John Caulfield, Contributing Editor
 vol. ix, 18 May 5, 2003

*TruServ Canada ramps up Ontario distribution initiative * Rona plans new share offering to finance Réno-Dépôt purchase * Lowe's plans 15% increase in selling space this year * Exporters target U.K., Mexico as outlook remains strong * Home Depot Canada plans opening in Sault Ste. Marie * Dealers' associations will tie meetings in with Hardlines Conference

"The paradox of our time in history is that we have taller buildings, but shorter tempers; wider freeways, but narrower viewpoints." George Carlin (American comedian, whose wife died recently)
Want to expand into Canada's $30 billion home improvement industry? Here's your chance to meet top buyers from Canada's leading retailers: Home Depot, Canadian Tire, Sears, Rona and more. For more information, click here!

Winnipeg, MB — A new Ontario distribution centre for TruServ Canada will be open for business by early Summer, says TruServ president and CEO Léo Charrière. And with it, he adds, will come the capability to begin filling a role as a full-line hardware distributor to Canada's home improvement industry.

Until recently, the Western-based co-op wholesaler had a mandate to supply only its own bannered dealers. These include True Value Hardware stores and J&S Variety outlets across Canada. But since last November, when Charrière sent a letter to buying group members nationally, he tipped his hand that he wants more. The Ontario team, comprising members of the Growmark retail division that TruServ took over earlier this year, will move from Growmark's Mississauga, ON headquarters by June 30 at the latest. In preparation for the opening, Charrière admits he's in discussions with various buying groups, but wouldn't be more specific about any possible negotiations. "We're trying to fill a void that we think is there. But right now everybody is talking to everybody."
Boucherville, QC — Rona Inc. wants to roll out another share offering, this time to pay for the acquisition of Réno-Dépôt Inc. That deal is expected to close by the end of August 2003. Rona has filed a preliminary prospectus with the securities regulatory authorities in each province in connection with a public offering of common shares. The syndicate underwriting the offering consists of BMO Nesbitt Burns, National Bank Financial, Scotia Capital, RBC Capital Markets and Desjardins Securities. Approval is expected within a couple of days, after which the shares will go on the market, with the offering closing a couple of weeks after that. Rona expects to raise between $100 million and $130 million, depending on the response of the market. Besides using the money to buy up the outstanding shares of Réno-Dépôt, Rona also intends to reimburse a portion of its current credit facilities. (In order to make the bid for Réno-Dépôt, Rona put together a finance package worth a total of $700 million.) But the company wants to keep those other credit lines intact, so they can be used for other expansion opportunities and to maintain a good balance sheet, says Sylvain Morissette, Rona's director of communications. "Right now is the good time to make the move. We think the market will react positively to it."
Montreal, QC — The annual meeting of the heads of Canada's building supply dealers' associations will be held for the first time at the Hardlines Conference Series this Fall in Toronto. The Canadian Retail Building Supply Council represents the dealers' associations from each region of Canada, namely the Atlantic Building Supply Dealers Association, the Association des detaillants de materiaux de construction du Quebec, the Lumber and Building Materials Association of Ontario, the Western Retail Lumbermens Association and the Building Supply Dealers Association of BC. Donald O'Hara is the executive vice-president of ADMACQ. He's also this year's chairman of the CRBSC. "The mission of the Council is mainly to work on national education programs that would benefit dealers across Canada. We are also working on benefit packages that will help our members." The group also tries to identify trends in the market. "It's a useful exchange forum for the chairpersons to see what's being done in different parts of the country." O'Hara says the Council chose its meetings around the Hardlines Conference Series for a number of reasons. "The conference touches on a broad spectrum of subjects useful to each association," he says. "The various sessions offer a unique forum to meet vendors, retailers and other association members in one central venue." O'Hara also finds a great deal of content in the seminars and keynotes that bears reporting in the pages of his association magazine, Quart de rond. "There's a lot of useful information at the Conferences that I can take back that will benefit my member dealers." Now in its eighth year, the Hardlines Marketing Conference runs September 3-4, 2003 at the Delta Hotel near the Toronto International Airport (formerly the Four Points Sheraton). The event comprises an International Business Seminar, Retail Strategies Symposium and the industry's executive summit, the Hardlines Marketing Conference. For the first time this year, Hardlines will host the industry at a gala dinner on September 3. For more information, check out or contact: (Why not arrange your meetings to tie in with the Hardlines Conference Series? The industry's decision makers will all be there! If you'd like Hardlines to help you arrange your meeting, contact Beverly Allen,
Wilkesboro, NC — Lowe's Home Improvement Warehouse, the industry's second-largest home improvement retailer, this year continues to invest in the distribution infrastructure that supports its aggressive store growth objectives, which call for a 15% increase in selling space in fiscal 2003. The company's expansion plans also include a move, scheduled for early September, of its corporate headquarters into a new "customer support centre" in Mooresville, NC. These are some details that Lowe's recently disclosed in its 10-k filing with the U.S. Securities and Exchange Commission, which reported on the company's financial and operational performance in 2002. During that period, Lowe's revenue rose 19.8% to US$26.5 billion, its store count by 15% to 854 units, comp-store sales by 5.6% and its net income by 43.8% to US$1.47 billion. Over the past several years, Lowe's has become more secretive, and its 10-k documents reflect that competitive position. However, the document does provide some insights. In 2003, Lowe's intends to open 130 new stores, including five relocations of older stores. These additions are expected to increase Lowe's sales floor square footage, which was 94.7 million at the end of fiscal 2002, by between 15 and 16%. The company expects that about 64% of those stores will be located in metro markets with populations of 500,000 or more, putting further competitive pressure on rival Home Depot. The company's capital expenditure budget for fiscal 2003 is US$2.9 billion, 80% of which has been earmarked for store and distribution expansion. Over the past several years, Lowe's has followed Wal-Mart's lead by building huge distribution centres to handle and redistribute merchandise into its stores. Currently the company has nine of these regional centres, and nine smaller facilities that handle lumber, building materials and imports. Half of all its inventory goes through this distribution network. In fiscal 2003, the company begins construction on its latest regional distribution centre, in Poinciana, FL. This year, Lowe's also plans to open between three and five of these smaller "flatbed" facilities. Last year, Lowe's spent US$114.3 million on advertising, which represented a 21.2% increase over its ad expenditures in 2001, but was about the same as what the company spent in 2000. A significant, though undisclosed, percentage of the retailer's ad funds comes from suppliers in the form of co-op allowances. A new accounting rule, which went into effect last year, requires retailers to treat all vendor funds, including co-op ad allowances, as "a reduction of inventory cost unless they represent a reimbursement of specific, incremental, identifiable costs incurred by the customer to sell the vendor's product." This treatment is required of all agreements entered into or modified after December 31, 2002. Lowe's stated that virtually all of its ad allowances for fiscal 2003 had been negotiated prior to that date, so the rule change wouldn't have any "material impact" on its balance sheet for last year. Lastly, Lowe's broke down its revenue in 2002 by product category, as it does every year. Appliances again generated the greatest portion of those sales, at 11%. Compared to the previous year, Lowe's reported declines as a percentage of total revenue in the sale of lumber, hardware, and building materials. It reported gains, as a percentage of the total, in paint, wall and window coverings and home organization.
Indianapolis, IN — Despite the U.S. dollar's strength throughout much of 2002, members of the Worldwide DIY Council reported strong export sales during the year, and they are even more optimistic about sales being up in 2003. The Worldwide DIY Council is an association of active exporters, comprising manufacturers from the U.S. and Canada. More than 30% of the members responded to a Council survey on business conditions during 2002 and their expectations for 2003. Through the first quarter of 2003, 67% of members said business is up; 72% expect it to be up by the time the year ends. Responding members sell their products in as many as 150 countries around the world, though the average manufacturer's sales efforts are more limited. The average number of countries in which members sell varies widely depending on product category, but breaks out as follows:
Category sold
# countries
Paint & Sundries
Lawn & Garden
Building materials
As the dollar weakened against the euro, making U.S. and Canadian products more competitive, most members did not change their sales tactics to take advantage of the more favourable exchange rate, although a few did appoint more sales representatives and/or distributors to broaden their market penetration. However, several member companies did make some strategic moves to help them. Among the actions taken: · elimination of currency relief discounts, and the addition of new product categories that were previously too price-sensitive; · establishment of more exclusive distribution by country; · price increases to gain back lost margins from previous price discounts; · favourable exchange rates give clients price decreases without vendors having to change prices; · aggressive promotions, conversion incentives, etc.; · more time and travel devoted to prospecting in Europe this year, at the expense of South America and the Middle East; · pricing and shipping allowances, minimum-order quantities and liberalized payment terms to increase sales; · addition of a new employee and the opening of a second distribution warehouse. In another question, regarding any anti-American feelings since the war in Iraq, only two of the 40 members responding to the survey reported there was a change in buyer attitudes, and both were noted in France. During the coming year, DIY Council members will be traveling extensively. On average, they will visit from five to 15 countries in 2003, with a few going to as many as 40 countries. The United Kingdom has been one of the best markets for Council members in 2002, followed by Mexico and Canada. Australia and the Central American and Caribbean regions were also primary sales targets last year. In 2003, members will be concentrating their sales efforts in Canada and a number of European and Latin American countries. Germany and Mexico were specifically named as key targets for this year. For more information about the Worldwide DIY Council, contact: Tom Delph, executive secretary, or phone: 812-376-9299.
Canadian Tire 33.65 26.80 31.50
Canfor 11.70 6.83 9.05
Costco 41.86 27.00 34.82
Goodfellow 13.99 9.88 10.90
Home Depot 49.50 20.10 28.51
Hudson's Bay 14.95 5.87 10.15
Lowe's Cos. 49.99 32.50 44.15
Rona Inc. 16.10 11.75 15.35
Sears Canada 25.10 13.60 16.16
Sodisco-Howden 1.94 1.06 1.37
Taiga Forest 7.00 5.85 6.75
Wal-Mart 59.30 43.72 56.15
West Fraser 39.46 26.27 31.01
Sault Ste. Marie, ON — Home Depot Canada has purchased land and applied for zoning to begin construction of an outlet here. A 15-acre property is the proposed site of a 103,000-sq.ft. store, somewhat smaller than a typical 135,000-sq.ft. Home Depot, but indicative of the retailer's attempts to develop formats that will be viable in smaller markets. Construction is expected to begin later this Summer, with a Spring 2004 opening. Toronto, ON — Two Toronto area garden centre chains have merged with the purchase by Sheridan Nurseries of five Weall & Cullen outlets. According to the Toronto Star, another store, in Etobicoke, will close this summer, and a tourist-oriented theme centre, Cullen Miniature Gardens, is not part of the deal. St. Jacob's, ON — Home Hardware is kicking off Spring with a new series of television ads that build on the retailer's tradition of spotlighting innovative products exclusive to Home Hardware. The first one, which rolled out at the beginning of April, featured the Earth Blender. A second ad, unveiled last week, features a patio treatment product called Tech Stone. Atlanta, GA — Home Depot spends almost eight times as much on advertising as its closest rival, Lowe's, although its sales are only twice those of Lowe's. Advertising last year amounted to almost US$600,000 per store. San Francisco, CA — Building Materials Holding Corp. reported an increase in net sales for the first quarter of 2003 of 11.8% to US$276.4 million. Sales of construction services and manufactured building components were up 21.6% to US$162.3 million, representing 58.7% of total sales, compared with $133.5 million, or 54.0% of total sales in the same period a year ago. Ste-Marie, QC — MAAX Inc. had an increase in consolidated sales for fiscal 2003 of $616.9 million, up 19% over $518.5 million in fiscal 2002. Operating cash flows rose 45.4% to $64 million, compared with $44 million last year. During the three-month period ended February 28, 2003, comparable net income (before amortization of goodwill) rose 40.7% to $6.0 million, up from $4.3 million in the corresponding quarter of the previous fiscal year. Guelph, ON — GSW Inc. reported the highest operating profits in its 155-year history in 2002. During the year, its share price rose 120% to around $17. Net income reached $6.5 million on sales of $413.9 million for the year, up from a net loss of $2.6 million on sales of $222.5 million in fiscal 2001. Newton, IA & Seoul, Korea — Maytag has forged a manufacturing agreement with Daewoo Electronics, whereby Daewoo will manufacture top-freezer refrigerators for Maytag, moving production form Maytag's plant in Galesburg, IL. Production at that facility will begin phasing out later this year, and it will be closed in late 2004. In addition, side-by-side refrigerators produced in Galesburg will be redesigned and produced at Maytag's plant in Amana, IA and at a new manufacturing facility being built in Reynosa, Mexico. New York, NY — Both MasterCard International and Visa USA have settled out of court with a group of retailers, including Wal-Mart, warding off a trial. The multibillion-dollar lawsuit, which challenged the debit card policies of MasterCard and Visa, charged that the credit card companies in question exacted excessive fees on customers using their debit cards. The credit card companies have agreed to pay US$3 billion and lower their transaction fees.
James (Jim) Ritchie has been appointed vice-president of Delroc Industries Ltd. He will focus on growing the membership base of the company throughout Canada. Ritchie joins Delroc after serving for many years as president of The Synkoloid Co. of Canada, and most recently as vice-president business development at USG Inc. He will be located in Delcroc's Langley, BC office and report directly to Terry A. Elliott, president of Delroc. (604-533-0599) Brian Mahoney has joined the Home Outfitters division of Hudson's Bay Co. in the role of senior buyer, hardlines and seasonal. He's heading up an 11-member team, reporting to Maurice Chelli, Home Outfitters' director of merchandising. (416-861-6728) Phil Brown, formerly divisional manager for consumer products at Growmark Canada, has joined Weyerhaeuser as area general manager for Ontario. Working out of the company's Brampton facility, he oversees the sales operation for Ontario and into Buffalo. Brown reports to Steve Buckle, Weyerhaeuser's regional general manager of Eastern Canada. (905-792-9903) At Wickes Inc., Jim O'Grady has been appointed president and CEO of Wickes Lumber. Most recently, O'Grady was vice-president of operations at Hope Lumber and Supply Co. An industry veteran with 25 years of management experience, he served as senior vice-president of operations for Wickes prior to leaving the company in May 2002. O'Grady will be part of the company's strategic restructuring plan. (847-367-3400)
Concerned with lower levels of new and unfilled orders, manufacturers expect to decrease production levels in the coming three months. Key factors influencing the manufacturers' intentions this quarter include global uncertainty and the appreciation of the Canadian dollar. In April, 31% of manufacturers stated they would decrease production in the second quarter, while only 19% expected to increase production. In addition, 12 of the 21 major industry groupings, representing 60% of manufacturing shipments, indicated a negative outlook for the second quarter of 2003.
Proposed changes to the Retail Sales Act, unveiled in the latest Ontario Budget, includes extending the Retail Sales Tax rebate for residential solar energy systems to include wind energy systems, micro hydro-electric energy systems and geothermal energy systems. Rebates would be available for qualifying systems purchased and installed between March 28, 2003 and November 25, 2007.

****HARDLINES MARKETPLACE**** Dont' miss the products and services on the Hardlines web Marketplace: And check out Hardlines Classifieds on the web:

HELP WANTED BUYING ADMINISTRATOR Buying Administrator required to take charge of the office of CID, a key division of a Buying Group, while cooperating with staff from other divisions. This position reports to and provides administrative support for the CID Manager. You will also be responsible for: liaising with Buyers to develop and coordinate programs on commercial building products; collecting, maintaining and reconciling purchasing and rebate records for Dealers and suppliers; developing an understanding of commercial buying programs; overseeing the accuracy and completeness of information posted on the CID Dealer Private Web Site; and planning and coordinating special Dealer events. You have initiative and experience with purchasing, buying or support of same, working knowledge and understanding of contact management database applications, proficiency in the use of MS Office (Word, Excel, etc.), great interpersonal skills, ability to prioritize and multi-task in a fast paced environment. You are dependable in critical situations, and able to work with minimal supervision. We offer a competitive compensation package and a pleasant working environment near the airport. We thank all applicants for their interest: however, only those candidates selected for an interview will be contacted. Please submit your resume in strictest confidence to: **********************************************************************************  SALES REP AND TRAINER Cognicase-Omni, the largest provider of Turn-Key Management Solutions for the Hardware and Building Supply Industry, is now expanding by opening an office in the Vancouver area. We are looking for career minded individuals who enjoy working in the hardware and building material business and have an interest in assisting dealers by providing management solutions. Computer experience is not necessary but preference will be given to those that have industry experience and want to work closely with a proven Software system. Positions are available in Sales and Training. Please submit a resumé by email to Frank Rizzo,

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