Co-op fédérée leaves Mutual, joins Spancan

TROIS-RIVIERES, QC — Coopérative fédérée de Québec has announced its intention to join Spancan, the hardware buying group, effective Jan. 1, 2008. Headquartered in Montreal, with a 210,000-square-foot hardlines distribution centre here, Co-op fédérée's membership includes 142 building supply and hardware stores that operate under the Unimat and Co-op banners. According to the Hardlines Who's Who Directory, sales by those stores are in excess of $321 million. The move comes at the same time as the appointment of a new head of its hardware division. Claude Sénéchal has been named general manager, effective Aug. 10. Formerly with Sears Canada, he replaces Claude Gingras, who left Co-op fédérée in mid-April. Rumours that Co-op fédérée would split from Mutual first emerged at the same time that its counterpart in Western Canada, Federated Co-operatives Ltd., announced its departure. The Saskatoon-based co-op wholesaler left Mutual to join Spancan in May.

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Home Depot lowers earnings projections

ATLANTA — Home Depot lowered its earnings estimates for fiscal 2007 last week, citing continued weakness in the housing market and the sale of its HD Supply division. With those two factors in play, Home Depot now expects earnings per share to be down 15% to 18% this year, to between $2.30 and $2.36 per share. (Prior to its agreement to sell HD Supply, Home Depot had expected earnings to be off 9%.) The company expects its revenue this year to be off by between 1% and 2% (despite opening 108 new stores), and same-store sales to be down in the mid-single digits. Due to negative same-store sales, Home Depot projects that operating margins will fall by between 1.5 and 2 percentage points. Home Depot also provided details about its intention to repurchase an estimated 30% of its outstanding shares of common stock. The company announced the launch of a tender offer for 250 million shares at a price range of $39 to $44 per share. The offer extends to Aug. 16, but the company can purchase an additional 39.5 million shares without extending that offer. "The two key areas of focus for our capital allocation strategy are to invest in our core retail stores and to return capital to our shareholders," Frank Blake, chairman and CEO, said in a prepared statement. "Despite a challenging housing environment, we remain committed to both, and today's tender launch is a clear demonstration of our commitment to returning cash to shareholders."

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Renovation, resale markets fuel dealer sales

TORONTO  —  Despite a slowdown in new construction, a robust resale housing and renovation market is translating into increased sales for dealers across the country. In Atlantic Canada, where the DIY market has been historically strong, installed sales are gaining ground as time-starved consumers look for help in completing reno projects. "Installed sales at retail is becoming very, very strong," says Don Sherwood, president of the Atlantic Building Supply Dealers Association. "If the dealers are not already in it, they are looking to get in to it. The growth is driven partly because people are too busy to do work themselves and because the summer in Atlantic Canada is very short, and people have a limited time to get things done." Within the installed sales category, Sherwood says decks, kitchens and bath are the most popular projects. Sherwood also suggests the reno market offers better opportunities for dealers than does new housing. "People are always chasing after new housing market, but the truth is there's more margin in reno materials," he says, adding that two out of every three dollars in Atlantic Canada is going to renovations. In Western Canada, several factors are driving renovation growth. Housing stock is in short supply, partly due to lack of skilled tradespeople, causing homeowners to upgrade their current homes rather than move, says Gary Hamilton, executive director of the Western Retail Lumber Association.  Recreational properties are also spurring sales, both from new construction and renovation, as is strong capital expenditure on commercial real estate. Runaway growth in Alberta is now fueling sales in other western centres, suggests Hamilton. "In places like Saskatoon, Regina, Brandon and in rural communities, the renovation market is being fed by people who came to Alberta to work. They made a lot of money and now they're going back to those centres, paying off their mortgages and spending on their homes." Hamilton speculates that the boom is not about to run out of steam anytime soon. "I don't see any black clouds on the horizon," he says.

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Consumers plan to spend more in 2007

TORONTO — Canadian consumers are optimistic, and expect to spend more in retail stores over the coming year, according to a new report by Kubas Consultants, a market research and consulting firm based here. The recently-released Major Market Retail Report found that, by a ratio of about two-to-one, shoppers will spend more in 2007, spurring a five-year high. Consumer confidence is strongest in the West, where optimists outnumber pessimists by a large margin. In Eastern Canada, there is almost no difference between positive and negative outlooks. The report goes on to say that Wal-Mart's popularity is beginning to wane. The proportion of consumers who say they are very or somewhat interested in shopping at Wal-Mart has been declining since it peaked in 2003. "With a strong economy and high consumer confidence in recent years, shoppers likely have become less interested in discount retail. This could change quickly if the economy weakens," says Ed Strapagiel, MMRR study director and executive vice-president of Kubas Consultants. In terms of total numbers, Canadian Tire is the most shopped retailer, followed by Shoppers Drug Mart, while London Drugs has the highest ability to bring in customers from the trade areas it serves. Costco gets top marks on value for money. Home enhancement retailers that have seen significant growth in the last few years include Home Outfitters and HomeSense. Kubas is forecasting that retail sales in Canada will hit $411 billion in 2007, up 5.1% from last year. About $200 billion of this will be spent in the major centres — Vancouver, Edmonton, Calgary, Toronto, Ottawa and Montreal. That represents a gain of 5.6% over last year.

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B&Q to sell only certified Brazilian wood in China

LONDON, U.K. — Over the next three years, B&Q's 60 warehouse centres in China will limit the sale of wood products from Brazil to those that are harvested under sustainable standards. Last year, Brazil exported $5 billion in wood and wood products worldwide, and China alone consumed nearly 10% of that total, according to Greenpeace, the environmental protection organization. B&Q has already announced that it will stop selling merbau — a dark red wood grown in Papua New Guinea and Indonesia — for flooring. B&Q's decision was first reported on the Web site Mongabay.com, which focuses on environmental news.

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