HARDLINES™
Five years serving Canada's home improvement industry
June 26, 2000 - Volume vi, #25
Michael
McLarney,
Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154
E-mail: buzz@hardlinesfax.com
Check out our incredible Classifieds
section!
* * * * * *
* IN THIS ISSUE:
* Sodisco-Howden buys Weber's retail division
* EXPO stores here part of 3-year plan, says Home Depot president
* Johns Manville to merge with investor group
* LP and Slocan form OSB joint venture
* Canfor modernizes its Grande Prairie mill
* * * * * *
HOTEL
ROOMS AT OUR 5th ANNUAL HARDLINES MARKETING
CONFERENCE:September
14, 2000. We have a limited number of rooms set aside for this
incredible one-day symposium featuring some of North America's
leaders in retail! To make your reservation, call the
Eaton
Centre Marriott Hotel:
1-800-905-0667; refer to the Hardlines Marketing Conference and/or
McLarney Communications.* * * * *
*SODISCO-HOWDEN
BUYS WEBER'S RETAIL DIVISIONSodisco-Howden
Group has signed a letter of intent to acquire the hardware related
assets of Weber Supply's Retail Sales Division in Kitchener, ON. The
transaction will be paid in cash and is subject to due diligence.
Since 1855, Weber has specialized in selling residential and
architectural hardware to lumber yards in Ontario. The company
went beyond the provincial border last summer, when St. John,
NB-based Thornes exited the retail business in Atlantic Canada. Weber
was one of the companies that developed a sales team in that market
in an attempt to fill the void. But despite this initiative and
progressive online ventures, including an e-catalogue with the Castle
Building Centres group, Weber's retail business has gradually shrunk
over the years, from as high as $30 million to an estimated $10
million. The big box
battle that's heating up in Ontario will continue to accelerate the
consolidation of Weber's dealer base, says David Weber, president of
Weber Supply. For the sake of both the business and the people in the
retail division, he says the timing was good to make the deal with
Sodisco-Howden.He adds that
the the company had been in talks with Tony Molluso, CEO of
Sodisco-Howden, for some time before the death of David's father and
company chairman, Jack Weber, on May 2. Even though Jack had a
special place in his heart for the retail division, which was the
foundation of the Weber company 145 years ago, he was "onside with
the deal," says David Weber.Despite the
shrinking customer base in Ontario, the business has remained steady
due to new business in Atlantic Canada, says David Weber.
Sodisco-Howden picks up five sales people in Ontario and four down
east. The deal takes one more competitor out of the marketplace for
Sodisco-Howden, and strengthens its presence in Central and Eastern
Canada. The sale is expected to close mid-July. Weber will continue
with its industrial division, Weber Construction Products Group,
which has 13 distribution centres in Ontario, Manitoba and
Saskatchewan, and estimated sales in excess of $100
million.HOME
DEPOT PRESIDENT OUTLINES CANADIAN EXPANSIONHome Depot
will double its number of stores worldwide within the next 3* years,
according to Arthur Blank. But, he adds, it's NOT talking with French
retailer Castorama.Blank was
drawn to Canada last week to speak at the annual convention of the
Retail Council of Canada. The company currently has 980 stores in
North and South America, including 56 in Canada. Blank says that
number will reach 1,900. He confirmed Canadian president Annette
Verschuren's statements in an earlier interview with Hardlines that
110-120 of them will be erected in this country
eventually.But other
store formats will take a while to get here. Home Depot has announced
it will expand both its Villager's Hardware and EXPO store formats in
the U.S., but no date has been set for a Canadian introduction.
However, Blank said the EXPO stores are part of a three-year plan for
this country, where he expects as many as 20. Two more Villager's
Hardware stores will be added to the two inaugural stores in New
Jersey, where they will be scrutinized until the end of this year
before a rollout is approved. Fuelling
Home Depot's expansion is 21%-22% annual growth, a figure being
matched or bettered by the Canadian division. However, Blank told me
that expansion in Europe at this time does not include any imminent
acquisitions. "We have not had any conversations with Castorama," he
said.He also said
growing contractor sales in Canada is important, although the DIYer
remains Home Depot's base customer. Contractor sales company-wide are
about 35% of overall sales, while Canada's are closer to 30%. The
introduction of a "pro initiative," already in six stores in Canada,
offers more focused services to contractors. JOHNS
MANVILLE TO MERGE WITH INVESTOR GROUPIn a deal
valued at approximately US$3 billion, Denver, CO-based Johns Manville
Corp. has entered into a definitive merger agreement with an investor
group led by Hicks, Muse, Tate & Furst Inc. and Bear Stearns
Merchant Banking. The investor group will provide approximately
US$565 million in equity capital and has received commitments for
senior and subordinated debt financing amounting to US$2.35 billion
through affiliates of Bear, Stearns & Co. Inc. The transaction is
expected to close before the end of the year, subject to various
conditions, including receipt of financing and shareholder and
regulatory approvals.Under the
terms of the agreement, which was approved by the company's board of
directors, JM's public shareholders will receive, for each share of
JM stock held, US$13.625 in cash and a 13% pay-in-kind preferred
stock with a liquidation preference of US$2.00. The transaction value
is based on approximately 155 million shares.The Manville
Personal Injury Settlement Trust, which holds approximately 76% of
JM's common stock, has agreed to vote its JM shares for the merger,
subject to certain conditions. Following closing, the Trust will hold
approximately 8.5% of the company's common equity. In addition, JM
has agreed to pay the Trust US$90 million in settlement of JM's
obligation for future income taxes of the Trust.The Trust
and members of JM management, including Chairman and CEO Jerry Henry,
will retain an equity stake in the post-merger company.Johns
Manville is a 142-year-old fiberglass insulation and roofing
manufacturer with sales of US$2.2 billion in 1999. It employs
approximately 9,700 people and operates 56 manufacturing facilities
in North America, Europe and China.LOUISIANA-PACIFIC
FORMS OSB JOINT VENTURE WITH SLOCANLouisiana-Pacific
Corp. has teamed with Slocan Forest Products in a 50-50 joint venture
to build a 700 million-sq.ft. OSB mill in British Columbia. The deal
emerged when both companies were planning to build their own OSB
plants. Instead, they agreed to combine resources, investing $200
million to form a new company called Slocan-LP OSB Corp. The new mill
will be located in the Fort St. John area, designed as a low-cost
operation that will meet long term market demand both in North
America and in Asia.Ike Barber,
chairman of Slocan Forest Products, will serve as president of the
new company.Following
completion of the environmental assessment process, construction of
the new mill is expected to be completed within 12-18 months. The
company anticipates the creation of more than 500 direct jobs in
manufacturing and forestry related activities. An estimated 750
indirect jobs during construction will also be created. The project
is expected to contribute more than $110 million annually to the
local economy. ONLINE
RETAILERS FEAR U.S. COMPETITORSAccording to
a new study to be released last week by The Boston Consulting Group
and Retail Council of Canada, Canadian retailers are focused largely
on the domestic market, earning 96% of revenues from Canadian
consumers. The Canadian Online Retailing Report, which is based on
first quarter survey responses from 66 Canadian online retailers,
suggests that online retailers need to act quickly to stay ahead of
U.S. competitors.Canada
stands second only to Sweden among developed countries in Internet
adoption, and well above the U.S. However, while Canadians have
embraced the Internet, both consumers and retailers have yet to fully
adopt online retailing. A key perception, widely held by study
participants, is that domestic online players are not their primary
competition. Nearly half the retailers surveyed perceive U.S. online
retailers as their primary competitors, followed by Canadian online
retailers (29%) and traditional Canadian retailers (19%).COMPANIES IN THE NEWSFor the
second quarter ended April 30, 2000, Matco Ravary achieved sales of
$13.6 million, up 10% over $12.3 million for the corresponding period
of the previous fiscal year. Net earnings totalled $98,828, compared
with $333,496 for the second quarter of 1999. Sales for the first
half of the fiscal year rose 10% to $25.2 million, compared with
$22.9 million for the same period last year. The net loss amounted to
$94,036, compared with $322,631 for the six months ended April 30,
1999. Canfor Corp.
has completed a $22-million modernization project for its Grande
Prairie sawmill. The project is expected to increase lumber
production at the 11-year-old plant by 14% to 25 million board feet
per year, while processing the same amount of logs, and to shave $4.5
million off Canfor's operating costs.Revy Home
& Garden really did open its fourth store in the GTA on Saturday,
this one in Scarborough. The 150,000-sq.ft. outlet, which employs
250, had both entrances blocked by picketers who protested the use of
non-union out-of-province workers to erect the store.Rona Cashway
has renovated its stores in Exeter, Forest, Ilderton, Seaforth and
Zurich, ON. The former Do-it centers, purchased by Cashway just
before it was in turn bought up by Rona, feature new store layouts
with expanded assortments of hardware and LBM.Canadian
Tire opened a new "next generation" store last Thursday, this one in
Ajax, ON. The 85,000-sq.ft. store has 53,000 sq.ft. of
retail.Home Depot
Inc. plans a major expansion of an in-store financing program for
home improvement loans to its DIY customers. The loan program is
currently being tested in 65 stores and is expected to be rolled out
to all Home Depot and Expo stores in Canada and the U.S. Credit lines
of up to $30,000 will be available. In-store approvals were pioneered
by the AWARD buying group in Atlantic Canada two years
ago and other groups, including Castle and Tim-BR-Mart, have been
working on programs of their own.Sears,
Roebuck and Co. has launched an appliance parts and accessories
website for contractors, builders and property managers who buy in
volume. The site - www.spdcommercial.com
- offers businesses access to more than 4.2 million parts from over
400 manufacturers and includes owner's manuals for most major brands,
including Sears'Kenmore brand, Whirlpool, Amana, Kitchen Aid, Maytag,
Briggs & Stratton and Black & Decker. CANADIAN
STOCK WATCH