Lowe's, Home Depot join roster of Hardlines Conference

WORLD HEADQUARTERS, TORONTO – A new date and new location will provide the backdrop for the country's major gathering for retail home improvement leaders this year. The HARDLINES Conference will feature representatives from two of the sector's top retailers–along with one of the country's leading distributors.

The Conference, being held Oct. 16-17, 2006, will feature Doug Robinson, president of the newly formed Lowe's Cos. Canada, and Home Depot's number-two person in this country, Roger Plamondon, vice-president of Canada East. Also on the roster: Tom Donaldson, president and CEO of CanWel Distribution, and brand guru Ted Matthews of Instinct Brand Equity Coaches. One of the most popular features of the Conference each year–and a lively counterpoint to the trends and analysis that will be presented–is a presentation by a successful independent. This year, Christine Hand, of Handyman Home Hardware in Conception Bay, Nfld., will appear. Additional speakers will be announced in the coming weeks. This year's Conference, our 11th, is moving to the Toronto Congress Centre, Oct. 16-17. It's expected to attract more than 250 retail and vendor executives from Canada and the U.S. for a lively program of education, information, and networking. The Conference will be co-located with the new National Hardware Show Canada, which runs Oct. 17-18. It will also be home for the Annual Industry Awards Gala, featuring Hardware Merchandising's Outstanding Retailer Awards and our very own Newsmaker of the Year Awards. For more information about the HARDLINES Conference, click here. For more info about the National Hardware Show Canada, click here.

↑ top

Home Depot reports 22% quarterly sales gain

ATLANTA – Home Depot generated US$21.5 billion in revenue during the three months ended May 1, a 13.1% increase over the same period a year ago. The company's net income for the quarter rose 19% to $US1.48 billion. "This acquisition gives us the opportunity to offer our services to The Home Depot's large contractor customer base," said Louise Kelly, CEO of EnerBank, which is chartered in Utah and had loan assets of $76 million at the end of 2005. The company employs 37 people and its management will stay on to run the business for Home Depot. The company's financial performance incorporated Hughes Supply, the huge distribution company Home Depot acquired in the first quarter of 2006. Hughes Supply has been folded into the retailer's Home Depot Supply division, which reported a 224.5% increase in sales, to US$2.1 billion, and a 432% rise in earnings, to US$149 million. Home Depot projects that its Home Depot Supply division will generate $12 billion in revenue this fiscal year. During the quarter, the company increased its average customer transaction by 4.3% to $60.75. (The company has stopped disclosing quarterly same-store sales, a new policy that has both analysts and ink-stained wretches fairly flummoxed–Editor.) The company's market share in the hotly contested retail appliance arena rose to 9.9%. And its stores' "retail services" business, which is essentially its installed sales program, grew by 8.5% to US$844 million. The company added 23 new stores in the quarter (including four in Canada), raising its total to 2,051 units. After the quarter ended, the retailer continued its recent acquisition spree by purchasing Home Decorators Collection, an online and catalog retailer of home d´cor products; and Cox Lumber, a Florida-based pro dealer with 28 locations and nearly $400 million in annual revenue. Depot is merging Cox's operations with those of Williams Brothers, the Georgia-based pro dealer it acquired last year.

↑ top

Las Vegas show highlights product trends

LAS VEGAS – Hot weather and innovative products were all found at the 61st annual National Hardware Show, held May 9-11 at the Las Vegas Convention Center. This was the show's third appearance in this city, following its departure from Chicago (and an acrimonious split with its partner there, the American Hardware Manufacturers Association). In Las Vegas, however, the show's fortunes have improved each year, and this year was no exception, with 3,280 manufacturers–including international companies–showcasing their new products for the lawn and garden, hardware and tools, paint and home d´cor, housewares, and plumbing and electrical sectors. The show filled more than 767,000 square feet of exhibit space. Final attendance figures were not yet available as of press time. This year also marked the show's second co-location with both the Las Vegas Gourmet Housewares Show and Paint and Decorative Retailers show and conference. The combined event showcased a number of new-product trends: Lawn & Garden: Gardens, terraces, patios, and other outdoor areas continue to be hot as consumers look for ways to extend their living spaces. Shoppers are looking for top-of-the-line grills, outdoor furniture with weather-resistant fabrics, fireplaces, decorative pillows and rugs, and accessories such as artwork and statuary–once considered more suited to the great indoors. High-End Products: According to the International Housewares Association, total U.S. consumer expenditures on housewares in 2004 reached $65.2 billion. There is a continued push toward smarter and more versatile products in core appliance and housewares categories, a trend driven by the continuing demand for convenience and functionality. Women: Women are buying more homes and are more responsible for basic repairs. According to the HARDLINES Women in Home Improvement Study, women are involved, either individually or with a partner, in more than 80% of the decision making for home improvement product purchases. In 2005, single women snapped up one of every five homes sold, according to the National Association of Realtors. Women also account for about one-quarter of power tool and accessory purchases in the United States. Smart Home Technology: Today, high-tech "smart" products have led to increased consumer interest in technologies that not only enable more efficient home improvements, but also add new conveniences to the home. Many homebuilders have been incorporating "smart home" technology into their homes in recent years. Energy Efficiency: The typical U.S. household was expected to pay $892 to heat the house last winter, up $107 from 2005, according to the U.S. Department of Energy. Energy costs send consumers scrambling for building products that will improve personal comfort and lower utility bills. Consumer demand for products that lower utility bills is increasing the popularity of green building. Second Homes: Vacation and investment-home sales both set records in 2005, with the combined total of second home sales accounting for four out of 10 residential transactions, according to the National Association of Realtors.

↑ top

Castle's Wylie: independents will survive a downturn that threatens majors

MISSISSAUGA, Ont. – Today's independent has to deal with a broad range of customers, and specializing in one type can be a strategy for success. Or not. The contractor customer remains the mainstay of many of the building centre dealers within the Castle Building Centres Group. And according to Pro Wylie, president of Castle, that's a strategy that works well–and keeps the big boxes at bay. Many dealers, including Home Hardware Stores Ltd. and TIM-BR MARTS Ltd., are adopting more retail friendly formats to expand their sales to pros while adding a more DIY-friendly mix, but Wylie is not convinced it's the best strategy for many of his members. He warns about becoming too "front-end oriented", which can send a mixed message to one's existing pro customers. Taking a page from the book of a very successful U.S. pro dealer, 84 Lumber, he calls their stores "down and dirty", yet the chain of 500-plus stores continues to flourish. Castle itself has introduced a store enhancement program for its members, developed by Burlington Merchandising Group. Several dealers have so far have adopted the program, which features new layouts and a full branding program that includes signage, colours, and even uniforms for staff. Meanwhile, says Wylie, the attempts of the big retailers, namely Home Depot and RONA, to cultivate the pro business makes sense, "because that's where all the money is." But, he adds, the cost for a company like RONA will come too high. Besides spending money on new companies, it must fend off new competition in the Canadian market. "It's not going to be strong enough to take on Home Depot and Lowe's both," he says. "A downturn in the economy will result in a collapse of RONA." He expects RONA to eventually retreat back into its home province of Quebec. Wylie remains confident about the fate of his own members, however. "But the independents are going to be there. They're stronger and more alive than ever."

↑ top

Investor challenges Home Depot's compensation policies

ATLANTA – Home Depot's board of directors authorized the company to repurchase another $2 billion worth of its outstanding common stock last week. That authorization came only days after Depot's stock price dipped by more than 7% following the release of the retailer's quarterly financial performance. Those results showed strong sales and earnings gains, but also weakness in certain categories’Äîespecially flooring’Äîthat some investors apparently interpreted as Home Depot's vulnerability to a housing market where new-home construction activity has been slowing in recent months. With this authorization, Home Depot is cleared to repurchase up to $14 billion worth of its shares. Since 2002 and through April 30, 2006, the company repurchased nearly 291 million shares and has returned more than $10.3 billion of cash to shareholders. But that hasn't mollified some institutional investors. Calpers, the giant pension fund that owns 10 million Home Depot shares, has contacted other investors by letter, urging them to approve a measure that would require Home Depot to get investor approval of its executive pay plan. "We have lost money on the inability of the company to align its interests with share owners," said Charles Valdes, chairman of Calpers' investment committee. Home Depot has stated that investor approval of this proposal would hamper the company's ability to recruit and hire executive talent. Last year, Home Depot's top five executives received salaries, stock and other compensatory payouts totaling more than $51 million. Bob Nardelli, its chairman and CEO, alone received $2.2 million in salary, a $7 million bonus and $14.7 million worth of restricted stock.

↑ top