canada. Every major commodity group posted increases, albeit small ones, compared with November 2002. Sales of sporting and leisure goods and furniture, home furnishings and electronics were mixed.
Consumers paid 2.0% more in December for the goods and services included in the Consumer Price Index than they did in December 2002, says Statistics Canada. In November, the 12-month advance was 1.6%. The CPI excluding energy, which excludes the impact of the electricity refund, rose 1.7% from December 2002 to December 2003. This is very similar to the 12-month advance of 1.8% observed in November. On a monthly basis, the CPI advanced 0.1%, after rising 0.2% in November.
|MEET EUROPE'S KEY BUYERS
|Hardlines will host a special Networking Lunch for North American vendors to meet Europe's top buyers. It will be held at the International Hardware Fair/Practical World fair in Cologne, Germany on Monday, March 15. For more details, call Bev Allen at 416-489-3396 or email@example.com.
|JOHN HECHINGER, SR., WHO HEADED LEADING CHAIN,
DEAD AT 84
|WASHINGTON, D.C. — John Hechinger Sr., the patrician, politically-active retailing executive who ran the home improvement chain his family controlled for more than four decades, died on January 18, his 84th birthday.The Washington Post reported that more than 1,000 people turned out for a memorial service for Hechinger, included Washington D.C.'s Mayor Anthony A. Williams, its delegate to Congress Eleanor Holmes Norton, several current and former members of the D.C. Council, Washington Wizards and Capitals owner Abe Pollin and Washington Post Co. chairman Donald E. Graham. The attorney Vernon Jordan, a close friend of former President Bill Clinton, was one of several people who eulogized Hechinger.
In the 1970s and early 1980s, Hechinger Co., which called itself in its ads and on its stores "The world's most unusual lumberyard," was considered to be one of the industry's paragons. Manufacturers clamored to test their products in its stores, known for their pristine housekeeping. The company's management team — which included Stephen Bachand, who went on to become CEO of Canadian Tire — was considered to be among the strongest in the field.
Hechinger Sr., who after World War II started working for the business his father Sidney founded in 1911, took the company public in 1972 and built it into one of the industry 10 largest dealers.
But Hechinger also lived to see his family's operation, under his son John Jr., succumb ignominiously to competition from Home Depot and Lowe's. In the late 1990s, Hechinger Co. was acquired by Los Angeles-based investment firm Leonard Green & Associates, and merged with Kmart's foundering Builders Square operation, moves that actually weakened the combined chain's market position. Hechinger Co. filed for bankruptcy protection in June 1999 and liquidated its operations.
Don't miss the products and services on the Hardlines web Marketplace:
And check out Hardlines Classifieds on the web:
HOME DEPOT ACCOUNT MANAGERS - ARE YOU A TOP GUN?
Are you an up and comer with major account management experience? If so, these premiere opportunities will excite you. Our Client, a "rising star" Toronto-based manufacturer is on their way to becoming a category dominant. They're in need of two high performers to take full advantage of North American opportunities they've already achieved.
Manage and direct the sales process for Home Depot including buying offices targeting Consumer, Pro and Installed sales areas. On the Retailer's behalf, you'll provide leadership into all category management issues including competitive positioning, sales data and forecasting, and cross-selling opportunities. You'll work with a cohesive, dynamic Marketing team on merchandising, packaging and PK/educational requirements.
Looking for a employer who continually demonstrates a commitment to improving Customer satisfaction and their competitive positon? To explore these opportunities in complete confidence, please contact Wolf Gugler, quoting Top Guns. Early responses may lead to interviews during the Canadian Hardware Show Feb. 1-3.
Wolf Gugler & Associates Limited. Telephone: 416-386-1719
Email: firstname.lastname@example.org Web site: www.wolfgugler.com
BUSINESS UNIT MANAGER — NATIONAL
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
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
RETAIL IS DETAIL. Let Noral Instore, a national service company, handle your service requirements in Canada. Noral serves some of America's leading manufacturers, managing their lines for Canada's top hardware retailers, big boxes and mass merchandisers.
Contact Al Vanderveen at 519-439-6800, ext. 201, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com
| Amazing Acrobatic Sprayers…
• Patented double-swivel action rinses more sink area than any other sprayer!
• Switches easily from soft, aerated flow to powerful jet spray.
• Fits all standard faucets. Easy, no-tools installation (adapter included).
• In five vibrant colours!
And matching SinkTastic …
• Funky thermoplastic in six hot colours.
• Replaces dreary metal basket strainers.
• Just drop it in! Fits all sink drains and waste disposals.
• Antibacterial agent and fresh scent!
As featured in Canadian Living Magazine. Visit www.etindustries.com
Our Counter Displays turn fast at checkout.
Great margins! Great little profit centres!
SELL YOUR COMPANY - OR BUY ONE - WITH HARDLINES CLASSIFIEDS!
DO YOUR EXECUTIVE SEARCH, FIND NEW LINES OR GET NEW REPS IN THE HARDLINES MARKETPLACE.
ONLY $2.50 PER WORD FOR THREE WEEKS IN THE CLASSIFIEDS.
TO PLACE YOUR AD, CALL PHYLLIS NOWELL AT 416-489-3396 OR EMAIL: email@example.com