Buying groups report strong performance

NATIONAL REPORT – The growth and viability of the independent continues unabated as buying groups unanimously report strong results, both for 2005 and for the year to date.

Canada's largest buying group, in terms of both number of dealers and estimated sales at retail, remains the 432 building centre members of Home Hardware Stores Ltd. According to Paul Straus, vice-president and CEO of Home Hardware, sales by the co-op wholesaler's LBM dealers were up more than 10% in the first quarter. In addition, same-store sales were up 7.1%. Nor is Home Hardware alone. At Sexton Group, the privately held buying group based in Winnipeg, Bob Mondy, vice-president and general manager, is delighted by the performance of his group's dealers so far this year. And even though the group took a hit when it lost Lloydminster, Alta.-based Nelson Lumber Co. to TIM-BR Marts last year, it has made some inroads into recruitment on its own. "We've picked up some smaller accounts–and not so small accounts," Mondy says. One of the major moves for Sexton at the end of 2005 was the addition of 35 building centre dealers that moved over from Allroc. Their sales, plus purchases worth about $20 million, will be reflected in Sexton's 2006 results. While the performance of Sexton's members vary widely according to geography, Mondy says Alberta and British Columbia have been especially hot, with same-store sales ranging from 11.5%-17.5%. Other Western-based groups are similarly buoyant. John Physic is vice-president of Delroc Industries. He says that sales for his Langley, B.C.-based group were good in 2005, calling it "a very strong year". He also expects the current year to be equally as strong. With a preponderance of members who are commercial dealers, Physic says they are benefiting from the explosive multiple-unit construction boom in the West. TORBSA, a group of 48 contractor-oriented dealers located mainly in Central Ontario, enjoyed strong sales, but the market in 2005 did not really pick up until the second half of the year. Bob Holmes, general manager of TORBSA, says the commercial business was depressed for a long time. Even as new housing remained strong, single starts, the main driver for his dealers, were down. "TORBSA had some good growth last year, and we look forward, tentatively, to 2006," he says. On the East Coast, TIM-BR Mart Atlantic, the division of TIM-BR Marts Ltd. formed by the addition of former members of AWARD at the end of last year, has had to cope, not only with an historically stable economy, but with transition issues of its own. The closing of AWARD, precipitated in part by the closing of its distribution business, ADL, ended up costing the members money. "We had some challenges that we faced, but the members, to their credit, lived up to their end," says John Morrissey, vice-president of TIM-BR Mart Atlantic. He adds that last year, despite the upheaval, was a good year for his members. "My goal for this year is to hit $150 million on the purchasing side." (For more data on Canada's LBM buying groups, check out the latest issue of our sister publication, Hardlines Quarterly Report. For more info, click here

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Sears Canada and Amazon develop enhanced website

TORONTO – Sears Canada Inc. unveiled a newly re-designed website last week that's built on the Amazon.com platform. With Amazon handling the "back office" on the combined project, shoppers now have a more comprehensive search capability, gift registries for all occasions, and even the option to "review" products. "This great relationship with Amazon takes our Internet business to the next level," said Dene Rogers, acting president, Sears Canada Inc. He was on hand last week, with a number of other Sears Canada execs and managers, to witness the official unveiling of the site at the company's downtown headquarters. Using the Amazon Enterprise Solutions group's architecture, the site, at www.sears.ca, aims to increase online interactivity with an extensive merchandise selection. It also features all the user interfaces one finds when shopping Amazon.com for books or music. Products can be searched by price, popularity (i.e., bestsellers) new arrivals, etc. In addition to the new design and standard navigational toolbar, the website provides shoppers with a comprehensive comparison-shopping capability for major appliances. And just like the Amazon site, consumers can write their comments about the products they've purchased. Taking the gift registry concept beyond bridal, an online "Wish List" feature enables shoppers to share their preferences with family and friends by emailing it to them. Rogers expects the site to begin offering sale specials that are exclusive to online shoppers. "We'd like to get more people to use the Internet than are using it now, so we'd like to have specials that drive people to our site," said Rogers. Sears Canada's website debuted online in 1996 and, by late 1998, the site received 500,000 visits. Today, sears.ca receives more than 30 million visits annually. Sears.ca offers more than 100,000 items and ships orders free to over 2,000 Sears outlet locations across Canada.

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Home Depot rejects demands by shareholders

ATLANTA – Home Depot has released the results of votes on proposals that were presented at its latest annual meeting. Some measures, such as the decision that all company directors be elected by a majority vote, were passed; other more contentious proposals were rejected. For example, two measures voted down would have enabled shareholders to put limits on the amount of compensation awarded to company executives and restrict their retirement benefits. Another one demanded disclosure of employment diversity at its stores. A bone of contention for many shareholders is the issue of corporate political donations. Home Depot chairman and CEO Bob Nardelli is a big supporter of Republican president George W. Bush, and Home Depot has donated generously to the Republican Party in recent years. Two moves, one opposing partisan political contributions and another regarding political non-partisanship, were both voted down. Nardelli took a lot of flak last week for his behaviour at the company's 2005 AGM. It lasted a mere 30 minutes, during which time Nardelli omitted to give a business overview or to accept questions from shareholders. To make matters worse, the board of directors didn't even bother to show up.v The company was bombarded by irate calls and emails after that. As a result, the company says it will return to its previous format for its 2007 annual meeting of shareholders. "Consistent with the way we run our company–in which we listen, learn and lead–we will return to our traditional format for next year's annual shareholders' meeting, which will include a business overview, the presentation of proposals, an opportunity for shareholder questions," said Nardelli in a prepared release. And, he added, the board of directors will be there next time. "Home Depot has a long-standing commitment to the highest standards of corporate governance and transparency."

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