BMR announces new sales levels, new logo, new dealers
QUEBEC CITY—BMR the Group, the Longueuil-based wholesale buying group, had its most successful dealer show ever this past weekend. The group is readying for its 40th anniversary in 2007, complete with a new logo that will appear in its promotional materials and even on its private-label packaging — and a new raft of dealer members.
Sales at this latest show, which focused mainly on hardware, seasonal and import items for BMRâ€™s 161 member dealers, are expected to reach close to $40 million, the result of an initiative that was built only nine years ago — and rebuilt just last year. In 1996, the group decided to expand its offering beyond lumber and building materials, and take hardware distribution "in-house", as well. A year later, a hardware distribution centre was up and running. The business grew steadily, as members bought in to the new supply model. In addition, BMR began evangelizing the merits of the retail hardware business for its dealer members. Then, in July 2005, the hardware DC in Longueuil, Que. went up in flames. The company is once again shipping up to 24,000 hardware SKUs from its new distribution centre. Another 11,000 SKUs are available via direct shipment.
Now, the group is expanding not only assortments but its geographic reach. Last year also marked the end of its relationship with the TIM-BR MARTS buying group. With it went the gentlemenâ€™s agreement to confine their businesses within their own geographic areas. BMR began recruiting dealers in the Maritimes, where it now has 20 members, and in Ontario, where its ranks have grown to seven.
At the show here, fully 32 new members were announced, all additions over the past 12 months. Of them, five are in the Maritimes and four are within Ontario. The most significant of these is, perhaps, a dealer in Windsor, Ont., formerly a signature Castle dealer.
According to Gabriel Pollender, vice-president of marketing for BMR, the group hopes to reach 200 members within three years. "In fact, we could reach that goal next year, if we accepted everyone who called us," he noted.
Slowdown makes some Atlantic dealers cut prices
MONCTON—Dealers in Atlantic Canada are coming to the end of the year that followed the year to beat all years. "Itâ€™s going to be tough to follow 2005," says Don Sherwood, president of the Atlantic Building Supply Dealers Association. "However, overall, everything is fine here."
He does point out, however, that the first signs of a slowdown have made some dealers wary. Poor weather in September did not help sales in the third quarter, either. The result: some dealers are trying to "buy the market", he says. "Theyâ€™re sensitive to losing market share and no dealer wants to give up market."
Even Kent, with 29 stores throughout Atlantic Canada, is reportedly lowering prices in some areas, especially on some commodities, and other dealers have to follow the prices downward. ""Once you see the market drop," says one industry observer, "the big players will drop their prices — and they have deep pockets."
Depressed lumber prices dampen CanWel results
VANCOUVER—Lower prices industry wide for lumber affected third-quarter results for CanWel Building Materials Income Fund, even as year-to-date profits showed an increase. For the period ended Sept. 30, CanWel reported sales of $243.3 million, down from $265.4 million in the same period in 2005. Downward price pressure on lumber and panel products during the third quarter was cited as the main culprit.
Net earnings were $4.4 million, compared to $5.3 million. For the quarter, CanWel reported gross margin of $24.2 million or 10.0% of sales, versus $27.1 million or 10.2% of sales in 2005.
For the nine-month period, CanWel reported sales of $719.2 million, down from $791.8 million in 2005. Net earnings, however, reached $12.1 million, up from $7.7 million during the same period in 2005.
"Given the depressed pricing environment for lumber and panel products, we are pleased with our ability to post these financial results," said Tom Donaldson, president and CEO of CanWel. A number of deals made during the quarter are expected to broaden CanWelâ€™s portfolio and limit the negative effects of soft lumber pricing. These include the acquisition of five treating plants across Canada, plus a new distribution deal with one of South Americaâ€™s largest forestry companies. CanWel has been appointed national distributor of Arauco Plywood Products. Arauco has some of the world's largest plantation holdings and output of kraft pulp, lumber, and panel production, thanks to extensive forest resources and industrial facilities in Chile, Argentina, and Brazil. Arauco panel products will be marketed in Canada under the AraucoPly brand.
Like other income trusts in Canada, CanWel is faced with new federal finance laws which will limit the tax exemptions previously available to trusts. The new laws will treat trusts more along the lines of regular corporations.
US slump takes toll on home improvement stocks
NEW YORK — Investors are taking out their nervousness about the ongoing softness in buyer demand for housing, and how that relates to spending on home improvement products, on some retailers more than others.
The industryâ€™s two home improvement giants, Home Depot and Loweâ€™s, seemed to be tracking each other. Loweâ€™s, saw its stock price dip to $26.15 per share in late August, and its high for this six-month period was just under $32 (it closed Wednesday at $30.40). Home Depot hit its nadir in mid-July — $32.85 per share — but has actually been recovering nicely since them. Although it reported a 3.1% decline in net income for the third quarter, through nine months ended Oct. 30, Home Depotâ€™s sales rose 13.8% to $70.6 billion. Same-store sales for the latest quarter fell, however, by 5.1%. Net income for nine months grew by only 6.2% to $4.55 billion.
Bob Nardelli, Home Depotâ€™s chairman, specifically blamed his companyâ€™s results on the weakness in the housing market (although it should be noted that its Home Depot Supply segment, which caters to residential and commercial professional contractors and builders, enjoyed a 222% gain in nine-month revenue, to $9.12 billion, and a 228.5% increase in operating income, to $657 million.) In the third quarter, the companyâ€™s inventory levels rose by 13.9% over the same period a year ago. Nardelli expects the slowdown in the housing market, and its negative impact on Home Depotâ€™s financial growth, to continue through the fourth quarter of 2007.
Duct tape gets fashionable
TORONTO—Okay, there are probably bigger news stories out there, but not many as fun and kooky as this. Henkel hosted a fashion show recently in the trendy Yorkville area of Toronto, featuring designs using nothing but duct tape.
The event was called "Stuck at Prom", to tie in with the time of year in which students dress formally for their school proms. Henkel, which markets the product under the "Duck Tape" brand, awarded scholarships for the best student designs.
Sears Canada shareholders reject takeover bid
TORONTO—Sears Canada Inc. shareholders have rejected a takeover bid by parent company Sears Holdings Corp. Well, sort of. The vote, held last week, required at least a two-thirds majority to vote in favor of the takeover. In fact, the vote received 81.32% approval.
While that was enough to satisfy Canadian corporate laws, securities regulations in the provinces of Ontario and Quebec require further two-thirds approval by minority shareholders. That vote, which excluded 7.5 million shares owned by Vornado Realty, an affiliate of Sears Holdings, failed. The Sears offer amounted to C$18 a share, or C$892 million.
The Court of Appeal for Ontario has further denied Sears Holdingsâ€™ motion to appeal the decision of the Divisional Court dismissing its appeal from the decision of the OSC.