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Michael McLarney, President & Editor mike@hardlines.ca Beverly Allen, Publisher bev@hardlines.ca John Caulfield, Contributing Editor Phone: 416-489-3396
November 24, 2008, Vol. xiv, #44
In This Issue

“Success in running a business carries by itself no promise of success outside business.” —Peter Drucker (American management consultant and author, 1909-2005)

Retail giants’ earnings nosedive in third quarter
ATLANTA & MOORESVILLE, N.C. — The worlds two largest home improvement retailers continue to struggle during a housing and credit slide that is taking no prisoners.Home Depot reported a 30.7% decline in earnings, to $756 million, for the three months ended Nov. 2. The retailer’s revenues during that period were off 6.2% to $17.8 billion, and same-store sales fell 8.3%. Through the first nine months of its fiscal year, Home Depot generated $56.7 billion, a 5% decline over the same period a year ago. Its net income for this period plummeted 37.9% to $2.31 billion. Same-store sales for the nine months were down 7.1%. (A change in its fiscal reporting calendar affected Home Depot’s earnings by $225 million.) Lowe’s Cos., Depot’s primary rival, didn’t fare much better. The Mooresville, N.C.-based retailer reported that its net income dropped for the fifth consecutive quarter. Earnings during latest three months, which ended Oct. 31, fell 24.1% to $643 million on sales of $11.7 billion that were off 1.4%. The company’s same-store sales were down 5.9% for the quarter and 6.5% for the first nine months of its fiscal year, during which its total revenue rose marginally to $38.3 billion, and its earnings were down 15.3% to $2.03 billion. Robert Niblock, Lowe’s CEO, stated that his company’s quarterly financial performance benefited from the relatively strong sales of products for maintenance and outdoor living projects. Lowe’s also experienced an uptick in sales from products that went toward post-hurricane reconstruction in the Gulf States. However, Niblock said that consumers, in general, are delaying discretionary spending, especially for bigger-ticket jobs. Lowe’s opened 39 stores during the quarter, bringing its total to 1,616. It expects to open between 33 and 38 more in the fourth quarter, when it projects that sales will fall within a range of -3% to 2% up. It expects its cash flow to be off by 330 basis points during the last three month, and off 190 points for the full year. The company has reduced its full-year forecast for earnings to $1.48 per share, from a previous estimate of $1.56. Home Depot, which slowed new-store openings this year (it opened 11 net new stores in the quarter and its capital expenditures were down nearly two-fifths through nine months), ended its latest quarter with 2,268 outlets that include operations in Canada (where it will open 10 stores in total this year), Mexico and China. (The company operates 257 stores in those three countries.) System wide, its customer transactions so far this year were down 3.1%, and its average sale per customer was off 2.2% to $56.97, although that falloff was probably cushioned by Home Depot’s launch during the quarter of a new lower-price merchandising and marketing campaign.
Home Depot
Revenue (in $bln.)
% chg.
Same-store sales
Net income (in $mln.)
Stores opened in 3Q


Home Depot execs find positives amidst bad news
SPECIAL REPORT — Frank Blake, Home Depot’s CEO, cautioned shareholders last week that the retailer’s revenue for the year could be down by as much as 8% and that earnings per share would be off 24%. However, he and other Home Depot executives pointed to some positives. The company lowered its inventory-per-store levels by 7.5%, and opened its fourth Rapid Deployment Center in Winchester, Va. Those RDCs now service 400 stores, and a fifth center will open in the fourth quarter.Greg Menear, Home Depot’s executive vice-president of merchandising, said that the company enjoyed a 2.7 percentage-point gain in quarterly gross margin, and saw six of its 13 product departments increase their market shares. Home Depot, and its nearest rival, Lowe’s, are hardly alone in feeling the pinch from an economic downturn that is manifesting itself in a significant curtailment in consumer spending. Target, for example, recently announced that it would scale back its store-opening plans for the next five years. The one exception appears to be Wal-Mart, which last week reported an 8% increase in quarterly sales and an 9.8% gain in earnings. Equally surprising was Wal-Mart’s rosy projection for good holiday sales.


RONA realigns executive team
BOUCHERVILLE, Que. — RONA inc., the country’s largest home improvement retailer, has made some significant changes to the duties of its top executives. Claude Bernier, who had been executive vice-president in charge of RONA’s “traditional” (non-big box) stores, has returned to a marketing role as executive vice-president, marketing and customer innovations. Bernier had been vice-president marketing before taking over operations of RONA’s hardware stores, building centres, and proximity stores. Pierre Dandoy, who had been executive vice-president in charge of the big boxes since 2002, will now oversee operations of both traditional and big-box stores as executive vice-president, retail operations.In another significant move, company CEO Robert Dutton now has his dealer development team report directly to him, in an effort to get more hands on with the recruitment efforts of RONA. This initiative stems from RONA’s 2008-2011 Strategic plan and aims at helping the company continue to grow while optimizing the entire RONA network. The shift reflects a realignment of all stores under one vice-president, while the role of marketing has been expanded, now including “customer experience”. Assigning the portfolio to Bernier, whose roots were in marketing (he hired Brossard in the first place), puts it back in the hands of an indefatigable worker who is one of Dutton’s most trusted lieutenants. Dutton’s hands-on role on the recruitment side reflects the company’s recognition of affiliate dealer-owners as a continued growth opportunity for RONA. “The organizational changes we are announcing today are providing RONA with a renewed dynamism and solid leverage to face the challenges that await us in this tough economic context,” said Dutton. “The support of affiliate dealers and recruitment of new independent dealers are central to our growth strategy. Even greater attention will now be devoted to this sector and I am making it a personal priority, in order to further crystallize our role as industry consolidator in Canada.”


Brossard departure triggers RONA’s executive shift
BOUCHERVILLE, Que. — At the heart of the latest executive realignments at RONA (see preceding story—your meticulous Editor) is the departure of Michael Brossard, who joined RONA in 2002 as senior vice-president of marketing and development.He had been responsible for putting together RONA’s multi-year sponsorship of the Olympic Games, a feat that captured the coveted licensing role away from Home Depot Canada. That deal, which gives RONA elite status as one of only six major sponsors of the Olympics, represents a marketing and advertising investment by RONA of more than $100 million per year. Despite the cost, Brossard insists it’s “a very intelligent investment in the brand”. He also orchestrated RONA’s sponsorship of the Canadian Football League, a move that now finds the RONA logo on every player’s jersey in the league. Brossard, currently evaluating the package offered to him by RONA, says he will take time to evaluate his options, “then choose the organizations that are the right fit for me.” He admits he hopes to land something related to sports.

BMR head says 2009 will be a “bunker year”

QUEBEC CITY — While not claiming to have a crystal to see into the future, Yves Gagnon, president and CEO of BMR le groupe, a buying group for 180 home improvement dealers, is generally optimistic about his members’ fortunes. “Our dealers are mostly in the smaller towns. There, you don’t have a big boom, but you don’t have a bust, either.” He spoke to HARDLINES during the group's recent dealer show here.Many of his dealers are benefiting from a boom in real estate in cottage areas in the environs of Montreal and Ottawa. He foresees that the growing investment in these areas, often as part of a retirement strategy, will result in more renovations — and more homes. Thanks to that regional resilience, as well as some real gains in member numbers in 2008, Gagnon expects his group’s retail sales to be up as much as 8% this year. More than a dozen dealers joined BMR in 2008 (another eight defected, leaving BMR with a net gain) and another 36 attended the dealer market, investigating the viability of BMR’s programs. Fully half of those dealers were hardware store operators, interested in BMR’s new BMR Hardware banner, which was launched last summer with the signing of 12 dealers. While that number hasn’t grown since the program’s inception — Gagnon says he wanted to “go slowly” with this initiative — he believes the time is right to put the push on it. Adjustments have been made to the flyer program and the product mix. “We are more and more complete,” he says. As one BMR Hardware dealer said, the program has become more complete since its inception, with more and more hardware products now available through BMR’s own 350,000-sq.ft. hardware distribution centre in Longueuil, Que. Gagnon believes the Hardware banner could number 50 dealers within three years. However, growth does not come without its challenges. BMR’s efforts to grow outside of its home province of Quebec took a body blow with the recent loss of R.D. Gillis Building Supplies, a major dealer with estimated sales in excess of $8 million in Sydney River, N.S., which is being sold to some competing Home Hardware dealers. Within Quebec, the competition for dealer is heating up. TIM-BR MART has just formed a dealer development team in Quebec, and Home Hardware has a new team, headed by BMR’s former dealer recruitment manager, Dunc Wilson. Check out the classifieds in this issue of HARDLINES to find out which group is also throwing its hat into the ring in Quebec.



Intermediate Graphic Designer

We are a Canadian wholesale company related to a renowned international manufacturer of premium woodworking tools. This dynamic, career building opportunity consists of marketing activities related to the creation and implementation of product packaging, sales and POP materials, company literature and presentations, advertisements and publicity, tradeshow materials and in-store signage. The job involves daily interaction with the market/customers and sales staff. Occasional traveling and show participation is required. Organization and meeting tight deadlines in a fast-paced environment is a must. Manditory skills: • Proficient with: Photoshop, Illustrator, InDesign – all on Mac platform. • Knowledge of pre-press/print-ready file preparation. • Knowledge of English/French bilingual requiremnts. • Multi-tasking and time management. Further qualifying assets: • College diploma in marketing, graphic design or related field or equivalent in related work experience in a corporate/marketing environment – possibly in the hardware or retail industry. • Web experience an asset (GoLive and Flash). • Experience meeting with printers, quote process and attending press-approvals. • Bilingual skills an asset. Please send your resume by email. No telephone inquiries please. Only suitable candidates will be contacted further. sales@freudcanada.com


Castle Building Centres Group Limited.

Directeur, développement des affaires – Région du Québec

Castle Building Centres Group Ltd. est un leader parmi les groupes d’achats de l’industrie du bois et des matériaux de construction au Canada. Vous êtes un individu très motivé, possédant des qualités exceptionnelles en relations personnelles et en communication. Ces atouts vous permettront de renforcer et d’accroître notre présence sur le marché québécois. Pour remplir ce mandat, vous devez connaître parfaitement l'industrie québécoise du bois et des matériaux de construction. Vous êtes prêt à voyager régulièrement, tout en étant à l’aise de travailler éloigner de la maison mère. Bien entendu, la maîtrise parfaite des deux langues officielles est indispensable pour ce poste. Vous rapportant directement au Président, voici une occasion unique de travailler avec un groupe dynamique de marchands indépendants et de participer activement à notre croissance. En lien direct et constant avec nos membres du Québec, votre succès repose sur une compréhension profonde de leurs besoins. Administrateur aguerri, vous devez posséder de bonnes connaissances en informatique et être apte à préparer des présentations étoffées. Castle Building Centres Group Ltd. offre un généreux régime de rémunération et une gamme complète d’avantages sociaux. Toutes les offres de service seront traitées avec la plus grande confidentialité. Veuillez envoyer votre curriculum vitæ à: Yvonne Patton Castle Building Centres Group Ltd. 6375 Dixie Road, Suite 400 Mississauga, Ontario L5T-2S1 Courriel: ypatton@castle.ca


National Account Manager

Here we grow again!

Graham & Brown Limited supplies some of the largest and most well known retailers around the world with innovative home enhancement products designed to meet our consumers' needs. In Canada, the company sells its’ Wallpaper and Art products through well recognized retailers like Home Depot, Wal-Mart, Canadian Tire, Home Outfitters, Lowe’s and Kent.

Rapid growth in Canada requires us to seek a candidate to fill the position of National Account Manager to manage and grow several of these key National customers. This senior role is an excellent opportunity for a highly motivated, experienced and enthusiastic individual looking for career advancement in a fast paced, entrepreneurial environment.

Key Responsibilities

- Exceed sales & profit targets by growing current products & introducing new products. - Develop & implement a Business Plan for target accounts. Present to retail buyers. - Achieve results through strategic Category Management with assigned accounts. - Work & communicate effectively with all support functions - Monitor & report on sales & profit by account as well as forecasts & inventory. - Manage account expenses to ensure that activities are carried out on Budget. - Analyze & report on POS with customers utilizing their in-house reporting systems.


- 10+ years experience as a National Account Manager selling consumer goods to National accounts in the Hardware/Home Improvement/DIY segment

- Experience working in the Canadian DIY market

- University or College graduate - A proven track record of partnering with retail buying teams to drive sales - Experience working with retailers & their POS reporting systems (i.e. Retail Link, Dart) This is a senior sales role within Graham & Brown. We offer a generous compensation package commensurate with this senior position that consists of a base salary, bonus program, car allowance and comprehensive benefit plan. The company is located in Oakville just off the QEW at Trafalgar Rd. Interested applicants should submit their resumes along with compensation expectations to gary.gill@grahambrowncdn.ca. No phone calls please.


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Publishing Details: HARDLINES is published weekly (except monthly in December and August) by HARDLINES Inc. 360 Dupont Street Toronto, Ontario, Canada M5R 1V 9 © 2008 by HARDLINES Inc. HARDLINES™ the electronic newsletter www.HARDLINES.ca ; Phone: 416.489.3396; Fax: 416.489.6154 Michael McLarney - Editor & President - mike@HARDLINES.ca Beverly Allen, Publisher - bev@HARDLINES.ca Brady Peever - Circulation Manager - brady@HARDLINES.ca The HARDLINES "Fair Play" Policy:Reproduction in whole or in part is very uncool and strictly forbidden and really and truly against the law. So please, play fair! Call for information on multiple subscriptions or a site license for your company. We do want as many people as possible to read HARDLINES each week - but let us handle your internal routing from this end! Subscription:$285 (Canadian subscribers add $14.25 GST = $299.25 per year/ GST #13987 0398 RT).Secondary subscriptions at the same office are only $46 (Canadian subscribers add $2.30 GST = $48.30).Ask about our reduced rate for branch offices.You can pay online by VISA/MC/AMEX at our secure website or send us money. Please make cheque payable to HARDLINES.


OUR RETAIL HOME IMPROVEMENT REPORT: How big is the industry? How fast has it grown in the past decade? What are our forecasts for growth in 2008 and 2009? What's the lowdown on the key retail players? Plus market shares by store format and province, and so much more. In handy PPT format, featuring more than 140 slides, 30 charts, graphs and maps and tons of other cool stuff! Click here to order your copy today — Beverly .
VANCOUVER — CanWel Building Materials Income Fund, through its subsidiary, CanWel Building Materials Ltd., has entered into an exclusive agreement with Owens Corning Canada LP to provide national warehouse and distribution services for Owens Corning fibreglass insulation products.ST. JACOBS, Ont. — Home Hardware Stores Ltd. has struck a deal with a new software provider to help the retail co-op deal more effectively with its 1,000-plus dealers nationwide. MessageWay Solutions is a provider of “advanced managed file transfer” software, which will be used to manage the exchange of electronic files between dealers and the head office’s order processing and replenishment systems. The new system is expected to improve the quality and timeliness of Home Hardware’s services to dealers. Most of Home’s information exchange with its vendor partners is already through electronic file transfer and the company is trying to enhance that capability with the dealers, as well. NEW MINAS, N.S. — Home Depot Canada opened a store here last week. The 60,000-sq.ft. outlet is just the sixth smaller sized store in the country. It is also one of 10 stores Home Depot Canada is to open before the year’s over. MONTREAL — Tembec, the forest products company, had consolidated sales for the three-month period ended Sept. 27 of $629 million, down from $675 million in same quarter a year earlier. The company generated a net loss of $4 million, tumbling from $22 million a year earlier. Earnings before unusual items, interest, income taxes, depreciation, amortization and other non-operating expenses (EBITDA) was $29 million, vs. $23 million. For the seven-month period, sales totalled $1.4 billion, down from $2.8 billion, while the company generated a net loss of $48 million in the seven-month period, compared with a net loss of $49 million during the same period a year earlier. In light of prevailing market conditions, says the company, management is assessing Tembec’s asset mix “to refocus its capital resources to improve operating margins and maximize cash flow from operations”. NORWALK, Conn. — The upcoming 2009 National Hardware Show will add another feature product section to its range of exhibitors. The show, being held May 5-7, 2009 at the Las Vegas Convention Center, will feature a storage and organization section anchored by Gladiator GarageWorks. The Gladiator brand plans to showcase the latest products, designs and ideas for consumers while educating retailers about the benefits of its modular garage organization system. The NPD Group, a provider of consumer and retail information, sees opportunity for home channel retailers in the storage categories as “garage storage is somewhat immune to the current housing market downturn,” said Mark Delaney, director of the NPD Group’s home division. “Garage storage is an up-and coming category that seems somewhat recession-proof.” LONDON — Kingfisher plc has been ranked second in The Observer Good Companies Guide 2008.  The Guide identifies the best companies in the FTSE350 and is designed to help private investors who want to put their money into companies making a positive contribution to society. Now in its second year, the Guide awarded Kingfisher, which owns the B&Q chain of DIY stores, an overall score of 87.05 out of 100. Kingfisher was cited for “its rigorous approach to its supplier base, dynamic management, and progressive attitude as an employer”. LONDON — Woolworths, the venerable U.K. department store chain, has suggested it may sell off its retail business of 815 stores. The company has two entertainment divisions, which comprise about 50% of Woolworths’ revenue. Woolworths was founded in 1909, a spinoff of the U.S. company of the same name, but it is a separate entity today. ATLANTA — Home Depot has launched a Spanish-language version of its website. According to the Wall Street Journal, the new site features 40,000 items, just like its English-language counterpart. LONDON — The pro dealer chain Stock Building Supply incurred a $60 million loss in net income for the three months ended October 31, according to its parent company Wolseley plc. Those losses come on top of a $6 million loss during the same quarter a year ago. Stock’s sales during the quarter were off 20%.
In last week’s story about IRLY and TIM-BR MART, our description of the relationship between IRLY and IHDA, through the former’s affiliation with TIM-BR MART. IRLY is not a member of ILDC, may not have been completely clear. “ Through its alliance with TIM-BR MART, Western Hardware is now a member of Independent Hardware Dealers Association (IHDA), and so is Independent Lumber Dealers Co-operative.” To get the full story of how the buying groups are interconnected, (even I get confused!), be sure and order the latest issue of our Amazing Retail Home Improvement Report! —Michael


Jon Irwin has been promoted to director of marketing and merchandising at TIM-BR MART. In his new role, he will be charged with assisting in building the TIM-BR MART brand across Canada. Irwin, a 25-year veteran of the industry, has been affiliated with a number of banners, including Beaver Lumber and Homecare, holding key marketing and merchandising positions in both of these companies. In 1997, he was part of the team, under then head of Homecare, Don Nash, that implemented the TIM-BR MART brand in Ontario, replacing the Homecare name. Since 2005, after assuming national merchandising responsibilities with TIM-BR MART, Irwin has been expanding the TIM-BR MART brand into Western Canada. Most recently, he served as national dealer development manager, overseeing the implementation of the company’s merchandising programs. In his new role, Irwin will lead the day-to-day activities of the Retail Services team, which comprises marketing, advertising and merchandising. He will be located in the TIM-BR MART Toronto office, reporting to Steve Stremecki, vice-president retail services.
The rate of home ownership in Canada rose to 68.4% in 2006. In 2007, housing-related spending contributed close to $300 billion to the Canadian economy. (CMHC 2008 Canadian Housing Observer)Canadians continue to use the Internet more than ever to purchase goods and services. In 2007, they placed almost $12.8 billion worth of orders, up 61% from 2005. This increase was driven by a larger volume of orders, which rose from 49.4 million in 2005 to 69.9 million in 2007. However, they are shopping more and more with overseas retailers: the proportion of orders placed with Canadian vendors declined from 57% in 2005 to 52% in 2007. (Stats Canada)
The CHHMA’s annual Industry Cocktail in Montreal will be held Dec. 2 at the Pointe-à-Callière Museum — the Montreal Museum of Archaeology and History — in Old Montreal. The Museum features artifacts from the First Nations of the Montreal region and depicts the story of how the French and British regimes influenced the history of this territory. You can register at www.chhma.ca under “CHHMA Events”. A block of rooms has been reserved at the Marriott Chateau Champlain.

Just posted A highly qualified sales/marketing and senior buyer with over 25 years experience and a proven track record is seeking a senior management position with a growth-oriented corporation where leadership and strong communication skills will have an impact on profitability, productivity and market share.

Click here to download this resumé

Sales professional - established relationships with key clients in the hardware, building materials, and paint industries, team player, superior business development skills, competitive, enjoys challenges.

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