July 26, 1999 - Volume v, #31
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

Hardlines Marketing Conference '99 will lay out some of the ways home improvement retailers will be successful in the next millennium. See Dan Cotter of TruServ Corp., David Krawzyk of Wickes Lumber, Larry Moore of Sears Canada, Michael Largent of Stambaugh Hardware, and John MacDougall of AWARD! September 16, 1999, at the Sheraton Parkway Hotel, just north of Toronto. Register now!!!

My thanks to this year's sponsors: The Watt Group, the Cologne International Hardware Fair/DIY'Tec, Intactix, Sterling Commerce and Logistics Solutions. &emdash; Michael

CASTLE SIGNS AGREEMENT WITH ACE

Castle Building Centres Group Ltd. has signed another wholesale hardware supply agreement, this time with Ace Hardware Canada. The deal has been struck to provide Castle with an additional source for both products and programs, "to compliment our basket of wholesale hardware source arrangements," according to a confidential letter sent to its members by Castle president Pro Wylie.

The deal exists alongside a similar arrangement Castle has with TruServ Canada, in addition to being supplied by Sodisco-Howden Group and Weber Supply. Ace, which has been aggressively wooing buying groups across the country, already has deals with Tim-BR Marts, Homecare, AWARD and Sexton Group.

Wylie has been quoted in the past stating that Castle has a mandate to support its independent member dealers in each region in which they operate on a micro-marketing basis. This new supply source fits in with that mandate by broadening the members' range of available products and services.

Reflecting a strong first quarter results from parent company West Fraser Timber Co., Revy Home & Garden had sales increase about 5% in the first quarter, taking off in the second.

"The smaller contractor stores in B.C. and Alberta were down 6-7% from the same time last year," says Revy president Carl Grittner. "But increases in same-store sales in the retail stores have been huge, especially in the second quarter, when they were up over 20%."

Grittner anticipates overall sales for 1999 will be around $800 million, up from $700 million in 1998.

West Fraser earned $37.0 million on sales of $590 million in the quarter ended June 30, compared with a loss of $14.3 million on sales of $472 million in the corresponding period in 1998. For the first half, earnings were $51.2 million on sales of $1.034 million, compared with a loss of $13.2 million on sales of $878 million last year. The increase in earnings is primarily due to substantially higher lumber prices during the quarter.

MacMillan Bloedel reported net earnings of $73 million for the second quarter of 1999, compared with a net loss of $55 million for the same period last year. Second quarter net losses reached $9 million from continuing operations and $46 million from discontinued operations, which were subsequently disposed of during 1998.

Distribution contributed $24 million to operating earnings, an increase of $14 million over the second quarter 1998, resulting from strong markets, cost savings and a more focused business strategy which distinguishes between commodity trading and warehouse operations. Combined sales were up 16% from the same period last year,with gross margins up 0.5% in commodity trading and 2% in warehouse operations.

* * * * * * * *

Sears Canada's sales for the three months ended July 3, 1999, increased 10.3% to $2.662 billion, from $2.414 billion in 1998. Net income reached $39.9 million, up $10 million from $29.9 million in 1998. Total revenues for the quarter increased 10.1% to $1.403 billion, from $1.274 billion in 1998. For the first half of 1999, Sears posted a profit of $57.1 million, compared with $37.4 million last year.

* * * * * * * *

Taiga Forest Products Ltd. had sales for the first quarter ending June 30 of $228.7 million, compared with $175.2 million for the same period in the previous year. Earnings grew to $2.6 million for the first quarter, compared with $811,000 for the same period in 1998. During the quarter, Taiga completed the construction of its new distribution centre in Langley, B.C. Its New Westminster operations relocated to this facility during the first week of July.

* * * * * * * *

For the second quarter ended June 30, Le Groupe Forex Inc. had sales of $123.3 million, compared with $57.7 million for the same quarter of 1998. The company recorded net earnings of $37.96 million, compared with $5.63 million for the same period in 1998. Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $65.76 million for the second quarter, compared with $15.99 million in 1998.

During the first 6 months of 1999, Forex's sales reached $205.9 million and generated net earnings of $52.7 million, compared with $88.31 million and net earnings of $5.99 million.

* * * * * * * *

International Forest Products had net earnings before one-time items of $3.5 million in the second quarter ended June 30, compared with a net loss before one-time items of $15.6 million in the second quarter of 1998. Interfor recorded a net loss of $44.7 million for the quarter. Total debt was reduced by $9.6 million in the quarter and at June 30th was $77.6 million below the level of one year ago.

* * * * * * * *

Emco Ltd. had net earnings for the quarter ended June 30, 1999, of $6.1 million, an increase from $5.2 million over the second quarter of 1998. Sales for the quarter were $334.7 million, up 2.1% from $327.9 million for the same period last year. Excluding the Kindred Industries division, which was sold in the fourth quarter of 1998, sales of Emco's continuing businesses were up 4.7% in the quarter over the same period last year.

Emco's net earnings for the first six months of 1999 were $6.6 million, compared with $4.6 million for the same period last year. Sales for the period were $582.5 million, compared with $573.2 million, excluding Kindred Industries.

* * * * * * * *

Two Olympic hopefuls who work at Home Depot Canada and receive time off for training and competition joined 5,000 athletes from 42 western-hemisphere countries this weekend who are competing in the 1999 Pan Am Games, in Winnipeg. Sixteen more are coming from Home Depot in the U.S.

* * * * * * * *

Westburne Inc. had sales for the second quarter ended June 30 of $596.1 million, an 8.6% increase from $47.2 million in the previous year. Pre-tax earnings totaled $29.3 million for the second quarter, up 4.4% from $28.1 million in 1998.

CANADIAN STOCK WATCH

"We seldom attribute common sense except to those who agree with us."
&endash; Duc de la Rochefoucauld (1613-1680)

PEOPLE ON THE MOVE

Stewart Mathie has been promoted to vice-president &endash; sales and marketing, at T.A. Drummond Metal Products Ltd. He was formerly national sales manager and Lycor marketing manager. (416-798-2225)

Retail trade in May reached $21.3 billion, up 0.4% from April, says Stats Canada. Excluding auto sales, which were sluggish, overall retail sales were up 1.4% in May.

Sales by wholesalers rose 1.8% in May from April. Lumber and building materials rose 3.9% to $2.4 billion. Sales here have been generally increasing since mid-1998, following a series of declines that started in spring '97.

NOTED - Buyers, manufacturers' reps and agents going to the National Hardware Show next month may want to do some homework on active U.S. exporters. Check out the World DIY Council's website: www.wdiyc.org . There are about 150 companies listed, I think. It's well worth a visit.

* * * * * * *

HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 1999 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.

July 26, 1999 - Volume v, #31
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

Hardlines Marketing Conference '99 will lay out some of the ways home improvement retailers will be successful in the next millennium. See Dan Cotter of TruServ Corp., David Krawzyk of Wickes Lumber, Larry Moore of Sears Canada, Michael Largent of Stambaugh Hardware, and John MacDougall of AWARD! September 16, 1999, at the Sheraton Parkway Hotel, just north of Toronto. Register now!!!

My thanks to this year's sponsors: The Watt Group, the Cologne International Hardware Fair/DIY'Tec, Intactix, Sterling Commerce and Logistics Solutions. &emdash; Michael

CASTLE SIGNS AGREEMENT WITH ACE

Castle Building Centres Group Ltd. has signed another wholesale hardware supply agreement, this time with Ace Hardware Canada. The deal has been struck to provide Castle with an additional source for both products and programs, "to compliment our basket of wholesale hardware source arrangements," according to a confidential letter sent to its members by Castle president Pro Wylie.

The deal exists alongside a similar arrangement Castle has with TruServ Canada, in addition to being supplied by Sodisco-Howden Group and Weber Supply. Ace, which has been aggressively wooing buying groups across the country, already has deals with Tim-BR Marts, Homecare, AWARD and Sexton Group.

Wylie has been quoted in the past stating that Castle has a mandate to support its independent member dealers in each region in which they operate on a micro-marketing basis. This new supply source fits in with that mandate by broadening the members' range of available products and services.

Reflecting a strong first quarter results from parent company West Fraser Timber Co., Revy Home & Garden had sales increase about 5% in the first quarter, taking off in the second.

"The smaller contractor stores in B.C. and Alberta were down 6-7% from the same time last year," says Revy president Carl Grittner. "But increases in same-store sales in the retail stores have been huge, especially in the second quarter, when they were up over 20%."

Grittner anticipates overall sales for 1999 will be around $800 million, up from $700 million in 1998.

West Fraser earned $37.0 million on sales of $590 million in the quarter ended June 30, compared with a loss of $14.3 million on sales of $472 million in the corresponding period in 1998. For the first half, earnings were $51.2 million on sales of $1.034 million, compared with a loss of $13.2 million on sales of $878 million last year. The increase in earnings is primarily due to substantially higher lumber prices during the quarter.

MacMillan Bloedel reported net earnings of $73 million for the second quarter of 1999, compared with a net loss of $55 million for the same period last year. Second quarter net losses reached $9 million from continuing operations and $46 million from discontinued operations, which were subsequently disposed of during 1998.

Distribution contributed $24 million to operating earnings, an increase of $14 million over the second quarter 1998, resulting from strong markets, cost savings and a more focused business strategy which distinguishes between commodity trading and warehouse operations. Combined sales were up 16% from the same period last year,with gross margins up 0.5% in commodity trading and 2% in warehouse operations.

* * * * * * * *

Sears Canada's sales for the three months ended July 3, 1999, increased 10.3% to $2.662 billion, from $2.414 billion in 1998. Net income reached $39.9 million, up $10 million from $29.9 million in 1998. Total revenues for the quarter increased 10.1% to $1.403 billion, from $1.274 billion in 1998. For the first half of 1999, Sears posted a profit of $57.1 million, compared with $37.4 million last year.

* * * * * * * *

Taiga Forest Products Ltd. had sales for the first quarter ending June 30 of $228.7 million, compared with $175.2 million for the same period in the previous year. Earnings grew to $2.6 million for the first quarter, compared with $811,000 for the same period in 1998. During the quarter, Taiga completed the construction of its new distribution centre in Langley, B.C. Its New Westminster operations relocated to this facility during the first week of July.

* * * * * * * *

For the second quarter ended June 30, Le Groupe Forex Inc. had sales of $123.3 million, compared with $57.7 million for the same quarter of 1998. The company recorded net earnings of $37.96 million, compared with $5.63 million for the same period in 1998. Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled $65.76 million for the second quarter, compared with $15.99 million in 1998.

During the first 6 months of 1999, Forex's sales reached $205.9 million and generated net earnings of $52.7 million, compared with $88.31 million and net earnings of $5.99 million.

* * * * * * * *

International Forest Products had net earnings before one-time items of $3.5 million in the second quarter ended June 30, compared with a net loss before one-time items of $15.6 million in the second quarter of 1998. Interfor recorded a net loss of $44.7 million for the quarter. Total debt was reduced by $9.6 million in the quarter and at June 30th was $77.6 million below the level of one year ago.

* * * * * * * *

Emco Ltd. had net earnings for the quarter ended June 30, 1999, of $6.1 million, an increase from $5.2 million over the second quarter of 1998. Sales for the quarter were $334.7 million, up 2.1% from $327.9 million for the same period last year. Excluding the Kindred Industries division, which was sold in the fourth quarter of 1998, sales of Emco's continuing businesses were up 4.7% in the quarter over the same period last year.

Emco's net earnings for the first six months of 1999 were $6.6 million, compared with $4.6 million for the same period last year. Sales for the period were $582.5 million, compared with $573.2 million, excluding Kindred Industries.

* * * * * * * *

Two Olympic hopefuls who work at Home Depot Canada and receive time off for training and competition joined 5,000 athletes from 42 western-hemisphere countries this weekend who are competing in the 1999 Pan Am Games, in Winnipeg. Sixteen more are coming from Home Depot in the U.S.

* * * * * * * *

Westburne Inc. had sales for the second quarter ended June 30 of $596.1 million, an 8.6% increase from $47.2 million in the previous year. Pre-tax earnings totaled $29.3 million for the second quarter, up 4.4% from $28.1 million in 1998.

CANADIAN STOCK WATCH

"We seldom attribute common sense except to those who agree with us."
&endash; Duc de la Rochefoucauld (1613-1680)

PEOPLE ON THE MOVE

Stewart Mathie has been promoted to vice-president &endash; sales and marketing, at T.A. Drummond Metal Products Ltd. He was formerly national sales manager and Lycor marketing manager. (416-798-2225)

Retail trade in May reached $21.3 billion, up 0.4% from April, says Stats Canada. Excluding auto sales, which were sluggish, overall retail sales were up 1.4% in May.

Sales by wholesalers rose 1.8% in May from April. Lumber and building materials rose 3.9% to $2.4 billion. Sales here have been generally increasing since mid-1998, following a series of declines that started in spring '97.

NOTED - Buyers, manufacturers' reps and agents going to the National Hardware Show next month may want to do some homework on active U.S. exporters. Check out the World DIY Council's website: www.wdiyc.org . There are about 150 companies listed, I think. It's well worth a visit.

* * * * * * *

HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 1999 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.