Canadian Tire CEO announces his departure
TORONTO – Wayne Sales has stepped down as President and CEO of Canadian Tire Corp., more than a year before his contract expires in June, 2007. Canada's largest hardlines retailer has installed Tom Gauld, past president of Canadian Tire Financial Services, to replace him.
Sales will remain with Canadian Tire for the term of his contract to help with the transition. The departure comes only weeks after Sales's right hand man, Mark Foote, left his role as president of Canadian Tire Retail to join Loblaw Cos.
The board of directors put in place a process for CEO succession in 2005 prompted by the June, 2007 expiry date of Sales's contract. During the process, Sales confirmed that he was highly unlikely to consider an extension to his current contract. The board had to accelerate the succession process, resulting in the appointment of Gauld. However, he had to be lured out of retirement to do it.
Home Hardware's new store design catches on with dealers
ST. JACOBS, Ont. – The latest dealer market for Home Hardware dealers was as much a showcase for the dealer-owned wholesaler's latest store program as it was for the latest products to put on the shelves of those stores.
The concept, unveiled at the same show last year (and first reviewed in vol. xi, #17, April 25, 2005–Editor), is gaining momentum among Home's hardware and building materials dealers alike. A promotional slogan, "Ride the Home Wave," is being used to brand the new program and create excitement around it to attract more dealers to sign on. "It's a recruitment tool, but it's also a message to dealers to get onside with this new store program," said Bill Ferguson, director, dealer support for Home Hardware Stores Ltd.
"Dealers understand that customers today have raised their expectations to another notch." Ferguson adds that retail–along with other sectors, such as travel and leisure–is getting more sophisticated in every sector, "and we're competing with all those expectations. But it's not just about creating a warmer experience, but backing it up with service and knowledge. We've got so many great tools to compete effectively."
Among the new wrinkles being previewed at the latest show is an in-store digital POP network. A giant flat-screen TV hangs above short-term displays, such as seasonal, and broadcasts product information messages. "As people enter our stores, we try to create an impact through value, unique and topical products. This digital POP helps define that message in-store," said Ferguson.
Last year, 84 dealers took on the new concept store program. "We had expected only 50," Ferguson noted. So far this year, more than 83 have signed on to upgrade their stores, with additional dealers expressing interest following the latest market.
Canada and U.S. resolve long-standing softwood dispute
WASHINGTON & OTTAWA – The U.S. and Canadian governments have hammered out a tentative agreement to end the longstanding softwood lumber dispute between the two countries. Under the agreement, the U.S. will stop charging duties of about 10% on Canadian softwood that enters the country. (Countervailing duties were lifted earlier in the year.) Over the past several years, the U.S. government has collected about $5 billion from Canadian suppliers, of which $4 billion will be returned.
The failure to return the full amount, despite Canada winning repeated NAFTA rulings handed down by the World Trade Organization, has been a sore point for many on the Canadian side, but the seven-year deal is seen as a positive step that will save thousands of jobs for Canadian mill workers after more than three decades of dispute.
Under the new deal, there will be quotas on Canadian imports, but if the price per thousand board feet falls below $355, the various producing regions in Canada must either pay a sliding export tax to the Canadian government or face a regional quota.
Home Depot expands direct marketing with online acquisition
ATLANTA – Home Depot continues to add businesses that leverage its non-traditional channels. The home improvement retailer has signed a definitive agreement to acquire Home Decorators Collection, which sells home décor products through catalogues and online.
Home Decorators Collection's product categories range from bath, window treatments and furniture to home décor, lighting, floorcovering and outdoor living. Its catalogues reach 3.3 million customers, representing the industry's third-largest in-house buyer file.
The terms of this acquisition were not disclosed.
The company, founded in 1991, also has seven retail outlets in Missouri, Kansas, Oklahoma and Illinois; and a large distribution center in St. Louis, according to its web site.
Home Depot estimates that the direct home décor market in the U.S. is an $18 billion business that's growing at a 20% annual clip. Under its Home Depot Direct division, the retail giant already taps into that market through various specialty catalogues such as 10 Crescent Lane and Pace Trading Company. It intends to fold Home Decorators Collection into that same division, a move that will nearly double the size of Home Depot Direct and add 65,000 items from 185 global sources. According to Paula Smith, a Home Depot spokesperson, with the addition of Home Decorators Collection, Home Depot Direct will be able to draw from a total of 1,000 global sources to offer more than 100,000 SKUs through its online and catalogue channels. However, the company has no immediate plans to makes changes in either Home Decorators Collections' stores or its distribution center.
Home Decorators Collection's president and founder, Gil Kemp, is staying on to run the business. (He will report to Harvey Seegers, president of Home Depot Direct.) Grant Williams, chairman of Knight's Direct, a private holding company with which Kemp joined forces in 1991 to form Home Decorators Collection, will also stay on in an advisory capacity through the remainder of this year.
RONA buys major B.C. independent
BURNABY, B.C. – RONA inc. continues its efforts to consolidate the Canuck home improvement market with the purchase of Curtis Lumber, a major independent in British Columbia's Lower Mainland. This will add to RONA's ever-growing pro dealer portfolio and add almost $80 million in retail sales to its retail network.
Founded in the late 1940s, Curtis Lumber has been controlled by Brian Kask Sr. since 1963. It now comprises six retail outlets in British Columbia: four in Burnaby, one in Langley, and one in Pender Harbour (Sunshine Coast). It also has its own truss plant. The store network comprises more than 150 staff working in approximately 50,000 square feet of combined retail and warehouse space plus 12 acres of outdoor storage.
RONA is counting on this latest acquisition to bolster its reach to the contractor and pro market in British Columbia's prosperous and densely populated Lower Mainland. While RONA remains strong in the traditional DIY markets, Curtis's heavy contractor and commercial business will increase RONA's reach in these markets and add needed expertise in the form of Curtis's existing sales and management teams. Kask's son, Brian Jr., will stay on as senior director of sales and purchasing, while his daughter Debbie will continue on as office manager.
The transaction, financed by RONA's existing credit facilities and subject to the usual conditions and approvals, is expected to close by the end of June 2006.
Rona currently has 39 stores in British Columbia–four big boxes and 35 building centres under the RONA Building Centre and RONA Home Centre banners. RONA estimates it now controls between 10% and 11% of the province's market.
According to RONA president and CEO Robert Dutton, the Curtis deal is just the latest in a string of acquisitions that are intended to increase the company's sales by $2 billion by the end of 2007 through the construction of new stores, the recruitment of affiliate dealer-owners, the acquisition of new points of sale, and the overall improvement of company's operations.
RONA's acquisition of Curtis Lumber follows two other acquisitions since the beginning of the year. RONA recently acquired Matériaux Coupal, a nine-store chain in the Greater Montreal Area. The company also acquired a chain of eight Chester Dawe stores in Newfoundland and Labrador. These three transactions have allowed RONA to add more than $285 million in retail sales.
Home Hardware signs multi-year partnership with Blue Jays
ST. JACOBS, Ont. – Home Hardware Stores Ltd. Toronto Blue Jays have forged a three-year deal giving Home Hardware the role of the team's official home improvement retailer.
The two organizations, which have worked together for more than a decade, signed a one-year deal in 2005 to make Home Hardware the team's exclusive home improvement retail partner. The new agreement extends that relationship for three years. It also makes Home's own brand of Beauti-Tone paint the Blue Jays' official paint brand.
Home Hardware and the Blue Jays will continue to leverage the partnership through in-stadium, media, television and radio, and retail promotional opportunities. Home Hardware and Beauti-Tone logos are featured throughout the Rogers Centre, where the Blue Jays games are played, and Home Hardware owns title sponsorship of the "World's Fastest Grounds Crew".
U.S. homebuilders report downturn in orders
DALLAS – The air seems to be finally leaking out of the U.S. housing market's remarkable growth, as two of the industry's biggest builders reported declines in their orders during the most recent quarter.
Centex, the industry's fourth-largest builder, reported that new orders were off by 11% during the three months ended March 31, compared to the same period a year ago. More noteworthy, however, was the $28 million charge against earnings that Centex took to cover the forfeiture of deposits it had made to option property and other pre-acquisition costs. The builder said that it took the land write-down to "align [its] land position to current market conditions" in markets such as Washington D.C. and Sacramento, Calif.
Centex's homebuilding operations saw its sales increase 29% to $3.98 billion, and that business unit's operating income rose 15% to $601 million.
Pulte Homes, the industry's 2nd-largest builder, saw its profit rise 20% in the quarter, to $262.6 million, on sales of $2.96 billion, which were up 18%. Its closings increased 7% to 8,602 homes. However, new orders were off 4% to 10,725 homes.
Other large production builders that reported declines in new orders for the quarter, including Beazer Homes USA, down 17% in dollars; Standard Pacific Homes, whose orders in the first quarter were off 1% in dollars and 8% in units; and Meritage Homes, which was down 6% in dollars and 2% in units.