SPECIAL REPORT — As dealers get ready for some provinces to start reopening their economies, many are now able to look ahead to how the current crisis will affect their businesses in the longer term. Those dealers shared their outlook in this year’s Hardlines Retail Report Survey, which polls dealers across the country to gauge their business conditions and concerns.
 
After modest growth in 2019, many dealers in British Columbia are experiencing a tough first quarter, with sales skewed by the current crisis. In the middle of March, many retailers saw a rise in sales as consumers scrambled to ready themselves for the lockdown. Some were up as much as 10 percent year over year for the period, but as the year progresses, they are feeling nothing but uncertainty.

Alberta stores are getting hit hard as the impact of the COVID-19 crisis on retailers adds to the already weak conditions there. The pandemic’s downward pressure on oil prices has gutted an already ailing resource sector that drives the provincial economy. Most dealers in the survey anticipate double-digit declines this year, some by as much as 25 percent if they are not able to rebound from the current situation. That outlook is shared equally by hardware stores and building centres.

Across Manitoba and Saskatchewan, many dealers reported solid surges in recent weeks, some in the double digits, but overall, many are reporting they hope the year will end with sales up slightly or flat. Some even anticipate a 10 to 20 percent drop for the year.

Ontario turns out to be the toughest province to get a read on. Dealers’ responses here varied widely, likely reflecting both the uncertainty surrounding the current crisis as well as the range of markets that comprise Canada’s largest province. Many dealers anticipated mid-single to low double-digit growth, but the current situation has turned those forecasts around. Many now expect sales to drop overall in 2020 by up to 10 percent.

Quebec enjoyed some of the strongest results in 2019, with the province growing by high double digits last year. But now many are anticipating a big drop in 2020, some by as much as 20 percent.

The Maritimes are also feeling the impact of the COVID-19 crisis, which has been especially difficult considering many dealers here did not have a strong 2019. Some hardware stores in Nova Scotia and Prince Edward Island, for example, have been hit especially hard by the economic impact of the pandemic.

Newfoundland dealers, which generally did not see strong growth last year, are bracing for the worst now. Many are expecting their sales to be down by 10 to 20 percent at year’s end.

While conditions—and outlooks—varied somewhat from province to province, the overall direction for the industry will be negative growth for 2020. The impact of the COVID-19 crisis has already begun to flatten the expectations of most dealers for any positive growth for the remainder of the year.

Dealers face slowdowns as construction work stalls due to pandemic

NATIONAL REPORT — The impact of the COVID-19 crisis on dealers has been as varied as the dealers themselves. One thing is common for all, however: everyone is busier than ever as they cope with the “new normal” of physical distancing, ongoing sanitization procedures and curbside pickup.

Hardware stores in particular are faring well in many markets, especially in Central Canada, and these dealers are more optimistic about the year as a whole than their building centre counterparts.

That’s likely due to the fact that many building centres, particularly yards that are focused on contractor business, are reporting slower volumes. Bob Holmes is general manager of TORBSA, a buying group that consists mostly of dealers serving commercial and industrial markets, mainly in Ontario. He notes that these types of yards managed to stay busy earlier in March as the COVID-19 pandemic was on the rise and started hitting DIY business. But since then, many of the commercial or major residential construction jobs have been put on hold; the ones that are considered essential continue with strict physical distancing rules resulting in fewer workers on the job.

“It has slowed things down," says Holmes. “I expect many dealers in April to be down by 30 to 50 percent. All we can do is wait for things to open up again.”

Steve Buckle, CEO of the Sexton family of companies, which includes Sexton Group, agrees—depending on the region. In the West, many construction projects remain in place, but at a significantly reduced output.

“Contractors are reporting the rate of progress to be anywhere from one-third to one-half of what it was prior to new work processes being implemented,” says Buckle. “This, of course, will result in slower construction material sales.”

He estimates that dealers in the West are facing downturns for the month of April ranging from 10 to 50 percent.

In Ontario, Buckle says more construction has been curtailed than in some other provinces, “so the situation temporarily was much tougher on our members there.”

However, he takes a brighter view of the months ahead. “We expect an improvement to business through the summer months, assuming there is a relaxation of government restrictions. I would also expect construction-site work to speed up to some extent as we adapt to, and become familiar with, the new work processes.”

NATIONAL REPORT — In what should be the busiest time of year for dealers, most of them are busy reinventing their business practices as the current pandemic stalls most major projects. And the impacts are flowing back through the supply chain.

From the distribution side, suppliers are seeing a similar picture. Boyden Moore, president and CEO of hardware distributor Orgill, Inc., confirms that there’s a split in how well different types of stores are faring. “Our pro-focused dealers are slowing a little more. Our hardware dealers are seeing increases.”

Ross Power is president of PowerHouse Building Solutions, which specializes in rainscreen, building envelope, insulation and specialty building products. He notes that the current conditions have given him more time to focus on how his business is run and how he can improve operations to prepare for an eventual upturn. Still, he’s seeing sales to his contractor-oriented dealers remain steady, as the market in B.C.’s Lower Mainland remains relatively healthy compared with other parts of the province.

“In general, commercial and residential have been much better than I expected,” Power says. His big concern is whether workers will stop showing up at the job sites, fearing for their health.

Power has made adjustments to accommodate the current circumstances. That included a 15-day extension for orders placed in March and through to April 15. He also created a fund to support his retail customers. PowerHouse is providing $2,500 toward the reimbursement of grocery delivery and service fees to all of the employees and immediate family members of the building centres that PowerHouse supplies.

Dave McNeil, VP allied products and national accounts at Taiga Building Supplies, says the markets are changing so quickly right now that businesses are dealing with conditions on a day-to-day basis. He doesn’t mince his words about the state of the construction markets in Ontario and Quebec. “They’re dead in the water.” He acknowledges that many dealers saw a lift in March, but April has been the month of reckoning. “Everyone is looking to [May],” he says.

He notes that “British Columbia has shown amazing resilience, not that it’s where it should be. But compared with Ontario and Quebec, it’s holding its own.” He observes that dealers closer to denser urban markets are feeling the pinch more than dealers in smaller centres. “Small projects have exploded,” he says. “There’s an unbelievable array of repair and reno jobs,” which help drive business for exurban and rural independents.

WORLD HEADQUARTERS, Toronto ― At Hardlines Inc., we are proud to announce the appointment of Geoffrey McLarney as Assistant Editor. While continuing his oversight of our Daily News updates and field reporting for the Quebec market, Geoff has taken on increased responsibility in the production of our weekly Hardlines newsletter and our monthly newsletter, Hardlines Dealer News. He remains a regular contributor to our print magazine, Hardlines Home Improvement Quarterly. Geoff reports to our Editor, Sigrid Forberg.

He has been involved with Hardlines since the age of seven when the newsletter began as a weekly fax publication sent from the basement of his family’s home. He joined the team formally as a freelance Editorial Assistant in 2012. Most recently, he held the title of Staff Writer.

Geoff graduated from Glendon College, York University, with a concentration in ethics and legal philosophy before studying theology at the University of Toronto. Geoff has been based in Montreal since 2013.

We look forward to watching Geoff grow in this role as he connects with dealers and executives across the country in his ongoing coverage of the retail home improvement industry.

Isabelle Laliberté has rejoined Lowe’s Canada as divisional vice president, operations for Quebec. She was previously at Lowe’s Canada a year and a half ago as a divisional vice president. In the interim, she served as general manager of the Pork Breeders of Quebec. Also at Lowe’s Canada, Chris West has joined as senior vice president, merchandising. He brings more than 25 years of merchandising, supply chain, category management and sourcing experience with major retailers including Walmart Canada and Canadian Tire Corp. He will lead the Canadian merchandising business unit.

John Hartmann, currently president and CEO of True Value Co., is leaving the Chicago-based company to join Bed Bath & Beyond as COO, as well as president of buybuy Baby, effective May 18. Hartmann may be best known to Hardlines readers as the closing keynote at last year’s Hardlines Conference.

DID YOU KNOW...

... that back issues of our sister publication, Hardlines Dealer News, are now available in a new archive? Check out past issues here of our monthly newsletter for Canada’s home improvement dealers and managers!

RETAILER NEWS

ST. JOHN — Kent Building Supplies, Irving Shipbuilding Inc. and the team at parent company J.D. Irving have donated $250,000 to the Canadian Red Cross “Stronger Together Nova Scotia” Fund. The fund was set up by the province of Nova Scotia on behalf of families and communities affected by the recent tragic mass shooting. In a release, the company said, “Our hearts go out to the families, friends and communities who have been affected by these senseless acts of violence.”

CALGARY — United Farmers of Alberta Co-operative Ltd. (UFA) has partnered with Zone Startups Calgary (ZSC) to collaborate and support early-stage agriculture technology companies with technical and commercial validation through UFA and ZSC’s program offerings. Zone Startups Calgary is an accelerator for pilot-ready technology start-ups. It’s operated by Ryerson Futures Inc., a Toronto-based global accelerator program. In addition to Calgary, Zone Startups programs are present on a global stage with operations in Toronto, India and Vietnam.

BOUCHERVILLE, Que. — Lowe’s Canada has partnered with Sico to launch the Colour Selector by Sico on rona.ca and renodepot.com. The new tool lets RONA and Reno-Depot customers view some 1,800 colours available in the Sico catalogue and purchase tinted paint online. It follows the “Stay safe, stay home” campaign launched earlier in April to encourage consumers to turn to e-commerce for their non-urgent needs.

SUPPLIER NEWS

WARWICK, Que. — Embassy Ceilings Inc. and Alexandria Moulding announced they have reached an agreement for the distribution of Embassy’s products to the Canadian retail building supply network. “We are very excited about expanding our product line with Embassy Ceilings,” said Donna Gerrits, VP of sales and marketing, Canada, at Alexandria Mouldings. “We carefully choose our product lines and work diligently to create true partnerships with our customers by providing them with the finest products, training, product knowledge and service in the industry.”

VANCOUVER — West Fraser Timber reported results for the first quarter of 2020 that included sales of $1.2 billion, up six percent from the prior quarter, but down 3.7 percent from $1.24 billion in the same quarter a year earlier. Earnings swung from a $5 million loss in Q1 2019 to positive earnings of $12 million in the latest quarter. The company cited improved prices, favourable foreign exchange and lower fibre costs for the improved Adjusted EBITDA for the quarter.

BURLINGTON, Ont. — Nicholson and Cates has announced a distribution agreement with Light Trim Siding Solutions, a Canadian trim and accessories manufacturer. Light Trim is an aluminum trim program that was specifically developed to work with James Hardie Siding. Nicholson and Cates will inventory the three most popular colours—black, white and bright silver—and provide colour matches for James Hardie Statement and Dream Collection colours through special order.

LIVONIA, Mich. — Masco Corp.’s Q1 sales rose 4.1 percent from a year ago, reaching $1.6 billion. Earnings came to $530 million, up from $116 million in last year’s first quarter. Operating profit for the quarter increased 14 percent to $225 million; adjusted operating profit increased 11 percent to $228 million.

LANCASTER, Pa. — Armstrong World Industries says its Q1 earnings remained unchanged from a year ago at $1.10 per share. Revenues amounted to $248.7 million, up from $242.1 million a year ago. Weaker sales in parts of the U.S. were only partly offset by stronger activity in Canada and Latin America.

ECONOMIC INDICATORS

In the Greater Toronto Area, sales of existing homes during the first 17 days of April were down by 69 percent compared to the same period in 2019. Year-over-year sales declines, in percentage terms, were greatest for the detached and condominium apartment market segments. The average selling price during the period was $819,665, down by 1.5 percent. (Canadian Real Estate Assoc.)

NOTED

Marvin Ellison, CEO of Lowe’s Cos., received a base salary of $1.45 million in 2019, up 68 percent from 2018. That base represented just 12.5 percent of his total compensation, which amounted to $11.62 million. His total compensation was 511 times greater than that of a median Lowe’s employee. Home Depot CEO Craig Menear had a salary of $1.3 million in 2019, which was down from $1.35 million in 2018. His total compensation package dipped to $10.89 million from $11.37 million, 481 times the median wage of a Home Depot employee.

OVERHEARD...

“This is our home, this is our community and these are our friends and family suffering and sacrificing. This community supports us, and this is a small moment in time when we can support them in return.”
—Canadian Tire Associate Dealer Ryan Jago. Jago, along with his wife Kurstie, donated the resources to construct a drive-through COVID-19 testing station to support their community in High River, Alta.