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Michael McLarney, President/Editor mike@hardlines.ca Beverly Allen, Publisher bev@hardlines.ca John Caulfield, Contributing Editor Phone: 416-489-3396
May 19, 2008, Vol. xiv, #20
In This Issue

“There is probably no man living, though ever so great a fool, that cannot do something or other well.” — Samuel Warren (English barrister and author, 1807-1877) 

RONA’s 1Q affected by weather, economic slowdown
BOUCHERVILLE, QC — A slowing economy and poor weather affected first-quarter results for RONA inc., Canada's largest home improvement retailer. Net earnings were $1.0 million, down from $9.0 million in 2007. However, consolidated sales (sales through distribution plus sales through its corporately owned stores) were up 3.8% in the first quarter of 2008, to $911.5 million, from $878.5 million in 2007. That growth can be attributed mainly to acquisitions, store openings, and the recruitment of new affiliate dealer-owners. (Excluding acquisitions, namely Noble Trade, Dick’s Lumber, Centre de Rénovation André Lessard and Best-MAR, consolidated sales dropped by 3.5%.)Poor weather across most of the country, combined with some faltering of consumer confidence, helped push RONA’s operating income down 18.2%, and same-store sales fell by 7.0%, of which 0.5% was attributed to price deflation for building materials. The shift in sales because Easter long weekend was so early this year, and because of the introduction of “Family Day” in Ontario, affected same-store sales negatively by a further 1.3%. RONA’s profitability was improved, however, thanks to the increase in its imports, its private-label programs – which were up 10% – and its ability to reduce inventory by 9% on a same-store basis during the quarter. In the year ahead, the company will continue to focus on improving its supply chain logistics and by increasing customer service through better staff training. “The results for first quarter 2008 reflect the strong drop in consumer confidence in the country’s economic growth,” said Robert Dutton, president and CEO of RONA, in a prepared release. “Results were also affected by weather conditions that were particularly unfavourable to construction and renovation activity in Ontario and Quebec, where we get nearly 70% of our sales.” In March and April, RONA recruited nine independent dealer-owners. These dealers come from various buying groups in Western Canada and Quebec, and represent estimated annual retail sales of about $50 million. Eight of those dealers own stores ranging from 2,000 to 24,000 square feet, and one plans to build a proximity store of 52,000 square feet.


TruServ dealers urged to “go big” with new paint program
WINNIPEG — With its potential for high sales and strong margins, the paint department is important to hardware dealers of any size. That’s why TruServ Canada has taken steps to promote a new paint program for its members.According to Greg Hollander, merchandise manager for the dealer-owned group, a new Décor Centre paint program, introduced at last year’s fall market, is getting up and running in earnest now. “We got a good response to the initial launch,” says Hollander, “and we’re pleasantly surprised by the number of dealers that have upgraded from a four-foot to an eight-foot color centre.” The program includes True Value’s private-label lines, E-Z Kare and WeatherAll , which have a new look with new packaging. The challenge with dealers, says Hollander, is to overcome “their concern that they don’t have enough room” for the program. One trick that gets suggested is to put the paint cans in the back. “[Cans] don’t sell paint, after all. It’s the décor ideas in the colour centre that sell the paint.” Hollander says that the newly expanded program is a valuable enhancement for any dealer “who wants to be a player in paint.” Expanding the program helps dealers, especially in the smaller towns, become a destination for paint. “It keeps the customers from driving into the cities.”


Home Depot takes long view on green marketing
TORONTO — Home Depot is taking a long-term view of the current wave of “green” marketing. A range of products introduced last month, in conjunction with legislation by the Ontario government to ban household chemical pesticides, fits in with the giant retailer’s existing plans.Products affected by Home Depot’s voluntary phase-out include herbicides, insecticides, fungicides, slug baits, moss control products and lawn fertilizers with weed control.  A total of 60 products will be affected. The products introduced to replace these chemicals reflect “what we’ve already done, what we’re already planning,” says Gino Digioacchino, vp merchandising for Home Depot Canada. The commitment to deliver on its green promise comes right from the customer. And the result is the opportunity to “take a real leadership position,” he adds. By June 2008, Home Depot anticipates that 62 of its stores nationwide will no longer sell pesticides, with all 166 stores offering additional environmentally preferred replacement products by the end of this year.


Homeowners will renovate this year: new report
LAS VEGAS — According to a new study commissioned by Masterchem Industries, three-quarters of Americans and Canadians are planning to carry out a renovation this year, despite the fact that one in 10 homeowners plans to sell their homes in the next year. The report, which surveyed more than 1,000 U.S. and Canadian homeowners and 300 American professional painters and contractors, uncovers home design preferences, including attitudes about green building products.The “Roller Report” shows that home seekers find kitchen design and curb appeal the most important factors when considering new homes, with roughly three-quarters of these respondents indicating that those two factors are “extremely important” or “very important” to their purchase decision. The majority of respondents staying in their homes this year (71%) will complete a renovation with paint; 46% will upgrade with an interior paint project and 25% with an exterior paint project. Green building products like bamboo flooring and compact fluorescent bulbs have taken the media by storm, but uncertainty and misperceptions about green design options are prevalent for homeowners. Forty percent of homeowners polled perceive green building products to be too expensive or hard to find, while 79% say they don't know what low VOC paint and primer is. While professionals are also still learning about green building products, nearly half (46%) will use eco-friendly options at the request of a client.


Web sales grow for home enhancement retailers

SPECIAL REPORT — Both Lowe’s and Home Depot are enjoying increased traffic on their websites. According to Internet Retailing’s e-mail newsletter, Nielsen Online reported that 32% more online shoppers in February visited Lowe’s and 15% more clicked on Home Depot’s site, compared to a year earlier. However, eBay still had the most traffic among home and garden e-retailers, with 10.8 million unique visitors, even though that number was down 8% from a year ago.The top six online home and garden shopping destinations in February, with unique visitors in millions, according to Nielsen Online, were: eBay home, 10.81 (-8%); Home Depot, 10.62 (+15%); Lowe’s, 8.1 (+32%); Home Shopping Network, 3.63 (+6%), eBay Crafts, 3.63 (-4%); IKEA, 2.89, (+69%).



Cubbon Building Centre (Home Hardware) President

Cubbon Building Centre is a highly successful and profitable five store chain of Home Hardware building centres in BC, Alberta and the Yukon The President is accountable to the Board and is responsible for providing effective and dynamic leadership and direction to all aspects of Cubbon Building Centres Ltd. The President ensures that the organization’s strategic and operating objectives are achieved, provides leadership to the management team, and is accountable for exceptional results in a very competitive retail environment. As the ideal candidate, you will bring demonstrated senior management success with a geographically dispersed multi-unit retailer with annual sales in excess of $100-million. An enthusiastic leader and coach, you will bring outstanding business acumen combined with a strong customer service orientation. For more information please contact Lorraine Scrimshaw at 506-388-1848.



Primus Business Services , a division of Primus Telecommunications Canada Inc. offers exceptional communication solutions – including voice, data and hosting services to over 45,000 small, medium and large enterprise organizations and is at the forefront of telecommunications in the Canadian marketplace.

To broaden its data centre footprint in Canada and to meet increasing customer demand for colocation and managed services, Primus Business Services recently expanded its Internet Data Centre Operations in Toronto and Ottawa. In addition to these new centres, Primus Business Services has opened a Data Centre in London, Ontario – a result of our commitment to servicing the needs of our existing clients in this area. Currently we are offering tours through our new state-of-the-art facility in London. If you are interested in a private tour please visit: www.primus.ca/london-event.
Andy Moncrieff has a proven sales record with key national accounts and their independent dealers in the hardware, building materials, and paint industries and superior business development skills. Click here to download Andy's Resumé
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BENTONVILLE, AR — Despite a poor economy in the U.S., Wal-Mart posted record sales and profits in its first quarter. Net income climbed 6.9% to $3.02 billion for the quarter ended April 30, while net sales were up 10.2% to $94.1 billion.CHICAGO — W.W. Grainger’s sales in April grew by 13% over the same month a year earlier. The Grainger branch in the U.S. saw sales rise by 11%, while the Acklands-Grainger in Canada was up a healthy 35%. NORTH ARLINGTON, NJ — An Ace Hardware dealer here is proposing to redevelop an old lumberyard into a mixed-use complex that would include his store as well as 15 apartments for active adults. The Leader, a local newspaper, reports that Tom Casas, the Ace member who is also the developer on this project, presented a plan to the town to convert the now-vacant Ridge Lumber into a 43-foot-long, four-storey building that would devote its first and second floors to the Ace store. The third and fourth floors would consist of 10 two-bedroom and five one-bedroom apartments. LOUISVILLE, KY — General Electric expects to fetch between $5 billion and $8 billion from the sale of its appliance unit. The 101-year-old business is the second-largest supplier of appliances in the United States behind Whirlpool, which increased its own market share two years ago when it acquired Maytag. Possible buyers for GE’s appliance unit include the Haier Group in China, and BSH Bosch & Siemens Hausgerate in Germany, according to the Wall Street Journal. Other possible suitors could be South Korea-based Samsung or LG Electronics, according to the New York Times. QUEBEC CITY — Novik, a manufacturer of polymer exterior siding and roofing coverings, has signed a long-term distribution agreement with a large European distributor for its new polymer “cedar” plank. The $7 million-plus deal gives Novik distribution in two European countries for the duration of the one-year agreement. PLANTATION, FL – A Black & Decker facility in this south Florida town is being closed. Operations are being consolidated into the company’s Towson, MD head office. Forty-eight staff are being affected by the move, of whom 12 have been offered new positions. LONDON – British DIY retailer B&Q was the only retailer to win this year’s Gallup Great Workplace Award, which honours businesses that engender an atmosphere of “high engagement” for their staff. Six out of 10 staff were seen to be “actively engaged” in their work. That’s more than twice the global average of 28%, according to the results of the contest. LONDON — Facing tougher competition from rivals like Homebase, B&Q is in for a tough year, say analysts, as the DIY and gardening industry in the UK is expected to decline for the first time in many years. Spending in home improvement and lawn and garden spending is expected to drop by 1.6% to £16.4 billion, as the housing market in that country slows, says a report by Verdict.

People on the Move

Estelle Moore has joined TruServ Canada Inc. as the human resource manager. Moore has more than 20 years experience in human resources, primarily in the financial services sector. The majority of her career has been with the Royal Bank of Canada, and most recently she was with the Assiniboine Credit Union.

Economic Indicators

New home construction will begin to slow in 2008, according to Canada Mortgage and Housing Corp.’s second-quarter Housing Market Outlook. Higher mortgage carrying costs are expected to put a damper on residential construction, which is forecast to fall to 214,650 units in 2008, from 228,343 in 2007. As a result, only Newfoundland and Labrador, Quebec, and Ontario will register an increase in housing starts in 2008. The report says that most of the pent-up demand for housing that built up over the 1990s has been realized. Starts in 2009 are expected to drop to 199,900 units. Existing home sales are expected to fall by 8.5% in 2008 to 475,900 units, and drop another 2.3% in 2009 to 465,000 units. (CMHC)The composite price index for non-residential building construction increased 2.6% in the first quarter to 165.7, compared with the previous quarter, and stood 8.7% higher than the first quarter of 2007. The quarterly increase was mostly the result of higher labour, materials, and fuel costs. Edmonton recorded the highest quarterly price change (+3.5%), followed by Toronto and Ottawa–Gatineau (both +2.8%), Calgary (+2.6%), Montréal (+2.4%), Vancouver (+2.0%) and Halifax (+1.3%). (Stats Canada)


Bruce Shuh, retired director of marketing at Home Hardware Stores, is currently on a motorcycle trek across North America to support Special Olympics Canada. Shuh’s 35-day motorcycle trip (he worked at Home Hardware for 35 years) will take him through the Grand Canyon, Death Valley, Vancouver Island, the Canadian Rockies and Yellowstone Park. To support this Special Olympics Canada fundraiser, visit: http://www.specialolympics.ca/en .