John Caulfield, Contributing Editor
vol. xi, #40, October 24, 2005

IN THIS ISSUE: • Sexton and Allroc make a deal • Allroc will focus on GSD • TruServ steps up general merchandise programs • ILDC member inducted into JA Hall of Fame • Quebec dealers ride wave of DIY enthusiasm • Weyerhaueser reports 3Q results • Galli exits Newell Rubbermaid * * * * * *

“People who shut their eyes to reality simply invite their own destruction.” — James Baldwin (American writer)
MISSISSAUGA, Ont.–After less than a year receiving hardware from Le Groupe BMR, TIM-BR MART Ontario has severed ties with the Quebec-based wholesaler and buying group. BMR, one of only two buying groups to do its own warehousing and distribution (the other is Surrey, B.C.-based Irly Distributors), had last year struck supply agreements with both TIM-BR Mart Ontario (aka Homecare) and AWARD, the Atlantic region buying group. The arrangement resulted in the formation of Quincaillerie Matreco Hardware, reflecting an investment by all three groups, which are already connected through their membership in the umbrella group Matreco. However, the deal has been plagued with mishap: a distribution centre installed by AWARD to route product to its 98 stores bled red ink and was shuttered in August, paving the way for the exit of AWARD president Tom Smith. BMR’s Longueuil, Que. warehouse burned to the ground, disrupting shipments. TIM-BR Mart Ontario’s deal will end effective Dec. 31, 2005, however, dealers are expected to wind down their orders from BMR by the end of this month. TIM-BR Mart Ontario’s decision to end its agreement with BMR was reportedly also due to BMR’s efforts to recruit members from its sister organizations. In fact, Brian Hermiston, a former AWARD staffer, has been hired by BMR to recruit dealers, and his efforts are tipping into anglophone Canada.
WINNIPEG–Sexton Group Ltd., the privately owned buying group headquartered here, has picked up 35 dealers that formerly belonged to Allroc Building Products. Allroc’s primary business is serving gypsum supply dealers, and the members who are moving to Sexton are building supply dealers.Unlike a more common scenario, whereby one group plunders the ranks of another to build its membership, Sexton and Allroc are in fact working together with these dealers to ensure a smooth conversion. The result will boost Sexton’s ranks beyond its existing 247 stores and leave Allroc to focus on the GSD sector with its remaining members and close to $750 million in retail sales. The deal is effective Nov. 1. Sexton would not reveal how much volume the new dealers will add to the $1.5 billion group’s retail sales. The news comes only one week after the announced hiring of Mark Henderson as vice-president at Sexton. Henderson is well-known throughout the industry as the former head of Henderson, a wholesaler in Winnipeg that was sold to Jeld-Wen.
LONDON, Ont.–T. Brayl Copp, owner of one of this city’s most successful building centre operations, was recognized last week when the London & District Junior Achievement inducted Copp to its Hall of Fame. Copp, owner of Copp Buildall, was on hand with his wife, Marjorie, and four children, Stacey, Lisa, Melinda, and Steven, at the awards dinner held Oct. 19 at the London Convention Centre. About 700 filled the room to pay tribute to Copp and fellow inductee, the late Peter J. Ivey, former head of Emco. In addition, a number of other members of the industry, including fellow members of the buying group ILDC, and many suppliers to Copp Buildall were on hand. Jim McKay, who recently retired as president of CGC, paid a personal tribute to his longtime friend and customer at the event. The Copp family first entered the building supplies business in 1908, when two brothers, William and Thomas Copp, arrived from Devonshire, England, and purchased an existing stone quarry. Over the years, lumber was added to the mix, as were additional locations throughout London. T. Brayl Copp joined the company in 1952, becoming president in 1966. Today, Copp Buildall has four stores and estimated sales of almost $50 million. It has been headed since 2000 by Brayl’s son, Steven Copp. Peter Ivey also has close ties to this industry. The Ivey family bought Emco in the ’30s and turned it into one of London’s leading companies. Under Peter Ivey’s aegis, it expanded internationally, and even became the first 100% foreign-owned company to operate in Japan. Ivey founded the Charles Ivey School of Business at the University of Western Ontario and was instrumental in establishing the charter for Junior Achievement in London.
WINNIPEG–The presence of more than 40 grocery store owners at last week’s TruServ market reflects the co-op hardware distributor’s growing presence in this market. TruServ, which supplies to about 676 hardware, building supply and variety retailers across the country, has been establishing itself as the hardlines supplier of choice for independent grocery and pharmacy retailers looking to expand their general merchandise categories.TruServ recently struck a supply agreement with a Winnipeg-based grocery buying group, Triple 4, and so far almost 70 of its members have signed on. Vanan Foods, a group based in Alberta, has also signed on. However, the initiative is no longer restricted to Western Canada: LM, a group of eight stores in Southwestern Ontario, has signed a general merchandise agreement with TruServ, as well. As the lines of retail blur, and other sectors expand their hardlines and general merchandise categories, TruServ is taking advantage of their role as a wholesaler to a diverse range of retailers. Besides grocery, the group continues to make inroads in the pharmacy sector, as well. At the show, the company informed Hardlines of a new supply deal with Pharmasave, the third-largest drug store chain in the country, with 330 stores. Effective Nov. 1, TruServ will begin testing its new merchandising in six Pharmasave stores, with the near-term potential for rollout to another 31 stores in a region ranging from Saskatchewan to Northern Ontario. At the market, these dealers were able to see what kinds of merchandising TruServ is putting into their stores, including endcap promotional products for everything from seasonal items and automotive accessories to toys. Mike Morin, who was hired in March of this year as business development manager – grocery, says Loblaws has led the way in expanding what one will find in a grocery store. “In pretty much any grocery store in Canada, you’ll see this range of products,” he said. But the new program also ended up attracting the interest of many of TruServ’s existing True Value hardware dealers. “Really, the program can be used throughout the whole member base,” Morin said.
NEW YORK–An analyst giving the thumbs’ up to Home Depot’s performance potential helped lift the giant retailer’s share price to its highest level in more than a month, despite concerns about a slowdown in the housing market and softening of consumer spending. According to Dana Telsey, of Bear Stearns, the company began receiving complete sales data from each store in the U.S. on a nightly basis earlier this year. The value of the technology improvements such as this US$1.25 billion investment managed to boost Depot’s shares by as much as 2.5% before the end of last week. By mid-day Friday, they were trading at $38.40, from a 52-week low of $34.56.
The 2005 Retail Road Trip to Buffalo:
Expose yourself to what’s happening with brands, packaging, merchandising and retail in the U.S. Join the team of Brandid and DMD on our tour of key retailers such as Target, Wegmans and Lowe’s, as well as 200 retailers at Walden Galleria mall. Wed., Nov. 16. Bus departs 7:30 a.m., return by 6:30 p.m., to and from 10 Bay St., with a west end pickup in Burlington. Cost: $75. Contact:
MONTREAL–According to the ADMACQ Rénovex Index, a quarterly publication of The Building Materials Retailers Association of Quebec, 74% of Quebec households say that they regularly carry out home improvement or do-it-yourself projects. This figure reflects a slight decrease of 2% from last June’s data and a 1% increase over March results. Donald O’Hara, president and general manager of ADMACQ, says these results clearly indicate that the interest in renovation and do-it-yourself projects is much more than a passing fad. “Having just issued our fifth ADMACQ Rénovex Index, we can now confirm that this trend has already been observed by our members throughout Quebec.”TORONTO–The third quarter found Sears Canada Inc. with total revenues of $1.487 billion, a 0.7% dip from $1.497 billion for the similar 13-week period in 2004. The lower revenues reflect the impact of the company’s April 2005 acquisition of Cantrex Group Inc., a buying group supplying independent retailers of furniture, home improvement and appliances. Profit for the quarter, excluding non-comparable items, was $20.8 million, or 19 cents per share, compared with $18.1 million, or 17 cents per share, in the quarter last year. Thanks to previously announced layoffs, the company had a non-comparable pre-tax restructuring charge of $62.7 million. Year to date, sales reached $4.329 billion, up 0.3% over last year, while profit was $27.9 million, or 26 cents per share, compared with $35.5 million, or 33 cents per share, for the same period last year. FEDERAL WAY, Wash.–Forest products giant Weyerhaeuser Co. reported a 52% decline in its third-quarter net income, to US$285 million, on revenue of US$5.6 billion that was off 1.3% from the same period a year ago. The company’s third-quarter earnings included a one-time tax benefit of US$14 million that related to a change in the tax laws in the state of Ohio. It also includes a US$21 million charge for the early extinguishment of debt. Through nine months ended Sept. 26, Weyerhaeuser’s total sales (including real estate and related assets) inched up 3.2% to US$16.8 billion. However, its earnings during this period declined 12.9% to US$944 million. GRAND FALLS, N.B.–With a focus on productivity and efficiency, Timber Top Trusses, which manufactures roof trusses and engineered floor systems, has quadrupled sales since 1998 and started exporting to as far away as Iceland and Spain. For this innovative and growing success story, owner Steve Toner, 30, has earned the Business Development Bank of Canada’s Young Entrepreneur Award for New Brunswick. NEWTON, Iowa–Maytag Corp. reported third-quarter consolidated net sales of US$1.26 billion, up 6.5% from net sales of US$1.19 billion in the same period last year. The company suffered a net loss of US$18.2 million, or 23 cents per share, compared with US$7.5 million, or 9 cents per share, a year earlier. In the third quarter, home appliances net sales were up 6.7%, driven largely by sales of major appliances. GRAND RAPIDS, Mich.–Knape & Vogt Manufacturing Co. has hired W.Y. Campbell & Co., an investment banker, to advise it on strategies, including a possible sell-off. Knape & Vogt’s chairman and CEO, Bill Dutmers, said the maker of kitchen and bath storage products will continue to invest in its products and people, adding that the outcome of the strategic assessment won’t necessarily result in the sale of KV. The company employs about 600, with manufacturing in Grand Rapids and Ho Chi Minh City, Vietnam, plus sales offices in Chicago and Mississauga, Ont. MONTREAL–At MAAX Holdings Inc., net sales for the second quarter of fiscal 2006 increased 1.6% to $138.3 million, from $136.1 million for the second quarter of 2005. Profits before income taxes decreased $11.7 million from $9.7 million, resulting in a loss of $2.0 million for the second quarter. Net sales for the six-month period increased 2.5% to $279.1 million, from $272.3 million, while the company went from a profit of $11.2 million to a loss of $4.8 million.
Joseph Galli has resigned from his position as CEO of Newell Rubbermaid. The resignation comes after sales fell for 10 consecutive quarters. Mark Ketchum, a former executive at Procter & Gamble and a Newell director, has been named interim CEO. The company will also start a search for a permanent successor.Can-Save, the Barrie, Ont.-based building materials distributor, has appointed Bob Crowell to the position of kitchen specialist for the Maritimes region. He was formerly with Bonaventure Agencies. (902-440-1619)
Spending in retail stores fell by 0.3% to $31.2 billion in August, following increases of 1.4% in July and 1.3% in June. August’s decline was the fourth monthly decline since the start of 2004, during which time retail sales grew by 12.7%. In constant dollars, retail sales dropped 1.0% in August, as consumers faced higher prices for gasoline and motor vehicles. Excluding the auto sector, retail sales advanced by a marginal 0.2% in August, after increasing by 0.7% in July and 0.3% in June.The Bank of Canada upped its key lending rate to 3% last week, only the second increase in a year. The increase marks the Bank’s efforts to put the brakes on the economy, which is operating at full production capacity.

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