MOORESVILLE, N.C. & ATLANTA — Both Lowe’s and Home Depot saw sales rise in the first quarter, even as the COVID-19 pandemic disrupted their businesses in the last few weeks of that period.

Home Depot’s sales climbed 7.1 percent to $28.26 billion, with comparable sales up 6.4 percent from last year and U.S. comps positive 7.5 percent. Net earnings dropped by 10.7 percent to $2.25 billion.

Rival retailer Lowe’s reported that its Q1 net earnings rose 27.8 percent to $1.34 billion on net sales that were up nearly 11 percent to $19.68 billion. Comparable sales soared by a whopping 11.2 percent, while comp sales for the U.S. business increased 12.3 percent. The company’s results were boosted by investments in its U.S. business and digital technology.

Lowe’s online sales jumped by 80 percent as customers flocked to e-retail with restrictions on in-person shopping in effect. Operating income was “modestly affected” by store closures in Canada.

Marvin Ellison, Lowe’s Cos. president and CEO, noted that both those closures and the impact of the pandemic held back performance in this country. “In Canada, we posted negative comp sales as performance was adversely impacted by store closures and other regulatory-related operating restrictions,” Ellison said in a call to analysts.

However, he expressed optimism about the Canadian business. “We have initiatives in place to improve performance and remain confident in the long-term potential of our Canadian business.”

Craig Menear, president, CEO and chairman of Home Depot, noted that the onset of lockdowns resulted in a similar online gain for his company, with an increase in sales of about 80 percent using Home Depot’s online platforms. “And more than 60 percent of the time our customers opted to pick up their orders at a store.”

He added that the switch to curbside pickup happened in the U.S. over a matter of days, but, “in the case of our Ontario stores in Canada, this curbside capability was turned on essentially overnight when it became the only option to remain open and operational, with those stores operating under these circumstances for more than a month.”

Likewise, Lowe’s saw online sales skyrocket through March. By mid-April, comp online sales were up 150 percent.

TORONTO — Trying to figure out how key metrics like housing starts and existing home sales will look on the other side of the pandemic would require nothing less than a crystal ball. Short of that, Hardlines asked one of the country’s leading economists to outline his concerns and expectations for the months ahead.

Peter Norman is vice president and chief economist at Altus Group, which supplies data and advisory services to the commercial real estate industry, including builders, developers and manufacturers. He admits that the upheaval created by the pandemic will be major. “I think it’s going to be a weak year because so much has been interrupted.”

That disruption comes, unfortunately, on the heels of an otherwise strong start to 2020, he says. A lot of construction projects were initiated, only to be shut down, especially in Ontario. He expects the pace of new housing to reach between 150,000 and 160,000 starts this year.

And even existing projects will be slowed down by the current situation. He points to three key factors affecting that slowdown. First, supply chains have been interrupted, especially for products coming from Asia. At the same time, job sites are being disrupted as worker safety requires fewer people on the job at one time.

Second, the demand side of the equation has been affected, with fewer people expected to be in the market for a new home. “We’re in a recession now,” he says. That trend will affect buyer habits through the rest of this year, and even into 2021, he adds.

Despite this weakness, he does expect housing to recover, getting back up to around 200,000-plus starts in 2021.

Finally, he says, the resale market, which drives the repair and renovation market for most dealers, is suffering now from lack of supply, while prices stay relatively stable. That supply should return in coming months, helping meet a pent-up demand later this year.

However, he warns, the reno market may not follow in step with these sales. Small projects, especially by DIYers, will continue to be popular. But with many people recovering from the fallout of the COVID-19 lockdowns, investing in major fix-ups of their homes may not be a priority. “On the renovation side, I think we’ll have a couple of soft years,” Norman says.

(Peter Norman, VP and chief economist at Altus Group, is a professional land economist and forecaster. He leads a national team of economic consultants advising private and public sector organizations across Canada.)

QUEBEC CITY — Home improvement retailer Canac is considering whether or not to bring back its paper flyers, which are currently suspended to discourage non-essential in-store traffic. “We were already noticing for quite a while that the trend of checking out deals was moving to digital applications like Reebee,” said Jean Laberge, president of the family-owned chain of 29 stores. Reebee is an app that connects consumers with a wide range of online flyers from Canadian retailers.

Laberge is not alone. Paper flyers have declined in popularity with the advent of digital alternatives, a move that’s been greatly accelerated by the isolation caused by COVID-19. While concerns about the transmission of infection may be hastening the switchover, many retailers are not planning to turn back when things get better.

Loblaw Cos., for example has announced it is permanently transitioning to digital promotions online and through its PC Optimum app. Canadian Tire has begun testing the waters, announcing last month it has “temporarily paused” production of flyers in Ontario. Meanwhile, Home Depot Canada, which quickly replaced its paper flyers with notices online, used the platform to reinforce the importance of shopping online when possible and shopping for only essential products in stores during the current crisis.

Laberge at Canac sees growing evidence that paper flyers may be obsolescent. “For months, we’ve observed almost the same sales results as with our traditional paper versions,” he says. “Add to that the environmental considerations of a paper circular and recent events tied to the pandemic … and the decision makes itself. We hope that other retailers will go in the same direction and follow suit.”

SPECIAL REPORT — Home Depot had been in Canada barely a year when it announced plans for its biggest store yet. Under the headline “Home Depot opens largest store, four new cities get sites,” Hardlines, at the time barely four months old, reported on May 22, 1995: “In a unique leasing arrangement with the Ontario Stockyards association, Home Depot Canada has occupied 11 of the 36 acres that once served as the focal point for eastern Canada’s beef industry.”

Home Depot arrived in Canada 26 years ago through the acquisition of five Aikenhead’s stores, which were owned by Molson Cos. In those days, the beer maker had a retail division that included Beaver Lumber, once one of the most well-known brands in home improvement in Canada. Molson set about restructuring the division in anticipation of the arrival of U.S.-style big box retailing. That included the hiring of Stephen Bebis, a wunderkind merchandising VP from Home Depot’s head office in Atlanta, to start a chain of big box stores in Canada.

Under Bebis, the new division was christened Aikenhead’s, lifted from a handful of traditional hardware stores under that name still owned by Molson. The flagship Aikenhead’s hardware store, which covered six storeys, had been a fixture at the corner of Yonge and Temperance Streets in downtown Toronto for 85 years.

Bebis had grown the business to five stores when Molson turned around and sold off 75 percent of Aikenhead’s to Home Depot. Already familiar with the corporate culture of Big Orange, he was kept on to lead further expansion.

Home Depot quickly added more stores. The Stockyards location, which opened on May 18, 1995, was number 15 in Canada. Some state-of-the-art innovations there included bulk paint dispensers, a phone sales centre that put callers through to a salesperson with a cellphone in each department and “Depot Diner,” serving hot dogs, sandwiches and coffee.

At the time of the opening, Bebis announced planned stores in Saskatoon, Regina, Winnipeg and Ottawa. “We’ll be the market leaders in these areas,” Bebis was quoted as saying in Hardlines. Before the end of the year, he had announced his resignation from Home Depot Canada. He went on to start Golf Town, a big box retailer.

(Hardlines started up 25 years ago as a fax newsletter to provide news and intelligence to the retail home improvement industry. To celebrate this milestone, we’ll feature stories here from time to time that reach into the archives of our early years.) 

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VAUGHAN, Ont. — TIMBER MART has added O. Coderre et Fils as its newest member in Quebec. The family business has two retail locations in the Lanaudière region. “We look forward to working with a group that is truly centered around the independent dealer and their unique business needs in Quebec,” co-owner Benoit Coderre said. Founded in 1950 as a single store in Saint-Jacques, it now has a second location in nearby Crabtree. Together, the two stores have a total of 70,000 square feet and adjoining lumberyards that total 170,000 square feet.

DUNCAN, B.C. — As large construction projects have ground to a halt in many markets during the COVID-19 crisis, some dealers have managed to keep busy. Tim Urquhart, president of Slegg Building Materials, with 10 outlets on Vancouver Island, is one. Business there and on the Lower Mainland has stayed relatively healthy. Eighty percent of Slegg’s business is with contractors and builders, “so our business has been okay,” Urquhart says.

BENTONVILLE, Ark. — Walmart’s Q1 results beat expectations as customers flooded its online channel to make purchases while sheltering in place. Revenues of $134.6 billion were up three percent. Online sales soared by 74 percent as customers stocked up on supplies such as canned food and paper towels. The online channel’s performance is so solid that Walmart announced it has shut down Jet.com, an e-commerce business it acquired in 2016. In Canada, Walmart’s net sales rose 7.6 percent while comp sales were up 8.5 percent.

SUPPLIER NEWS

MARKHAM, Ont. — The 51st Annual General Meeting of the Canadian Hardware & Housewares Manufacturers Association will be held on Tuesday, June 2, at 9 a.m. via virtual meeting. The association will provide login details closer to the meeting date.

VANCOUVER — CanWel Building Materials turned a profit of $850,000 in the first quarter, after posting a $356,000 loss in Q1 of 2019. Revenues increased 15.9 percent to $326.7 million, compared to $281.9 million a year ago. Despite a slowdown in operations at the end of March due to the pandemic, sales rose by $44.8 million or 15.9 percent, largely due to the April 2019 acquisition of Lignum Forest Products.

SURREY, B.C. — The Building Supply Association of British Columbia (BSIABC) has introduced a new warehouse training course. Called WSLID, “Warehousing, Stock Keeping, Logistics and Inventory Distribution,” the in-depth program has been launched by the association to give workers a background in everything from excel spreadsheets and forklift operation to drug awareness and safety training. (Click here for more info.)

MONTREAL — Intertape Polymer Group reported that Q1 net earnings increased by $3.7 million to $14.2 million. Revenues rose by 0.4 percent to $278.9 million thanks in part to the acquisition of Nortech Packaging, partially offset by lower selling prices.

VANCOUVER — Acadian Timber’s loss in Q1 narrowed to $3.7 million, compared to $6.2 million in 2019. The forestry firm reported sales of $31.4 million, up from $30.9 million a year ago. The change reflects a two percent decrease in the sales volume of logs, more than offset by a one percent increase in the weighted average selling price and increased timber services activity.

ECONOMIC INDICATORS

Home sales dropped by a record 56.8 percent in April, compared to an already weakened March. Sellers and buyers across the country have seemingly moved off to the sidelines during the COVID-19 lockdown. Sales fell by 66.2 percent in the Greater Toronto Area, 64.4 percent in Montreal, 57.9 percent in Greater Vancouver, 54.8 percent in the Fraser Valley, 53.1 percent in Calgary, 46.6 percent in Edmonton, 42 percent in Winnipeg, 59.8 percent in Hamilton-Burlington and 51.5 percent in Ottawa. (Canadian Real Estate Association)

April’s housing starts in the U.S. were at a seasonally adjusted annual rate of 891,000, 30.2 percent below March. Single-family housing starts were at a rate of 650,000, down 25.4 percent from the previous month. The SAAR of units authorized by building permits was 1,074,000, which was 20.8 percent below March and down 19.2 percent from a year ago. (U.S. Census Bureau)

OVERHEARD...

“Things could be much worse. We aren’t seeing growth, but the retraction we’re seeing is far less than I expected. I think we should all feel pretty fortunate we’re in this industry where, at least on the West Coast, we’ve been considered an ‘essential service.’ ”
—Ross Power, president of PowerHouse Building Solutions, a building materials distributor based in Surrey, B.C. He commented in an email on the continued building activity in British Columbia’s Lower Mainland.