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Phone: 416-489-3396
Michael McLarney, Editor & President
mike@hardlines.ca
Beverly Allen, Publisher
bev@hardlines.ca
Brady Peever, Client Services Manager
brady@hardlines.ca
John Caulfield, Contributing Editor
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November 16, 2009, Volume xv, #43 |
In This Issue:
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“Decision making is the specific executive task.” —Peter Drucker (American business philosopher and author, 1909-2005) |
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RONA sees signs of recovery in third quarter results | ||||||||||||||||||||||
BOUCHERVILLE, Que. — RONA inc., Canada’s largest home improvement retailer, reported consolidated sales (sales from corporately owned stores and through distribution) of $1.32 billion in third quarter, down $61.2 million or 4.4% from $1.38 billion in 2008. That loss was reflected in a 5.3% reduction in same-store sales at RONA’s corporate and franchise stores, while distribution sales were down 1.6%.Net earnings were down $3.4 million, or 6.4%, to $49.1 million.
Despite higher sales to commercial and professional customers in Ontario, sales overall in Canada were down, a result of the lingering economic situation. RONA blamed the drop in same-store sales on weaker housing starts in 2009, which put downward pressure on sales by its contractor oriented outlets. Then, hopes for a recovery during the summer were dimmed by poor weather.
RONA’s sales of forest products, building materials and seasonal items were especially hard hit by current conditions, while products for smaller projects and fix ups, such as paint, light fixtures, hardware, and kitchen and installation services posted positive sales in the third quarter.
“As anticipated, we glimpsed the first signs of recovery in our industry during the third quarter. Same-store sales in our store network continued to decline, but more slowly than at the beginning of the year,” RONA president and CEO Robert Dutton said.
During the quarter, RONA managed to keep growing its network of independent dealer-owners, and since the beginning of the year, 12 dealer-owners representing an estimated $30 million in annual sales have been recruited. In addition, RONA dealer-owners have completed 42 store expansions or renovations totalling nearly $40 million in investment.
Consolidated sales for the nine-month period were $3.54 billion, down 6.1% from $3.77 billion in 2008. For the nine-month period, net earnings declined by 15.2% to $107.4 million, from $126.7 million in 2008.
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Canadian Tire sales dip in third quarter | ||||||||||||||||||||||
TORONTO — Canadian Tire Corp. released third-quarter results showing an anticipated drop in its core retail business. However, overall results were pulled down by a drop in the company’s Financial Services business due to a significant increase in loan losses, which contributed to a 21.8% decrease in Canadian Tire’s net earnings over the same quarter in 2008.Overall sales by the corporation were down 6.0%.
Canadian Tire Retail’s sales decreased 2.3% from the same quarter in 2008. Unseasonably cool, wet weather impacting some seasonal businesses such as backyard living, cycling, gardening and camping, while lingering slow economic conditions impacting discretionary categories such as home décor, electronics and storage and organization. Despite overall softer sales, however, the Retail division did see a healthy increase in categories such as exercise equipment, automotive parts, kitchen and pet food.
Canadian Tire Retail's third quarter adjusted earnings before income taxes were $93.7 million, down 0.4%. Increases in operating expenses for the new Eastern Canada Distribution Centre, higher store occupancy costs and continued investments in productivity initiatives were partially offset by effective cost management, particularly in advertising and supply chain.
During the quarter, Canadian Tire Retail expanded one traditional store into a Smart store and opened one new Small Market store, bringing the total number of Canadian Tire stores to 476.
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CanWel gets upgraded on revised housing forecasts | ||||||||||||||||||||||
VANCOUVER — Low lumber and panel prices continue to impact sales by wholesalers across the country (see RONA’s latest results above—Michael). But companies that rely heavily on commodity lumber products felt the crunch even more. However, as housing picks up and consumer confidence begins to return, these wholesalers may be well positioned for the recovery.CanWel Building Materials Income is one such company. It reported its third-quarter sales recently, which dropped from $227 million to $188 million. And although this reflected the tough economy, especially in Western Canada, it was also due to the continued decrease in lumber and panel prices year-over-year. “We continue to experience year-over-year deflation within the quarter in regard to the overall construction material product family. The average prices for lumber products, for example, decreased by 21% in comparison to the same period of 2008,” said Tom Donaldson, president and CEO of CanWel, in a release. However, the company was able to improve its net profits through cost controls and increased efficiency. Profits rose to $7 million from $5.6 million. In addition, signs of recovery in the form revised housing forecasts from Canada Mortgage and Housing Corp., which show a modest rebound in housing starts beginning in the middle of 2010, have given a boost to companies supplying the home improvement industry, including CanWel. A report by GMP Securities considers that Canadian housing showing signs of stabilization and issued a report that maintained a “Buy” rating for CanWel. In addition, it increased CanWel’s target price to $4 from $2.25. “As a whole, housing data has improved from the recent lows in early 2009 and we believe that the housing market has shown signs of stabilization. We view this positively for CanWel and believe that the company will benefit from any recovery in Canadian housing activity or renovation spending,” says the report. CanWel operates 16 distribution centres across Canada, selling through two divisions, CanWel Distribution, selling building materials, and CanWel Hardware Division (formerly Sodisco-Howden Group), selling hardware. | ||||||||||||||||||||||
Canadian Tire centralizes automotive businesses | ||||||||||||||||||||||
TORONTO — Canadian Tire Corp. has made organizational changes that pull together key corporate functions, with an emphasis on strengthening its core automotive businesses. The company has centralized finance, human resources, information technology, communications, government relations, legal and real estate — functions that had previously been disparate across Canadian Tire’s operations.To lead the new company-wide automotive initiative, Michael Medline has been appointed president, Canadian Tire automotive and dealer relations. All aspects of automotive across all business units (PartSource, Petroleum, automotive hard parts, accessories, service centres and tires) will be handled under with a single strategic mission. Medline, a nine-year veteran of Canadian Tire, will continue to work with Canadian Tire dealers to grow the company’s broader retail and automotive businesses as one company. Huw Thomas is becoming executive vice president, financial strategy & performance to oversee Canadian Tire’s financial strategy and performance company-wide. He will act as a senior strategic advisor to the Stephen Wetmore, Canadian Tire CEO. He was formerly CFO, and will retain responsibility for investor relations. Company-wide financial operations will now be centralized under Marco Marrone, who has been appointed CFO and evp, finance. In addition, Dean McCann has been appointed president, Canadian Tire Financial Services and an officer of the company. | ||||||||||||||||||||||
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Join us for breakfast with Ken Jenkins, President of Castle Building Centres. Hardlines, in association with NRHA Canada, is pleased to present our latest Executive Breakfast, Nov. 18. Mr Jenkins will offer valuable insights into a buying group that represents more than $1 billion in retail sales across Canada. Prepare for 2010 with this must-attend information event. Click here to register |
DID YOU KNOW…? |
…that there are twice as many hardware stores in Alberta as there are in British Columbia? Or that Sexton Group has almost 3% of the PEI market? Or that Kent has almost twice the market share of Home Depot in Nova Scotia? You might have known that Quebec represents more than one-fifth of the Canadian retail home improvement market, but I'll bet you didn't know that RONA and Castle have similar market shares in Saskatchewan. This is just a small part of the HARDLINES Market Share Report, available in just a few days! To order your Report, click here |
NEWS IN BRIEF |
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ECONOMIC INDICATORS |
The seasonally adjusted annual rate of housing starts reached 157,300 units in October, up from 149,300 starts in September, due largely to an improvement in multiple starts. Urban starts increased by 5.2% to 139,900 units overall. Of that, urban multiples were up 13.8 per cent to 72,600 units and urban single starts declined by 2.7% to 67,300 units. (CMHC) |
NOTED... |
Hardware Merchandising magazine, in conjunction with Burlington Merchandising and Fixtures, presents the Canadian Home Improvement Merchandising Awards (CHIMAs), created to honour excellence in the in-store merchandising of products specific to the hardware/home improvement marketplace. Winners are awarded in each of five categories: Department Presentation-Chain Stores; Hardware and Housewares Merchandising; Building Materials Merchandising; Department Presentation-Independent Dealer; and Seasonal Product Merchandising.Hardware Merchandising is now soliciting entries for the 2009 CHIMA awards, which will be presented at the Canadian Home Improvement Show on February 11, 2010 in Toronto. Any Canadian hardware/home improvement dealer is eligible to enter regardless of size or buying group affiliation, and individuals or buying groups can put in an entry on behalf of a dealer. For more information, contact Mike Frame (Burlington Merchandising & Fixtures) mframe@bmfonline.com or Dave Chestnut (Hardware Merchandising) david.chestnut@rci.rogers.com . Entries will be accepted until Nov. 25, 2009. |
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