vol. ix, 9 March 3, 2003

* NHS, AHMA end contract: two U.S. hardware shows in 2004 * Home Depot and Lowe's: same business, different results * Rona enjoys "organic growth" in 2002 * Groupe BMR nears completion of Matco Ravary purchase * Housing starts will top 200,000 again this year * Canadian Tire will roll out new concept stores by Fall * Rona slashes staff at Toronto office

"To create one's own world takes courage." Georgia O'Keeffe (American artist, 1887-1986)
The place to be on March 9, 2003 to hook up with the key players in North American hardware/home improvement retailing. The beer is on us! For more information about Practical World, the International Hardware Fair/DIY'TEC, call Barbara Hills, Canadian Sales Representative, at 416-598-3343 or email: b.hills@koelnmessenafta.com. (PS: The unofficial Canadian pub crawl in Cologne will kick off on Saturday, March 9. Look for your fellow Canucks on the steps of the Dom Cathedral at 4 p.m.— Michael)
Chicago, IL & Norwalk, CT The National Hardware Show is moving to Las Vegas next year, a reflection of a change in direction - and a change in the show's ownership structure. The Show's organizers, Reed Exhibitions, will relocate NHS, under the National Hardware Show name, to the Sands Expo and Convention Center in Las Vegas from May 10-12, 2004. However, the Show's biggest supporter, the American Hardware Manufacturers Association, says Reed doesn't in fact own the show outright, but owns the name only. Tim Farrell, executive vice-president and COO of the AHMA, says his association "sponsors and conducts the show, while Reed manages and produces the show." In addition, the seminar series held concurrently with NHS, International Hardware Week, is owned by the AHMA, he says. The AHMA is pulling its support from the show in 2004 and starting its own show almost a month earlier. Called the AHMA Hardware Show, it will remain at McCormick Place in Chicago. But the date will change to April 18-20, 2004. Farrell first let the news of the change slip while speaking to an audience at the Distribution America meetings in Colorado Springs last week. The AHMA's new show will be consistent with the AHMA's mission for the industry, says Farrell. Both shows will have to compete head on to attract exhibitors, as they vie for industry credibility. The show has a history in Chicago and the AHMA is relying on the support of its members, which, he says, are largely concentrated in the Midwest and east of the Mississippi. "Running the industry show independently will be to the benefit of our industry, and we feel Chicago, versus Las Vegas, is the best venue for the hardware show," says Farrell. "This is based on independent research over several years and countless amount of feedback." But Reed has been doing research of its own. "Customer research indicated that the Spring is an ideal time for product buying at retail and that pretty much drove the decision," says Rob Cappiello, industry vice-president in charge of the National Hardware Show at Reed Exhibitions. He recently moved over from his role as publisher of Home Channel News to work for the show. Las Vegas is considered one of the nation's top business and family destinations, and already plays host to a raft of trade shows, including six by Reed Exhibitions. Reed will move to Las Vegas with both the name and the legacy of the existing event, billing itself as the 59th edition of the National Hardware Show. It will also feature a new segment, the first annual Lawn & Garden World, as well as a full conference program. Besides competing against each other, the Spring dates will put the two shows up against a number of other events. Practical World, the International Hardware Fair/DIY'TEC in Cologne, Germany, is probably the U.S. show's biggest rival. It's typically held in the first or second week of March. The Housewares Show, also held in Chicago's McCormick Place, will likewise move in 2004 from January to a date in March. In addition, the Canadian Hardware and Building Materials Show takes place only a few weeks beforehand, commencing on the first Sunday of February. "We're getting good feedback from the industry," Farrell adds of his new event. "We're gaining industry support and our hope and belief is that our show will be the show for the industry, and supported by the industry." This year's National Hardware Show, which has been in Chicago since 1974, will take place there for the last time in its current form from August 10-12. About 2,000 vendors are expected to exhibit.
Atlanta, GA & Wilkesboro, NC Both Home Depot and Lowe's Cos. unveiled their results last week. And while Home Depot remains about twice the size of its closest competitor, its star is no longer shining as brightly on Wall Street as it once was. Its stock has fallen more than 50% in the last 12 months and closed another 0.7% when its results were announced. By comparison, Lowe's share price went up almost 6% when its results were unveiled. Home Depot enjoyed record earnings of US$3.7 billion for fiscal 2002, compared with US$3.0 billion in fiscal 2001. Its sales for the year increased 9% to US$58.2 billion. Same-store sales for the year were flat, however, while Lowe's saw same-store sales increase 5.6%. Lowe's, on the other hand, enjoyed net earnings growth of 43.8% to US$1.47 billion, following a rise in profits of 46% in its fourth quarter. For fiscal 2002, Home Depot's net earnings reached US$686 million, down from US$710 million. Lowe's sales increased 19.8% to US$26.5 billion from US$22.1 billion a year ago. Fourth quarter results for both companies typified the contrast between their respective performance. Profits for Lowe's reached US$319.4 million, up from US$218 million a year earlier. Total sales rose 16.5% to US$6.1 billion for the fourth quarter, while sales by Home Depot for the fourth quarter were actually down 2% to US$13.2 billion. According to Robert Tillman, chairman of Lowe's, 2002 was "the best year in our 57-year history." Bob Nardelli, chairman and CEO of Home Depot, had a different message for analysts, however. "We are disappointed with the sales growth, as it fell short of our expectations," he admitted. Same-store sales for Lowe's didn't grow as much in 4Q 2002 as in the same period a year earlier - up 4.1%, compared with a 7.4%. But it's up over Home Depot's 4Q same-store sales, which fell 6% for the quarter. Categories that enjoyed strong growth in 2002 at Lowe's included plumbing, paint, flooring, and home organization. Home Depot has been trying to expand its installed services, which are considered a huge growth market for them. In fact, sales in services grew 26% for Home Depot in its fourth quarter. What's ahead? Lowe's is rapidly gaining entry into new markets, including ones Home Depot is already in. It has 744 stores in 42 states, 112 of which were new last year, with another 11 being relocated during that time. Home Depot ended the year with 1,532 stores, including 89 in Canada. It expects to open another 200 in 2003. However, it faces competition from its own outlets. Cannibalization affected about 21% of its existing stores, resulting in a 4% negative impact on same-store sales. Other factors downgrading stores' top line included the implementation of the company's new performance standards, called SPI, as well as the refitting of a number of departments across the chain. Home Depot expects sales for fiscal 2003 to increase 9%-12% and earnings per diluted share to increase between 9 and 14%.
Boucherville, QC Consolidated net sales for Rona Inc., which include sales through its distribution centres and corporate stores as well as Rona's share of the sales of franchise stores, were $2.33 billion, a 27.1% increase over 2001 sales of $1.83 billion. Net earnings for the year increased 75.0% to $43.1 million. While some of the growth is attributable to Rona's acquisition of Revy and Lansing in June, 2002, same-store sales for the year increased 7.0% for Rona's corporate and dealer-owned stores. Sales overall at retail increased 33.3%, reflecting, in part, the Revy and Lansing acquisition, the opening of two corporate big box stores during the year, and the closure of five under-performing Rona Cashway stores in Ontario. Retail sales by all Rona's stores, both corporate and dealer-owned, are anticipated to total almost $3 billion again this year. The company's growth in the second half of the year was considered "completely organic." In the fourth quarter, consolidated net sales reached, $539.9 million, up 6.3% over $508.1 million in 4Q 2001. Net earnings for the quarter were up 94.4% to $9.1 million, attributed again to organic growth and to increases in operating efficiency. Same-store sales in the fourth quarter increased 3.7%. During the past year, Rona launched a successful IPO on the Toronto Exchange, raising $150 million, half of which went toward the paying down of debt. The remainder will be used for further expansion, with more growth targetted for Western Canada. The company will also invest in an intensive advertising campaign, which will begin later in April.
Toronto, ON Canadian Tire Corp. plans a Fall launch of its latest new concept stores. Called 20/20, the program will include a number of changes to the layout of the stores, plus the addition of new categories and possibly some added at-home services. The first four 20/20 stores will open sometime late in August, 2003, all in the Greater Toronto Area. While Canadian Tire scored healthy sales by its stores in 2002, with overall sales up 4.7% from 2001, same-store sales were up only 1.4%. Sales boosts have traditionally come with the company's investment in new and expanded stores, so it continues to fine-tune its retail formula to foster continued growth. Its Next Generation of stores has been under way since the early '90s years and the most recent enhancement to the program appeared in January 2001. The first four 20/20 stores will all be "A" type stores, with about 100,000 sq.ft. of space. However, the retail area will be expanded by up to 16% over traditional "A" stores, as warehousing will be reduced and more space devoted to merchandising. Some of the categories that will be added or expanded into the new space are designed to attract more female shoppers. The company's research indicates that about half the shoppers in their stores are women, yet they account for only about 40% purchases. New categories will include consumables, namely household cleaning products, which are considered high repeat traffic items. Kitchenwares, storage and ready-to-assemble furniture assortments will also be expanded. A gift registry is also expected to be in place in its stores by the end of 2003 or early 2004.
Canadian Tire 33.65 24.18 29.90
Canfor 11.70 6.83 9.14
Costco 43.92 27.09 30.52
Emco 16.90 8.05 16.48
Goodfellow 13.99 9.88 10.95
Home Depot 52.25 20.10 23.45
Hudson's Bay 15.55 5.87 8.40
Lowe's Cos. 49.99 32.50 39.30
Rona Inc. 14.75 11.75 14.25
Sears Canada 25.10 15.15 16.85
Sodisco-Howden 2.20 1.06 1.50
Taiga Forest 7.00 5.28 6.75
Wal-Mart 63.94 43.72 48.06
West Fraser 40.38 26.27 39.05
Rona slashed jobs at its Ontario head office last week, as 29 people were let go. They included Rob Wilbrink, formerly vice-president of operations and development for Rona's Ontario stores. His duties will be covered off by Phil Dwyer, who was already overseeing Rona Cashway. A number of assistant buying positions were let go, as well, another step in the further consolidation of Rona's buying decisions into its Boucherville, QC head office. The Toronto office will focus on supporting the network and business development in Ontario. The takeover of Matco Ravary by a syndicate of 16 dealers within Le Groupe BMR has been postponed. Originally slated to close on February 28, both parties have agreed to close the transaction on or about March 6, 2003, instead, to allow finalization of paperwork. The deal, worth $24.5 million in cash plus the assumption of $13 million in Matco Ravary's debt, had already been approved by Matco Ravary's board of directors, but was challenged unsuccessfully by Rona Inc., which tried to file an injunction against the sale. Rona owns about 30% of Matco's shares. The six-store chain in the Montréal area, formerly a member of Rona, has been buying from BMR since December 19, 2002 and will represent the addition of about $60 million in retail sales to the BMR organization. Carmel Chaput, chairman of Matco Ravary, and Gilles Nolet, president, who together held 47% of the company's voting shares, will remain with the company in their current roles for an unspecified time. Home Hardware Stores launched its own gift card this past weekend. Available in any denomination, the Home Gift Card will be accepted at all Home Hardware locations across Canada, aimed at the birthday, housewarming, bridal shower, anniversary and holiday gift-giving market. It's also being promoted as part of an employee reward or customer appreciation program. Gerber Plumbing Fixtures Corp. has announced that most of its assets have been sold to a new entity, Gerber Plumbing Fixtures LLC. Chicago-based Globe Union Group is the majority owner of Gerber Plumbing Fixtures. Gerber's 2002 revenues exceeded $100 million. Gerber will operate as a stand-alone subsidiary of Globe Union. Ila Lewis, current Gerber chairman and granddaughter of founder Max Gerber, has been named chairman of the new company. Terms of the transaction were not announced. Wal-Mart de Mexico SA will invest close to 6.4 billion pesos (US$610 million) within the next 18 months to expand its retail network. Shareholders have approved the expenditure plan for the opening of 61 retail outlets. In Mexico, Wal-Mart operates under the Walmex banner.
Shawna Rossi has joined Home Depot Canada as senior public relations manager. Formerly with First Pro Shopping Centres, development partner of Wal-Mart Canada, she has also worked in corporate communications roles for Hudson's Bay Co. and The Bay. Rossi replaces David Day, who left the company to join another communications firm. (416-609-0852) At Johns Manville, Gino Allegro has been promoted to the position of Canadian regional sales manager, in charge of the Canadian sales team and their support staff. He was formerly national accounts manager for Canada. (204-488-6765) Canadian Tire Corp. has announced two senior executive appointments at Mark's Work Wearhouse, concurrent with the retirement of president Garth Mitchell. Michael Lambert, formerly CFO, has been named president, Mark's Work Wearhouse, and executive vice-president and officer of Canadian Tire Corp., reporting to CTC president and CEO Wayne Sales. In this role, Michael will be accountable for the continued integration of Mark's within Canadian Tire as well as new business development and support of Mark's operations … Paul Wilson, currently COO, has been appointed president and COO of Mark's. His duties will include the continued conversion of Work World stores to the Mark's banner and new merchandising growth strategies. (403-250-1222)
Housing starts are forecast to exceed 200,000 units again in 2003, says the latest report from CMHC. Starts are expected to reach 205,500 units. Factors keeping the rate so high will include low mortgage rates, continued employment and income growth, and rising migration. Construction is also expected to remain robust in 2004, with housing starts forecast to reach 195,100 units. As sales moderate, relative to the number of listings on the market, average resale price growth is expected to slow to 5.3% this year and 3.8% in 2004. In the latest release of its housing affordability index, Royal Bank expects rising house prices and increasing mortgage rates to reduce the affordability of Canadian homes. The proportion of pre-tax household income needed to service the costs of owning a home climbed in 2002 from 30.6% to 31.8%. The index is expected to rise to 32.7% in 1Q 2003. The Consumer Price Index rose 4.5% in January year over year, with energy costs accounting for the bulk of the increase. Without energy costs, inflation grew 3.5% from January 2002 to January 2003.
The BSDA of B.C. will host Westcoast 2003, its trade show and convention for home improvement dealers in British Columbia, March 13-14. For more information about attending or exhibiting, contact the BSDA at: 604-513-2205; www.bsdabc.com. The 2003 Certification Watch Conference, Exhibit and Field Tour take place March 25-29 in British Columbia. The theme of the conference, organized by Certification Watch, will be "The Policy and Practice of Forest Certification." The speaker roster includes guests from both the U.S. and Canada. Check out:www.CertificationWatch.org or call: 514-273-5777.
"Our focus this year is very simple: it's on sales, on service, on execution." - Bob Nardelli, chairman and CEO of Home Depot, speaking to analysts during a conference to report the company's year-end results..

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HELP WANTED AREA GENERAL MANAGER A visionary leader to optimize marketing strategies at our Customer Service Centre, Brampton (Greater Toronto Area), ON. Weyerhaeuser Company Limited — a Fortune 200 company — is a major, dynamic player in the integrated forest products sector. With numerous operations across Canada and the US, Weyerhaeuser is one of the largest organizations of its kind worldwide. Our Building Materials division has an annual volume of $160 million. You will be called upon to support, measure and ensure the effective execution of business strategies. You will assume full accountability for the division’s financial performance by managing the overall operations, including: Sales & Marketing; Administration; Warehousing & Delivery; and Asset Management. Your passion for financial excellence is coupled with a demonstrable ability to deliver it. We envision you as someone who accepts accountability for results and embraces change as a competitive advantage. Capable of developing and implementing a customer-focused strategy and organizational culture, you bring to this key role: · building materials management experience · proven leadership capabilities · well-developed business acumen as evidenced by your ability to analyze and implement financial/strategic plans. For information on Brampton, please visit www.city.brampton.on.ca. If you are interested in joining a world-class organization that believes in safety and employment equity, and offers a competitive salary and a full range of benefits, then consider this opportunity with Weyerhaeuser. Please submit a résumé, citing job number #000784/HAR (essential), to: Weyerhaeuser Company Limited, Recruiting, Staffing & Diversity. Fax: 206.374.2210; email (with résumé contained in the body of the message, not as an attached file): resume@weyerhaeuser.com. Weyerhaeuser is an Equal Opportunity Employer building a capable, committed, diverse workforce representative of the communities we serve. This position is open to those legally entitled to work in Canada. www.weyerhaeuser.com NATIONAL SALES MANAGER—CANADA Air King Limited, a leading and growing Manufacturer of Consumer Ventilation & Humidification Products since 1961, is currently seeking a National Sales Manager — Canada. This senior-level individual must have the ability to initiate, expand and maintain relationships with primary retail customers and retail buying groups. The person will call on national retail accounts and manage a network of successful retail sales representatives. Candidate must have 3-5 years of retail customer sales experience preferably with seasonal products. Communication ability, analytical/organizational skills, effective computer use, and leadership qualities are essential. Minimum expectation is an undergraduate degree; MBA is preferred. Travel required. We are prepared to offer an attractive starting salary plus a comprehensive benefit package. If interested, send your Resumé with salary history to: Air King Limited, 110 Glidden Road, Brampton, ON L6T 2J3. Fax: (905) 456-1015; Attention: Human Resources Department. No Phone Calls Please. ***********************************************************************************  ONTARIO SALES REPRESENTATIVE Leading manufacturer of Flooring Related Products has an immediate opening for an ONTARIO SALES REPRESENTATIVE. The ideal candidate will have 3-5 years of sales experience as well as a post-secondary degree/diploma in a related field. Your sales background will include thorough knowledge in sales forecasting/budgeting as well as call reporting using the MS Office Suite. You must have strong communication and interpersonal skills, the ability to recognize customer and market needs and a proven ability to follow up and close on those opportunities. This position is best suited to individuals who possess mechanical/technical aptitude and who feel comfortable demonstrating products and various applications. Knowledge of the Flooring Industry would be an asset. A clean driving record and the ability to travel within Ontario is a must. If you feel you are qualified for this role, please email your resumé, along with income requirements bev@hardlines.ca (put Box 317 in the subject line) or fax c/o Box 317, 416-489-6154.


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