John Caulfield, Contributing Editor
 vol. ix, 19 May 12, 2003

* Léo Charrière quits TruServ for North West Co. * Home Depot poised for Atlantic expansion * Post Réno-Dépôt: Rona eyes future acquisitions * Sodisco-Howden reduces loss in first quarter * Ridgid a money loser at Home Depot, says Emerson * Housing starts down, but single starts stay strong

"I like to listen. I have learned a great deal from listening carefully. Most people never listen." — Ernest Hemingway (1899-1961)
World Headquarters, Toronto Canada's premier news source for the retail home improvement market has introduced a new publication - a special weekly edition of Hardlines for the U.S. and international markets. In only a few short weeks since we launched this baby, Hardlines International has become the trusted source for the most up-to-date news about hardware and home improvement retailers and manufacturers in the U.S. and around the world. We're very proud to have on board John Caulfield, former managing editor of National Home Channel News, as contributing editor. John is well known and well respected by industry leaders on both sides of the border. He's been instrumental in establishing Hardlines International as a credible and reliable source for news. We're very excited about our new publication. If you'd like more info about Hardlines International, just call us here at the World Headquarters! Michael
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Winnipeg, MB Léo Charrière has announced his resignation from TruServ Canada to join North West Co. as vice-president, CFO and secretary. He replaces Gary Eggertston, but with added responsibilities and reporting to North West's CEO, Edward Kennedy. He'll remain at TruServ until May 15.

A 20-year veteran of the dealer-owned co-op, Charrière ably steered the company as it severed ties with TruServ in the U.S. last year, after taking over the helm from former CEO David Grubbe. Charrière says the decision was strictly a personal one, and in no way reflects any dissatisfaction with his current employer. In fact, he says the company is in very good shape, with a strong executive team. "TruServ is strong financially and we're having a pretty good year here. Sales are up 24% in the first quarter, and profits are up 24% in the first quarter, as well." These factors made Charrière's decision to leave that much easier. In addition, North West had been wooing him for some time, and made him an offer "he couldn't refuse," says one source inside the company. Charrière is also looking forward to a new challenge at North West, where he'll be second in command. "It's a larger company, and I'll have multiple departments reporting to me. It's a very different environment, with all corporate-owned stores," he says of the retailer, which dominates Northern Canada with 141 combination food and general merchandise stores, in addition to seven convenience stores and a chain of 23 AC Value Centers stores in Alaska. "I've never had experience with a public company and I felt this was an opportunity to broaden my experience. It was," says Charrière, "definitely one of the hardest decisions I've ever had to make."
Toronto, ON Even as Home Depot in the U.S. battles bad press and worsening stock prices, the Canadian division shows no signs of letting up. After opening 14 stores in 2002, at least 14 more are planned for this year. But not all the new stores will necessarily be as big as their predecessors. Home Depot Canada is actively developing store footprints up to 20% smaller than the standard 135,000-sq.ft. size. A 105,000-sq.ft. store opened in Moncton, NB on April 24, after three years of delays. And just last Thursday, a similar-sized store opened in Bracebridge, a town in Ontario's northern cottage region with a population of 13,233 that almost doubles during the summer. That smaller format also opens up doors for Home Depot to expand throughout Atlantic Canada. Next stop, says Annette Verschuren, president of Home Depot Canada, is Charlottetown, PEI. "I'm so pleased with how we're doing in Halifax and Dartmouth," says Verschuren. "We're ready to take it to the next level." In addition, Home Depot has its sights set on stores in Sydney, NS, Saint John, NB and St. John's, NF. "I'm really close to doing deals in all these places, says Verschuren, "sometime over the next two to three years." Another city that has been mentioned as a possible site in the past is Fredericton. However, Verschuren gave no indication that this was on the short list any more.
Boucherville, QC Despite the recent $350 million takeover of Réno-Dépôt, Rona Inc. will stay on the lookout for other opportunities to grow its market share. Robert Dutton, CEO of Rona, has stated he is keen to expand in both the rich Ontario market and the Western provinces, where Rona's presence is under-developed. Rona's continued expansion strategy is three-pronged: by recruitment of new dealers, organic growth with existing dealers and other acquisitions. "If there's an acquisition possibility that reflects exactly what we want, namely a company that's aggressive and strategic, a company with good management and a company with potential for growth, we'll decide who to go with," says Sylvain Morissette, director of communications for Rona. What about expansion into the U.S.? "The future for Rona is in Canada. We want to reinforce our network in all formats and in all segments of the country," says Morissette. "That includes both acquisitions and additions to Rona's co-op dealer ranks." He notes there's still room to grow and consolidate further within the Canadian market, which remains, he says, fragmented at the independent level.
Fort Wayne, IN Despite modest sales gains in recent months, Do-it Best continues to position itself for stronger future growth. Through the first 10 months of its fiscal year, which ends the last Saturday in June, the third-largest dealer-owned buying group in the U.S. saw its out-of-warehouse sales increase by 3%. Most of those gains, though, came from shipments to new members, says Bob Taylor, the co-op's president. "Our business from existing members has been pretty flat." Nevertheless, in its last fiscal year, Do-it Best paid out US$95.7 million in rebates to its 4,300 members, the highest amount in its history. One member received a US$2 million rebate, and two others received US$1 million each. But Taylor acknowledges that, in the period of economic and political uncertainty which has shaken U.S. consumer confidence, the co-op needs to find new ways to create foot traffic and profit for its members - and itself. Consequently, Do-it Best is urging more members to sign onto a category management program dubbed "Opportunity," which provides historical data that can be used to determine product assortments. Since its inception, 704 members have purchased planograms through this program. The co-op offers market analyses and store redesign consultation through a program called RetailPLUS!. It's already done 104 of these projects, with 50 on tap for its next fiscal year.
Longueuil, QC Sico Inc. has acquired all shares of Para Inc. for about $16.9 million in cash, plus the assumption of around $26.9 million in debt. A share offering Sico floated last February financed the deal, which is the company's fifth acquisition since December 2000. Para, which produces a full line of architectural and related products, is also exclusive distributor of Sikkens stains in Ontario. The deal effectively doubles Sico's market share in Ontario, and especially the Greater Toronto Area. Para services a network of about 400 paint retailers across Canada. The deal comes on the heels of Sico's 1Q results, when it posted a 1.6% increase in revenues, despite the poor weather that put much of the industry on hold during that time. Not only that, but sales in the West are growing as Rona's former Revy stores continue to switch paint lines. The company reported net income of $2 million on sales of $59.4 million, up from net income of $1.4 million on sales of $58.4 million.
St. Louis, MO Emerson Electric, the electronics supplier, has decided to stop manufacturing the Ridgid line of benchtop and stationary power tools, which it has sold through Home Depot for more than three years. Emerson plans to license that brand and outsource the production of those tools to other suppliers. During a May 7 teleconference to release the company's second-quarter financial results, Emerson's CEO, David Farr, insisted that his company's relationship with Home Depot continued to be "rock solid," and that its sales of Ridgid branded hand tools and shop vacs, home organization under its ClosetMaid brand, and garbage disposals under its Insinkerator brand are "strong." However, he said that Emerson was losing money on the US$80 million in Ridgid branded benchtop and stationary tool sales it generated annually through Home Depot's stores. Farr said he and other Emerson officials had been in discussions with Bob Nardelli, Home Depot's chairman and CEO, for 18 months, "to see how we could add value" to their relationship. In an agreement struck between the two companies, Emerson will provide the technology and branding, and would outsource the actual manufacture of those power tools to other companies. A company spokesman, David Baldridge, said in an interview with Hardlines that Home Depot would play a major role in deciding which companies got that outsourced business. Farr said that Emerson expected to sell through its benchtop and stationary inventory within the next three months. He added, without elaboration, that Emerson anticipated "other opportunities" to put the Ridgid name on other products sold in Home Depot's stores in the future. Emerson will continue to make Ridgid-branded shop vacs and pro-grade plumbing products.
Great Neck, NY Leviton Manufacturing is the latest supplier to back away from producing consumer cord sets. The electrical supplier has decided to stop making cord sets through its Electricord division for retailers that include Home Depot, Lowe's, Sears Hardware and Wal-Mart. Joe Zaccaria, a company spokesman, confirmed with Hardlines that Leviton made this decision about its cord set production within the past two weeks. The company, which makes and distributes one of the leading brands of electrical switching devices for the home improvement industry, will continue to manufacture extension cords for its original equipment manufacturer (OEM) customers, as well as for its American Insulated Wire subsidiary. Domestic makers of cord sets for consumers have been under competitive pressure from Asian imports for several years. In September 2001, General Cable, the Kentucky-based supplier, exited the consumer cord set business. "The materials weigh a ton, shipping is costly, and there have been virtually no price increases for years," Zaccaria explains. A source familiar with Leviton's situation added that Levition's decision may have been precipitated by Home Depot telling the manufacturer that it would be switching to an Asian supplier for extension cords.
Canadian Tire 33.65 26.80 33.05
Canfor 11.70 6.83 8.50
Costco 41.86 27.00 35.30
Goodfellow 13.99 9.88 10.90
Home Depot 49.50 20.10 29.71
Hudson's Bay 14.95 5.87 9.70
Lowe's Cos. 49.99 32.50 45.29
Rona Inc. 16.70 11.75 17.25
Sears Canada 25.10 13.60 16.32
Sodisco-Howden 1.90 1.06 1.62
Taiga Forest 7.00 5.85 6.80
Wal-Mart 59.30 43.72 55.80
West Fraser 39.46 26.27 31.01
Montreal, QC Despite lower seasonal sales in March, due to rotten weather, Sodisco-Howden Group recorded revenues of $87.6 million for the first quarter of 2003, up 4.2% over the same period in 2002. The increase reflects the acquisition of Ace Hardware Canada back in February. Earnings before interest, taxes, depreciation and amortization reached $1.2 million, a $2.4 million swing from the company's loss of $1.2 million a year earlier. A $634,000 charge related to the Ace Canada acquisition kept the company in the red, with a net loss of $394,000, a big improvement, however, over the $2.8 million loss incurred in 1Q 2002. Vancouver, BC Professional Paint Inc., through its wholly owned subsidiary, General Paint Corp., has acquired Toronto-based Ideal Paints. General, a leading supplier in Western Canada, has been expanding in Central Canada with the development of outlets in five Ontario cities. The deal will add four Ideal outlets, plus a distribution centre, for a total nine in Ontario. PPI is a privately held company with a number of regional brands in the Western U.S. and Canada, including Frazee, Hanley, Parker Paint and Kwai Paint. Rona Inc. breaks ground tomorrow on its latest Rona Home & Garden store, this one in Kingston, ON, about 2½ hours east of Toronto. The 120,000-sq.ft. store is expected to open in October 2003, featuring 45,000 SKUs and creating some 200 jobs. Toronto, ON A program to help consumers choose paint colours has been adopted by Home Depot Canada. The Colour Solutions Centre, first announced in the pages of Hardlines a few weeks back, comprises a 32-ft. section that features more than 3,000 paint samples, including Ralph Lauren and Disney by CIL. The Centre includes a kiosk by Behr with an interactive touch screen that allows customers to scan in the colour of their choice, and to see how that colour, which has been pre-matched with a wide range of trim color options, would look when applied to different rooms. San Diego, CA Lanoga Corp. has agreed to acquire the assets of Dixieline Lumber, a home center chain that sells into California, Nevada and Arizona. Dixieline includes 10 home centers, a truss plant, a mill remanufacturing plant and a lumber distirbution facility. Its sales last year rose 5% to $230 million. Based in Redmond, WA, Lanoga is a 268-unit chain. Duncan, BC As Doman struggles to escape bankruptcy protection, it reported an increase in sales in the first quarter of 2003 to $149.2 million, from $131.7 million in the first quarter of 2002. Net earnings also increased to $52.2 million, up from a net loss of $39.4 million in the first quarter of 2002. Sales in the solid wood segment decreased slightly to $98.7 million. Atlanta, GA Home Depot will host DIY workshops on May 14 exclusively for women. The North America-wide initiative will take place in all of Home Depot's 1,500-plus stores starting at 7 p.m. Put on by Home Depot staff and suppliers, the special clinics are designed to help women learn how to use power tools, build a patio, and install outdoor lighting. New York, NY Masco Corp., which owns everything from Delta Faucet to KraftMaid cabinets, reported net income of US$165.8 million in its first quarter, compared with US$57.8 million a year earlier. Sales rose 19% to US$2.5 billion, from US$2.1 billion.
Ian Morrison, currently Ontario sales manager for CRC, has assumed responsibility as CRC sales manager for Eastern Canada, comprising Ontario, Quebec and Atlantic Canada, effective immediately, Morrison has spent the past five years as CRC's Ontario sales manager. (416-461-8122) Hillary Stauth has joined Home Outfitters as director of corporate communications. She was most recently at the Toronto Stock Exchange, and before that with the government of Ontario as then-Premier Mike Harrison's press secretary. The Home Outfitters PR function was formerly handled by the retailer's parent, Hudson's Bay Co. (416-861-6905) Anders Moberg, who spent time as head of Home Depot's international division, has just moved from Ikea to join Royal Ahold, a food retailer based in the Netherlands, as CEO. He's got his hands full: the company is saddled with accounting irregularities that leave US$880 million unaccounted for in its books.
Housing starts fell from 220,400 units seasonally adjusted in March to 207,800 seasonally adjusted in April, reports Canada Mortgage and Housing Corp. Rural starts in April were estimated at a seasonally adjusted annual rate of 29,300 units, down from 31,500 in March. However, housing activity remains strong throughout the country, as a 14.3% drop in multiple starts accounted for the overall decrease. Urban single starts were actually up 3.5%. The value of building permits issued across Canada declined 4.4% in March to $3.6 billion, after falling 11.7% in February. The decline was in non-residential construction intentions, which fell 15.9%, as the value of residential permits rose 3.1% from February to March, to $2.4 billion. However, the year started strong, and January's record level of $4.3 billion in building permits was more than enough to push construction intentions for the first three months up 6.6% to $11.8 billion, from the first quarter of 2002 and 18.1% from the first quarter of 2001.
Annette Verschuren, president of Home Depot Canada and president of Home Depot's Expo Design Centers division, will be guest speaker at the Greater Moncton chamber of commerce annual banquet in Moncton, NB on May 22. Verschuren is herself a Maritimer, having grown up on a farm in North Sydney, NS.
"Just wanted to mention that in the last issue of Hardlines, you mentioned us as the Western Retail Lumberman's Association. Please remember that we have been politically correct for a few years and our name is Western Retail Lumber Association. Thanks." Gary Hamilton, executive director of the WRLA, who responded to our reader feedback form. Check it out:

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