HARDLINES™
Five years serving Canada's home improvement industry
October 16, 2000 - Volume vi, #39
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154
E-mail: buzz@hardlinesfax.com Check out our incredible Classifieds section!* * * * * *
* Kent prepares for Home Depot with store expansions
* Rona announces partnership with Watt Group to develop new box stores
* Molluso hints at another Sodisco-Howden acquisition
* Home Depot stock stumbles following Wall Street warning
* * * * * *THE HARDLINES MARKETPLACE It's a great place to announce new lines or acquisitions, services or lines available. And of course they are an effective, low-cost way to hire new people. At just $16 per line, here's what you get with each Marketplace Ad:- two weeks in the fax version
- three weeks in the email version
- posted on our website for three weeks
- your ad read by more than 3,000 people every single week
- thousands of hits on our Website!
- our boundless thanks for your support of Hardlines!Bev takes care of the Classifieds so contact her: bev@hardlinesfax.com or call her at 416-489-3396.HARDLINES WHO'S WHO 2000-2001 EDITION: The only annual guide to Canada's leading hardware and home improvement retailers, wholesalers, buying groups, mass merchants and co-ops. It lists more than 100 companies. Each listing features executives, product categories, sales, number of outlets, buyers, etc. No salesperson or marketing person should be without this little beauty! In fact, some of our subscribers are buying three and four copies, so the whole sales force will be armed with the right names and numbers while they're on the road. Don't be caught without it!The cost is only $125 for subscribers, or $165 for non-subscribers (+ GST/HST).Order onlineor call us at 416-489-3396.KENT PROACTIVE IN ATLANTIC BIG BOX BATTLEThe arrival of Home Depot to Atlantic Canada has been met with strengthened competition from the incumbent big box there, Kent Building Supplies. Kent's first big box, erected in Halifax in the early '90s, underwent expansion and reopened last week, just in time for the opening of Home Depot's first store in Halifax this coming Thursday, October 19. Home Depot's second store will open November 2 in Dartmouth, NS.The Kent store was renovated from 85,000 sq.ft. to 110,000 sq.ft., plus a new larger drive-through and garden centre. In addition, three more acres of land adjoining the store, already owned by Kent, were developed, bringing the property to 13 acres in total. "We've expanded just about everything in the new store," says Stew Valcour, general manager of Kent. "But we added a larger flooring department, expanded our tool department and expanded our fashion bath department. We've also added a library so customers can look up different projects at their leisure."Because this store was Kent's first foray into big box retailing, Valcour admits the company has learned a lot since then. One thing that's been changed is the lighting. "We've re-lamped the whole store so its much brighter," he says. It even features a Tim Horton's donut shop.Services which are exclusive to Kent big boxes include a cut shop, says Valcour. "It's something Home Depot doesn't do," he notes. The one in this store has been expanded with carpenters on staff at all times for custom cutting.Valcour also believes his stores have a distinct advantage over the new competition in the field of contractor sales, which represents a significant proportion of all Kent's business, including its big box stores. The Moncton store, does about 20% of its business with the trades.More emphasis has been put on training facilities, too - for both customers and staff. A permanent facility has been installed at the front of the store, complete with video playback and big-screen television. It's also cut off from the noise of the store to offer a more quiet environment for customers.* * * * * *RONA WILL USE WATT GROUP FOR ONTARIO ROLLOUTRona Retail Canada has contracted the Watt Group develop a design and format for its big box stores in Ontario. The stores, which will differ from the traditional big box Rona stores being installed in Québec, will nonetheless be more than 100,000 sq.ft. in size and present a new spin on the category. "Together with The Watt Group, Rona plans to redefine the home improvement big box shopping experience," says Rick Blickstead, president and COO of Rona Retail. He refers to the new concept as "home solutions" retailing. The first such store will open in Brampton, ON in March 2001. That market is getting crowded, with Home Depot already there and The Building Box on its way. As a result, Rona is trying to stand out from the pack. "We need to give people in the GTA an alternative," says Blickstead. "The others are doing the big box formula very well, so we don't intend on building the same kind of store. The Watt Group is one of the leading design and branding companies in the world, responsible for packaging up the Home Depot concept back in 1978. Other recipients of The Watt Group's expertise include Do-it Center, Lansing Buildall's award winning Kennedy Road store, Ontario Brewers' Retail's "The Beer Store," Loblaws and Mitre 10, a dealer owned hardware chain in Australia.The Watt Group was also part of our program at last month's Hardlines Marketing Conference, where their presentation on branding was made to a packed room.* * * * * *SODISCO-HOWDEN CONSIDERS ANOTHER ACQUISITIONFocusing on selling smarter instead of worrying about buying smarter is just one of the messages Tony Molluso, outspoken CEO of the Sodisco-Howden Group, is trying to get out to the industry. He talked about supplier partnerships, contractor loyalty, dealer consolidation and future acquisitions at a recent breakfast meeting hosted by the Canadian Hardware and Housewares Manufacturers Association. Despite its purchase of Smith-Barregar in British Columbia and Weber Supply in Southwestern Ontario, Molluso insists his company will be profitable this year. He also said he's seriously considering establishing a 75,000-sq.ft. distribution centre in Moncton, NB, "but we will not acquire another company where we have to acquire a distribution centre to go with it." He did tell Hardlines, however, "We have three balls in the air. One of them has to land," within the next several weeks.* * * * * *HOME DEPOT STOCK FALTERS ON EARNINGS REPORTSThe news that Home Depot's earnings would be off sent its stock tumbling from 51 to 36 7/16, from a low of 34 7/8 at the end of last week. Home Depot blamed lower-than-expected profits in its third quarter on low prices on lumber and building materials. Profits per share of approximately US$0.28 for the period, an increase of 12% over the third quarter of 1999 - and only half of the company's targets, were also blamed on "hurricane related activity" and Y2K related sales activity over the second half of 1999 (returns on all those Y2K gas generators finally hitting the bottom line???).The company still anticipates 23-25% earnings growth for fiscal 2001, which will come, says Home Depot president and CEO Arthur Blank, from its Expo Design Centres (see also People on the move), Villager's Hardware and other new business strategies such as e-commerce and international expansion.Lowe's, by comparison, whose fiscal third quarter ends on October 27, 2000, anticipates a total sales increase of about 18%. COMPANIES IN THE NEWSWest Fraser Timber Co. will take over Plum Creek Timber Co.'s Southern lumber manufacturing operations in Joyce, LA and Huttig, AK for US$60 million plus working capital. The two mills have the capacity to produce 300 million board feet of lumber per year. As part of the deal, Plum Creek will supply logs to the facilities at market prices. West Fraser says it intends to keep all the operations' 430 employees and increase overall capacity to 400 million board feet. The sale is expected to close in the fourth quarter of 2000.Owens Corning in Canada is not yet part of the parent company's bankruptcy protection filing. The wholly owned Canadian subsidiary continues its day-to-day operations uninterrupted, and all warranties and guarantees on OC products, both here and in the U.S., will continue to be honoured, says a company spokesperson.Smith & Associates has been appointed as the exclusive rep agency in Canada for Duragloss Car Care Products, Auto Spares Canada and The Carby Corp.Former Eaton's staff may have been neglected after the retailer's closing, but former customers are being wooed once again. In its effort to restore the venerable name in its new chain of upscale urban department stores, Sears mailed out new Eatons credit cards to more than 100,000 former Eaton's customers, as well as new customers, across Canada who responded to a direct mail campaign back in August.The Bay has established a charitable program that is intended to raise millions of dollars to support Canadian cancer sufferers and their families. The new program, called Well Into the Future, has been structured in association with the Canadian Cancer Society, Look Good Feel Better, Wellspring and Candlelighters Canada. The Bay, its staff and customers will be able to take part in a kick-off fund-raiser called "Donate a dollar." CANADIAN STOCK WATCH