October 25, 1999 - Volume v, #43
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

BEAVER HEAD DEPARTS WHILE DEAL AWAITS REGULATORY APPROVAL

With finalization of Home Hardware's purchase of Beaver Lumber still pending, Home has gone ahead with re-organization at the senior management levels, including the departure of Beaver's president and CEO, Doug Robinson. (Expectations were that the deal would close by the end of September. It awaits final approval by the federal Competition Bureau.)

Robinson's mandate upon replacing Ralph Trott four years ago was to prepare the company for sale. With that completed, he is now preparing to return to the U.S., where he spent 13 years at 84 Lumber.

Looking back, Robinson calls the experience "exhilarating," and adds that the addition of Beaver will enhance Home's positioning as a strong LBM player. "I think a dual brand strategy will be a great strategy for them," he says. Home's existing LBM dealers would benefit from taking on the Beaver name: "They'll struggle to get those dealers to convert, but I think they should." Beaver currently has two different LBM banners.

Robinson also expects the sale of Beaver to be the "catalyst for further consolidation" in Canadian home improvement retailing.

* * * * * * *

SODISCO-HOWDEN CEO BOASTS STRONG SALES, HINTS AT ACQUISITION

Strong sales performance and hints of a possible acquisition were key messages of the head of Sodisco-Howden Group at the Howden dealer market last week in Toronto. Tony Molluso, president and CEO, said sales for the year are expected to reach $400 million. But, he added, he would like to see the company grow through acquisition and said two companies have been targetted, one of which may become part of Sodisco-Howden before year's end. He also mentioned his interest in establishing a Howden distribution centre in Western Canada.

Taiga Forest Products Ltd. recorded sales for the second quarter ending September 30 of $227.2 million, compared with $182.1 million for the same period in the previous year. Earnings for the second quarter were $2.0 million, up from $1.9 million for the same period in 1998. Sales for the first six months reached $455.9 million, up from $357.27 million a year earlier.

MacMillan Bloedel reported net earnings of $47 million for the third quarter, compared with $77 million for the same period last year. Excluding non-recurring items, net earnings for the third quarter were $65 million. For the nine months ended September 30 MB reported net earnings of $153 million, compared with net earnings of $38 million ($.27 per share) for the same period in 1998. Distribution contributed $14 million to operating earnings, up $3 million from 1998. Compared to 2Q '99, the decline in prices for framing lumber and panels during the quarter adversely affected sales volumes as customers reduced orders and waited for prices to bottom out. Commodity trading margins were also adversely affected. Combined sales were up 8% from the third quarter of last year.

Sodisco-Howden Group has converted all its remaining Novico stores in English Canada, effectively consolidating its banners to Pro and Do-it center. About 100 Novico stores remain in Québec.

Ainsworth Lumber Co. Ltd. had sales of $122.4 million for the third quarter ended September 30, compared with $103.0 million for same period in 1998. Net earnings were $13.8 million in the third quarter, compared with $5.5 million in 1998. Sales for the nine months ended September 30 were $330.8 million, compared with $264.3 million in 1998.

All-Install, a comprehensive marketing package for installed project sales, is now available to Castle dealers, after being introduced at Castle's latest Area Group Leaders' Meeting. Castle members have the option of offering All-Install as either a department right in the store or as a stand-alone showroom in a high traffic part of the community. The first store to put in the program was Bigford's in Brighton, Ont., which put in a design centre in nearby Belleville. Another 75 have expressed interest in the program.

For the third quarter ended October 2, Sears Canada posted net earnings of $35.3 million, up from $24.1 million for the third quarter of 1998. 3Q revenues increased by 12.8% to $1.457 billion, from $1.292 billion in 1998.

Emco Ltd. had net earnings for the quarter ended September 30 of $4.8 million, compared with $7.4 million for the third quarter of 1998. Sales for the quarter were $351.0 million, an increase of 3.2% from $340.1 million for the same period last year, excluding the business sold in 1998. Emco Distribution's 3Q sales in Canada, including acquisitions, were up 4.2% and 2.1% higher for the first nine months of the year.

Westburne's sales for the third quarter ended September 30 reached $679.7 million, an increase of $88.8 million or 15 % over the previous year, with same store sales increasing by 6.0 %. Sales growth in Canada reflected a strong industrial and commercial market in Ontario, Québec and the Atlantic region, partially offset by the impact of regional economic weaknesses in Western Canada. Sales for the nine months ended September 30th reached $1,788.2 million (including $95.3 million from acquisitions), up 10.0 % over the previous year. Excluding acquisitions, sales increased by 4.1%.

Unican Security Systems Ltd. recently supplied the U.S. Pentagon with Unican 4000 Series programmable pushbutton locks throughout its facilities. The headquarters of the U.S. Department of Defense is one of the world's largest office buildings, with approximately 23,000 military and civilian employees.

At a recent investor and analyst meeting, Lowe's Cos Inc. announced that top-line sales growth is projected to be in the 20% range over the next few years. In addition, moderate improvements to gross margins and total expense leverage are anticipated over that same period. As a result, management expectations are for future diluted earnings per share growth to be in the 22%-23% range on an annualized basis.

Consumer-friendly project calculators are now available on Home Depot's Web site www.homedepot.com. They will enable users to calculate automatically the amount of materials required for a project. To use the calculators, consumers enter the dimensions of an area into the proper calculator that tabulates how much material, such as paint, wallpaper, or grass seed, should be purchased to complete the project.

CANADIAN STOCK WATCH

COMPANY	52-WEEK HIGH	52-WEEK LOW	CLOSE (FRI.)
Canadian Tire	46.00	29.00	35.65
Canfor	13.30	4.25	11.45
Goodfellow	11.80	6.00	11.10
Hudsons Bay	23.85	4.00	18.65
MacMillan Blo.	27.85	12.05	22.75
Sears Canada	34.35	15.25	34.30
Taiga Forest	14.75	8.65	13.50
West Fraser	41.00	9.05	32.55

"In quietness and in confidence shall be your strength."
&endash; Isaiah XXX:15

PEOPLE ON THE MOVE

Ed Barnett has joined Ace Hardware Canada as retail sales consultant for Newfoundland and Labrador. He was formerly with Weber Supply and Thornes … Warren Smith has joined Ace as a retail sales consultant for Ontario. He comes over from LePage. (905-475-1188)

Brett Sanders has joined Vanguard Plastics Ltd. As retail sales coordinator. He was formerly at Smith-Barregar in advertising and promotion. (604-888-2511)

CORRECTION: Seems I've been mixing up titles at Castle Building Centres lately. Ron Marchetti is national business development manager. David Morton is national marketing manager. (905-564-3307)

"Everybody's been trying to get cozy, but nobody wants to go to bed." &emdash; Doug Robinson, former president and CEO of Beaver Lumber, believes the various alliances and supply deals made by different groups in recent years will give way to more solid consolidation as a result of Home Hardware's purchase of Beaver Lumber.

-"There are no rules in retail anymore. If there's an opportunity to sell something different in a building centre, we'll take it." - David Morton, national marketing manager of Castle Building Centres, on the group's decision to make available to its members lawn and garden, pet supply and workwear programs from GROWMARK.

Retail trade advanced 1.2% (seasonally adjusted) in August to $22.1 billion, says Stats Canada. Holding prices constant, the increase was 0.7%. This is the fourth consecutive monthly gain, with most of the increase in prices in the automotive sector (+2.6%). "Other" stores (including hardware) were up 0.4%. All provinces showed increases except British Columbia (-0.8%).

* * * * * * *

HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 1999 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.

October 25, 1999 - Volume v, #43
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

BEAVER HEAD DEPARTS WHILE DEAL AWAITS REGULATORY APPROVAL

With finalization of Home Hardware's purchase of Beaver Lumber still pending, Home has gone ahead with re-organization at the senior management levels, including the departure of Beaver's president and CEO, Doug Robinson. (Expectations were that the deal would close by the end of September. It awaits final approval by the federal Competition Bureau.)

Robinson's mandate upon replacing Ralph Trott four years ago was to prepare the company for sale. With that completed, he is now preparing to return to the U.S., where he spent 13 years at 84 Lumber.

Looking back, Robinson calls the experience "exhilarating," and adds that the addition of Beaver will enhance Home's positioning as a strong LBM player. "I think a dual brand strategy will be a great strategy for them," he says. Home's existing LBM dealers would benefit from taking on the Beaver name: "They'll struggle to get those dealers to convert, but I think they should." Beaver currently has two different LBM banners.

Robinson also expects the sale of Beaver to be the "catalyst for further consolidation" in Canadian home improvement retailing.

* * * * * * *

SODISCO-HOWDEN CEO BOASTS STRONG SALES, HINTS AT ACQUISITION

Strong sales performance and hints of a possible acquisition were key messages of the head of Sodisco-Howden Group at the Howden dealer market last week in Toronto. Tony Molluso, president and CEO, said sales for the year are expected to reach $400 million. But, he added, he would like to see the company grow through acquisition and said two companies have been targetted, one of which may become part of Sodisco-Howden before year's end. He also mentioned his interest in establishing a Howden distribution centre in Western Canada.

Taiga Forest Products Ltd. recorded sales for the second quarter ending September 30 of $227.2 million, compared with $182.1 million for the same period in the previous year. Earnings for the second quarter were $2.0 million, up from $1.9 million for the same period in 1998. Sales for the first six months reached $455.9 million, up from $357.27 million a year earlier.

MacMillan Bloedel reported net earnings of $47 million for the third quarter, compared with $77 million for the same period last year. Excluding non-recurring items, net earnings for the third quarter were $65 million. For the nine months ended September 30 MB reported net earnings of $153 million, compared with net earnings of $38 million ($.27 per share) for the same period in 1998. Distribution contributed $14 million to operating earnings, up $3 million from 1998. Compared to 2Q '99, the decline in prices for framing lumber and panels during the quarter adversely affected sales volumes as customers reduced orders and waited for prices to bottom out. Commodity trading margins were also adversely affected. Combined sales were up 8% from the third quarter of last year.

Sodisco-Howden Group has converted all its remaining Novico stores in English Canada, effectively consolidating its banners to Pro and Do-it center. About 100 Novico stores remain in Québec.

Ainsworth Lumber Co. Ltd. had sales of $122.4 million for the third quarter ended September 30, compared with $103.0 million for same period in 1998. Net earnings were $13.8 million in the third quarter, compared with $5.5 million in 1998. Sales for the nine months ended September 30 were $330.8 million, compared with $264.3 million in 1998.

All-Install, a comprehensive marketing package for installed project sales, is now available to Castle dealers, after being introduced at Castle's latest Area Group Leaders' Meeting. Castle members have the option of offering All-Install as either a department right in the store or as a stand-alone showroom in a high traffic part of the community. The first store to put in the program was Bigford's in Brighton, Ont., which put in a design centre in nearby Belleville. Another 75 have expressed interest in the program.

For the third quarter ended October 2, Sears Canada posted net earnings of $35.3 million, up from $24.1 million for the third quarter of 1998. 3Q revenues increased by 12.8% to $1.457 billion, from $1.292 billion in 1998.

Emco Ltd. had net earnings for the quarter ended September 30 of $4.8 million, compared with $7.4 million for the third quarter of 1998. Sales for the quarter were $351.0 million, an increase of 3.2% from $340.1 million for the same period last year, excluding the business sold in 1998. Emco Distribution's 3Q sales in Canada, including acquisitions, were up 4.2% and 2.1% higher for the first nine months of the year.

Westburne's sales for the third quarter ended September 30 reached $679.7 million, an increase of $88.8 million or 15 % over the previous year, with same store sales increasing by 6.0 %. Sales growth in Canada reflected a strong industrial and commercial market in Ontario, Québec and the Atlantic region, partially offset by the impact of regional economic weaknesses in Western Canada. Sales for the nine months ended September 30th reached $1,788.2 million (including $95.3 million from acquisitions), up 10.0 % over the previous year. Excluding acquisitions, sales increased by 4.1%.

Unican Security Systems Ltd. recently supplied the U.S. Pentagon with Unican 4000 Series programmable pushbutton locks throughout its facilities. The headquarters of the U.S. Department of Defense is one of the world's largest office buildings, with approximately 23,000 military and civilian employees.

At a recent investor and analyst meeting, Lowe's Cos Inc. announced that top-line sales growth is projected to be in the 20% range over the next few years. In addition, moderate improvements to gross margins and total expense leverage are anticipated over that same period. As a result, management expectations are for future diluted earnings per share growth to be in the 22%-23% range on an annualized basis.

Consumer-friendly project calculators are now available on Home Depot's Web site www.homedepot.com. They will enable users to calculate automatically the amount of materials required for a project. To use the calculators, consumers enter the dimensions of an area into the proper calculator that tabulates how much material, such as paint, wallpaper, or grass seed, should be purchased to complete the project.

CANADIAN STOCK WATCH

COMPANY	52-WEEK HIGH	52-WEEK LOW	CLOSE (FRI.)
Canadian Tire	46.00	29.00	35.65
Canfor	13.30	4.25	11.45
Goodfellow	11.80	6.00	11.10
Hudsons Bay	23.85	4.00	18.65
MacMillan Blo.	27.85	12.05	22.75
Sears Canada	34.35	15.25	34.30
Taiga Forest	14.75	8.65	13.50
West Fraser	41.00	9.05	32.55

"In quietness and in confidence shall be your strength."
&endash; Isaiah XXX:15

PEOPLE ON THE MOVE

Ed Barnett has joined Ace Hardware Canada as retail sales consultant for Newfoundland and Labrador. He was formerly with Weber Supply and Thornes … Warren Smith has joined Ace as a retail sales consultant for Ontario. He comes over from LePage. (905-475-1188)

Brett Sanders has joined Vanguard Plastics Ltd. As retail sales coordinator. He was formerly at Smith-Barregar in advertising and promotion. (604-888-2511)

CORRECTION: Seems I've been mixing up titles at Castle Building Centres lately. Ron Marchetti is national business development manager. David Morton is national marketing manager. (905-564-3307)

"Everybody's been trying to get cozy, but nobody wants to go to bed." &emdash; Doug Robinson, former president and CEO of Beaver Lumber, believes the various alliances and supply deals made by different groups in recent years will give way to more solid consolidation as a result of Home Hardware's purchase of Beaver Lumber.

-"There are no rules in retail anymore. If there's an opportunity to sell something different in a building centre, we'll take it." - David Morton, national marketing manager of Castle Building Centres, on the group's decision to make available to its members lawn and garden, pet supply and workwear programs from GROWMARK.

Retail trade advanced 1.2% (seasonally adjusted) in August to $22.1 billion, says Stats Canada. Holding prices constant, the increase was 0.7%. This is the fourth consecutive monthly gain, with most of the increase in prices in the automotive sector (+2.6%). "Other" stores (including hardware) were up 0.4%. All provinces showed increases except British Columbia (-0.8%).

* * * * * * *

HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 1999 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.