HARDLINES™ Five years serving Canada's home improvement industry October 30, 2000 - Volume vi, #41 Michael McLarney, Editor & Publisher Ph: 416-489-3396 Fx: 416-489-6154 E-mail: buzz@hardlinesfax.com  
Check out our incredible Classifieds section!
* * * * * * * Cashway to become dealer-owned, Homer gets deep-sixed * Fire at Copp's Buildall may cost $1 million * Réno-Dépôt will build 14th big box in Spring 2001 * First Ace/Growmark combo show launches two-way supply deal * Housing starts projected to increase 3.2% this year * * * * * *   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 online or call us at 416-489-3396.  
ACE AND GROWMARK SOLIDIFY CONTRA SUPPLY DEAL AT FIRST JOINT SHOW   Ace Hardware Canada hosted its first-ever dealer market last fall. But for this year's event, it teamed up with wholesaler Growmark Inc. It's just one more strategy, insists Ace, to reaffirm its commitment to this country. The union between the two companies goes deeper than just this market. Two years ago, Ace struck a deal to supply hardware to Growmark's 160 co-op farm and hardware dealers throughout Ontario. Since then, Growmark has developed three merchandising "modules" for its own dealers - turnkey programs in workwear, pet food and lawn and garden. These modules, originally made available just to Castle Building Centres' dealers, will be available throughout the country via Ace's distribution infrastructure. The reciprocal supply arrangement is intended to keep Ace delivery trucks full both to and from the Growmark warehouse. Wolf Gruber, president of Ace Hardware Canada, is excited by the potential of the new programs for his dealers. "We were looking to get into pet food and supplies, while the greenhouse program will make more impact on the important female customer," he says. "Certainly, there is a need to offer our customers a way to differentiate themselves." Homecare Building Centres had a number of its dealers at the show and many expressed interest in the new programs. "They were really good and I think a bit of an eye-opener for a number of our dealers," says Anna Mammone, hardware buyer for Homecare. She particularly saw a fit for the garden and workwear modules for many of Homecare's dealers. Ace's biggest customer, and its means of entry into Canada, was Beaver Lumber. But as those stores, acquired last year by Home Hardware, stop being supplied by Ace by March 31, 2001, strategic alliances have been important to Ace's sustained viability in this country. Gruber insists that new business is growing at a healthy rate. "Our non-Beaver business year to date is up 35% and our Ace dealer business is up 43%," he points out. * * * * * * RONA PLANS CASHWAY CONVERSIONS, TERMINATES HOMER LUMBER EXPERIMENT Rona Retail Canada Inc. is carefully moving ahead with its strategy to convert all its Cashway stores to dealer-owned status. Except for six joint-venture operations, the stores are all company owned. The 66-store chain was acquired at the beginning of this year for $50 million. "We're working with the dealers and developing different models in which they can become dealer-owners," says Rick Blickstead, president and COO of Rona Retail. Rona is looking for investment both from existing store staff and from outside investors. "We want to proceed as quickly as possible," Blickstead adds. The conversion is being overseen by Jim Pybus, president of Rona Cashway Building Centres Ltd. Pybus is also in charge of the overall integration of Cashway and Rona, which includes supplying the Cashway stores from Rona's warehouse in Boucherville, QC effective last spring. The amalgamation of the two chains has meant the end of Cashway's Homer Lumber banner. This experimental program, which was rolled out to about four stores, mainly in the Niagara region of Southern Ontario, specialized in special buys and value pricing. Those stores have been changed to Rona Cashway. * * * * * * $1 MILLION FIRE RIPS THROUGH COPP'S IN LONDON, ON Fire ravaged one of the five stores in the Copp's Buildall chain in London, ON earlier this month, causing an estimated $1 million in damage. The fire, at the company's Adelaide St. location, burned one warehouse to the ground, destroying inventory that included hardwood lumber, insulation and drywall. A second warehouse suffered water and smoke damage; a foot of water left a large part of the stock there unusable. Nobody was injured in the blaze. The fire was caused by an arsonist, a 40-year-old man who was caught about a week later, although not before more fires were started elsewhere in the city. According to Jim Stewart, vice-president, finance at Copp's, the company suffered another fire back in 1981 at its Hyde Park location. An electrical short caused a fire that burned that store to the ground.
COMPANIES IN THE NEWS   Réno-Dépôt Inc. will begin construction in Sherbrooke, QC in Spring 2001 of its 14th big box store, which will open later the same year. The 125,000-sq.ft. store will cost $21 million and be located at the corner of Portland Street and Highway 410. It will include a 20,000-sq.ft. gardening centre and at least 60,000 SKUs. The store will have a staff of 300. Other sites slated for big box development by Réno-Dépôt include Laval and Beauport. The company currently operates 11 big boxes in Québec: Brossard, Anjou, Laval, Pointe-Claire, Québec City, St-Hubert, Rosemere, LaSalle, Hull, Montréal (Marché Central) and Montréal (Notre-Dame-de-Grâce). As of Fall 2000, it will also be operating three Building Boxes in Ontario: Cambridge, Brampton and Scarborough. TruServ Canada has made a supply agreement with Castle Building Centres to make available TruServ's full range of programs and products. Under the terms of the agreement, Castle dealers will have access to TruServ products, including hardware and building materials, as well as seasonal, workwear, crafts, automotive, cleaning supplies, and pet food and supplies. There are currently 37 jointly bannered Castle/True Serv dealers in Canada. In its third quarter, Ainsworth Lumber Co. saw sales decrease 18.1% from the previous quarter, due to a slow-down in U.S. housing demand. However, year to date, sales only decreased 1.7%, to $325.0 million from $330.8 million during the same period in 1999. The net loss for the 2000 third quarter was $0.2 million, compared with a net profit of $13.8 million in the same period a year earlier. For the nine month period, net earnings reached $19.7 million, compared with $20.2 million. With last year's purchase of Eaton's, Sear's Canada bought more than just a chain of ailing department stores. It also secured one of the most powerful retail brands in the country. The relaunch of Eaton's this upcoming Christmas season will also mean the rollout of two brand extensions that made the Eaton's name great. The Eaton's catalogue got mailed last week to more than 4 million existing Sears customers and the company has just announced it will rejoin the Santa Claus Parade in Toronto. The parade once belonged to Eaton's, the way the Christmas parade in New York was a Macy's event, but the retailer, which founded the parade in 1905. bailed in 1982, leaving the city to pick up the slack. Unican Security Systems Ltd. had sales for the first quarter ended September 30 of $118.0 million, up a 6.6% from $110.7 million for the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached $22.3 million, or 18.9% of sales, compared with $20.8 million or 18.8% of sales for the same period last year, up 7.2%. Net earnings for the first quarter were $8.0 million, up 14.3% over last year. Emco Ltd. has arranged with Bank of America Canada to provide it with a long term financing arrangement that will replace its current credit line. The new credit will provide up to $325 million to finance Emco's ongoing working capital and capital expenditure needs. In addition, the arrangement creates a reserve of funds to be used to repurchase the remaining balance of Emco's subordinated debentures, due April 30, 2002.
  CANADIAN STOCK WATCH
COMPANY 52-WEEK HIGH 52-WEEK LOW CLOSE (FRI.)
       
Canadian Tire 37.35 15.10 17.70
Canfor 19.80 8.10 8.70
Goodfellow 12.55 8.50 8.50
Home Depot 70.00 34.68 39 3/8
Hudsons Bay 21.65 12.50 13.50
Lowe's Cos. 67.25 34.25 41 7/8
Sears Canada 42.50 30.75 24.00
Taiga Forest 14.20 6.80 8.70
West Fraser 39.50 25.90 25.80
    "An idea is the most exciting thing there is." - John Russell (British critic)
NOTED …   Submissions are now being sought for Hardware Merchandising's Outstanding Retailer Awards, which recognize excellence in home improvement retailing in Canada. This will be the 10th edition of the awards, which will be presented at the Canadian Hardware & Building Materials Show in Toronto in February. Awards will be presented in the following categories: hardware store under 5,000 sq. ft.; hardware store over 5,000 sq. ft.; building supply/home centre; and large surface home centre/warehouse (over 50,000 sq. ft. retail). Also: two new categories have been added: contractor specialist retailer and paint specialist retailer. Retailers who wish to enter the awards can contact 416-596-5258 or email rgersbeck@rmpublishing.com.  
PEOPLE ON THE MOVE   - - - - - - - -  
MARKET INDICATORS   Housing starts in Canada should reach 154,800 units this year, up 3.2% 149,968 from 1999, according to CMHC's fourth quarter Housing Outlook Report. They are expected to rise again in 2001 to 160,900. After reaching their highest level since 1989 last year, starts in Ontario will continue to increase, albeit more moderately, thanks mainly to job creation and rising net migration. Starts in Toronto will increase to 37,500 this year, representing over half the homes built in the province. Growth in Ottawa will lead all major centres in Canada. Construction in the Atlantic region this year will benefit from strength in several sectors, including tourism and energy production. Next year, starts will drop in Nova Scotia and New Brunswick as economic growth and job creation eases. Rising housing starts in Québec will be tied to solid economic growth, increasing employment, and rising consumer confidence. Starts will be up in both Québec City and Montréal this year. In Alberta, growth in the energy and manufacturing sectors will maintain residential construction at early 1980s levels. In the Prairies as a whole, however, a drop in multiple starts in all three provinces will mean a slight decline in starts this year. With consumer confidence remaining weak and people moving to other provinces, starts in British Columbia will slip again this year, then will rise again in 2001. After a dramatic increase in August, Stats Canada reports a modest decline in September wholesalers' sales.Sales were down by $11 million from September 1999. Year-to-date sales for 9 months are up 3% to $2.2 billion from 1999. Sales declined across Canada, except for modest increases in British Columbia and Atlantic Canada. Comparing August with September by product group: Plumbing declined by $6 million , PVF was down slightly, waterworks down $5 million, hydronics up $500,000, And HVAC up by $1.5 million.  
Are you reading your own copy of Hardlines? Find out about our special company rates!    
Hardlines Marketplace   Got new products? Looking for new staff or lines? Hardlines Marketplace is read each week by North America's key decision makers in home improvement retailing and manufacturing. If you want to build your sales team or find new agents or new lines, this is the place! Only $16 per line. Call Beverly at 416-489-3396, ext. 2, for more details. * * * * * * * HARDLINES™ the electronic newsletter. www.hardlinesfax.com phone: 416-489-3396; fax: 416-489-6154. E-mail: buzz@hardlinesfax.com Michael McLarney, Editor & Publisher (extension 1): mike@hardlinesfax.com Beverly Allen, Marketing Manager (extension 2): bev@hardlinesfax.com Nancy Wright, Administrative Assistant: nancy@hardlinesfax.com Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 © 2000 by Michael McLarney. Reproduction in whole or in part is very uncool and strictly forbidden and really and truly against the law. Call for information on a site license for your company. 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.)  
  HARDLINES™ Five years serving Canada's home improvement industry October 30, 2000 - Volume vi, #41 Michael McLarney, Editor & Publisher Ph: 416-489-3396 Fx: 416-489-6154 E-mail: buzz@hardlinesfax.com  
Check out our incredible Classifieds section!
* * * * * * * Cashway to become dealer-owned, Homer gets deep-sixed * Fire at Copp's Buildall may cost $1 million * Réno-Dépôt will build 14th big box in Spring 2001 * First Ace/Growmark combo show launches two-way supply deal * Housing starts projected to increase 3.2% this year * * * * * *   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 online or call us at 416-489-3396.  
ACE AND GROWMARK SOLIDIFY CONTRA SUPPLY DEAL AT FIRST JOINT SHOW   Ace Hardware Canada hosted its first-ever dealer market last fall. But for this year's event, it teamed up with wholesaler Growmark Inc. It's just one more strategy, insists Ace, to reaffirm its commitment to this country. The union between the two companies goes deeper than just this market. Two years ago, Ace struck a deal to supply hardware to Growmark's 160 co-op farm and hardware dealers throughout Ontario. Since then, Growmark has developed three merchandising "modules" for its own dealers - turnkey programs in workwear, pet food and lawn and garden. These modules, originally made available just to Castle Building Centres' dealers, will be available throughout the country via Ace's distribution infrastructure. The reciprocal supply arrangement is intended to keep Ace delivery trucks full both to and from the Growmark warehouse. Wolf Gruber, president of Ace Hardware Canada, is excited by the potential of the new programs for his dealers. "We were looking to get into pet food and supplies, while the greenhouse program will make more impact on the important female customer," he says. "Certainly, there is a need to offer our customers a way to differentiate themselves." Homecare Building Centres had a number of its dealers at the show and many expressed interest in the new programs. "They were really good and I think a bit of an eye-opener for a number of our dealers," says Anna Mammone, hardware buyer for Homecare. She particularly saw a fit for the garden and workwear modules for many of Homecare's dealers. Ace's biggest customer, and its means of entry into Canada, was Beaver Lumber. But as those stores, acquired last year by Home Hardware, stop being supplied by Ace by March 31, 2001, strategic alliances have been important to Ace's sustained viability in this country. Gruber insists that new business is growing at a healthy rate. "Our non-Beaver business year to date is up 35% and our Ace dealer business is up 43%," he points out. * * * * * * RONA PLANS CASHWAY CONVERSIONS, TERMINATES HOMER LUMBER EXPERIMENT Rona Retail Canada Inc. is carefully moving ahead with its strategy to convert all its Cashway stores to dealer-owned status. Except for six joint-venture operations, the stores are all company owned. The 66-store chain was acquired at the beginning of this year for $50 million. "We're working with the dealers and developing different models in which they can become dealer-owners," says Rick Blickstead, president and COO of Rona Retail. Rona is looking for investment both from existing store staff and from outside investors. "We want to proceed as quickly as possible," Blickstead adds. The conversion is being overseen by Jim Pybus, president of Rona Cashway Building Centres Ltd. Pybus is also in charge of the overall integration of Cashway and Rona, which includes supplying the Cashway stores from Rona's warehouse in Boucherville, QC effective last spring. The amalgamation of the two chains has meant the end of Cashway's Homer Lumber banner. This experimental program, which was rolled out to about four stores, mainly in the Niagara region of Southern Ontario, specialized in special buys and value pricing. Those stores have been changed to Rona Cashway. * * * * * * $1 MILLION FIRE RIPS THROUGH COPP'S IN LONDON, ON Fire ravaged one of the five stores in the Copp's Buildall chain in London, ON earlier this month, causing an estimated $1 million in damage. The fire, at the company's Adelaide St. location, burned one warehouse to the ground, destroying inventory that included hardwood lumber, insulation and drywall. A second warehouse suffered water and smoke damage; a foot of water left a large part of the stock there unusable. Nobody was injured in the blaze. The fire was caused by an arsonist, a 40-year-old man who was caught about a week later, although not before more fires were started elsewhere in the city. According to Jim Stewart, vice-president, finance at Copp's, the company suffered another fire back in 1981 at its Hyde Park location. An electrical short caused a fire that burned that store to the ground.
COMPANIES IN THE NEWS   Réno-Dépôt Inc. will begin construction in Sherbrooke, QC in Spring 2001 of its 14th big box store, which will open later the same year. The 125,000-sq.ft. store will cost $21 million and be located at the corner of Portland Street and Highway 410. It will include a 20,000-sq.ft. gardening centre and at least 60,000 SKUs. The store will have a staff of 300. Other sites slated for big box development by Réno-Dépôt include Laval and Beauport. The company currently operates 11 big boxes in Québec: Brossard, Anjou, Laval, Pointe-Claire, Québec City, St-Hubert, Rosemere, LaSalle, Hull, Montréal (Marché Central) and Montréal (Notre-Dame-de-Grâce). As of Fall 2000, it will also be operating three Building Boxes in Ontario: Cambridge, Brampton and Scarborough. TruServ Canada has made a supply agreement with Castle Building Centres to make available TruServ's full range of programs and products. Under the terms of the agreement, Castle dealers will have access to TruServ products, including hardware and building materials, as well as seasonal, workwear, crafts, automotive, cleaning supplies, and pet food and supplies. There are currently 37 jointly bannered Castle/True Serv dealers in Canada. In its third quarter, Ainsworth Lumber Co. saw sales decrease 18.1% from the previous quarter, due to a slow-down in U.S. housing demand. However, year to date, sales only decreased 1.7%, to $325.0 million from $330.8 million during the same period in 1999. The net loss for the 2000 third quarter was $0.2 million, compared with a net profit of $13.8 million in the same period a year earlier. For the nine month period, net earnings reached $19.7 million, compared with $20.2 million. With last year's purchase of Eaton's, Sear's Canada bought more than just a chain of ailing department stores. It also secured one of the most powerful retail brands in the country. The relaunch of Eaton's this upcoming Christmas season will also mean the rollout of two brand extensions that made the Eaton's name great. The Eaton's catalogue got mailed last week to more than 4 million existing Sears customers and the company has just announced it will rejoin the Santa Claus Parade in Toronto. The parade once belonged to Eaton's, the way the Christmas parade in New York was a Macy's event, but the retailer, which founded the parade in 1905. bailed in 1982, leaving the city to pick up the slack. Unican Security Systems Ltd. had sales for the first quarter ended September 30 of $118.0 million, up a 6.6% from $110.7 million for the same period last year. Earnings before interest, taxes, depreciation and amortization (EBITDA) reached $22.3 million, or 18.9% of sales, compared with $20.8 million or 18.8% of sales for the same period last year, up 7.2%. Net earnings for the first quarter were $8.0 million, up 14.3% over last year. Emco Ltd. has arranged with Bank of America Canada to provide it with a long term financing arrangement that will replace its current credit line. The new credit will provide up to $325 million to finance Emco's ongoing working capital and capital expenditure needs. In addition, the arrangement creates a reserve of funds to be used to repurchase the remaining balance of Emco's subordinated debentures, due April 30, 2002.
  CANADIAN STOCK WATCH
COMPANY 52-WEEK HIGH 52-WEEK LOW CLOSE (FRI.)
       
Canadian Tire 37.35 15.10 17.70
Canfor 19.80 8.10 8.70
Goodfellow 12.55 8.50 8.50
Home Depot 70.00 34.68 39 3/8
Hudsons Bay 21.65 12.50 13.50
Lowe's Cos. 67.25 34.25 41 7/8
Sears Canada 42.50 30.75 24.00
Taiga Forest 14.20 6.80 8.70
West Fraser 39.50 25.90 25.80
    "An idea is the most exciting thing there is." - John Russell (British critic)
NOTED …   Submissions are now being sought for Hardware Merchandising's Outstanding Retailer Awards, which recognize excellence in home improvement retailing in Canada. This will be the 10th edition of the awards, which will be presented at the Canadian Hardware & Building Materials Show in Toronto in February. Awards will be presented in the following categories: hardware store under 5,000 sq. ft.; hardware store over 5,000 sq. ft.; building supply/home centre; and large surface home centre/warehouse (over 50,000 sq. ft. retail). Also: two new categories have been added: contractor specialist retailer and paint specialist retailer. Retailers who wish to enter the awards can contact 416-596-5258 or email rgersbeck@rmpublishing.com.  
PEOPLE ON THE MOVE   - - - - - - - -  
MARKET INDICATORS   Housing starts in Canada should reach 154,800 units this year, up 3.2% 149,968 from 1999, according to CMHC's fourth quarter Housing Outlook Report. They are expected to rise again in 2001 to 160,900. After reaching their highest level since 1989 last year, starts in Ontario will continue to increase, albeit more moderately, thanks mainly to job creation and rising net migration. Starts in Toronto will increase to 37,500 this year, representing over half the homes built in the province. Growth in Ottawa will lead all major centres in Canada. Construction in the Atlantic region this year will benefit from strength in several sectors, including tourism and energy production. Next year, starts will drop in Nova Scotia and New Brunswick as economic growth and job creation eases. Rising housing starts in Québec will be tied to solid economic growth, increasing employment, and rising consumer confidence. Starts will be up in both Québec City and Montréal this year. In Alberta, growth in the energy and manufacturing sectors will maintain residential construction at early 1980s levels. In the Prairies as a whole, however, a drop in multiple starts in all three provinces will mean a slight decline in starts this year. With consumer confidence remaining weak and people moving to other provinces, starts in British Columbia will slip again this year, then will rise again in 2001. After a dramatic increase in August, Stats Canada reports a modest decline in September wholesalers' sales.Sales were down by $11 million from September 1999. Year-to-date sales for 9 months are up 3% to $2.2 billion from 1999. Sales declined across Canada, except for modest increases in British Columbia and Atlantic Canada. Comparing August with September by product group: Plumbing declined by $6 million , PVF was down slightly, waterworks down $5 million, hydronics up $500,000, And HVAC up by $1.5 million.  
Are you reading your own copy of Hardlines? Find out about our special company rates!    
Hardlines Marketplace   Got new products? Looking for new staff or lines? Hardlines Marketplace is read each week by North America's key decision makers in home improvement retailing and manufacturing. If you want to build your sales team or find new agents or new lines, this is the place! Only $16 per line. Call Beverly at 416-489-3396, ext. 2, for more details. * * * * * * * HARDLINES™ the electronic newsletter. www.hardlinesfax.com phone: 416-489-3396; fax: 416-489-6154. E-mail: buzz@hardlinesfax.com Michael McLarney, Editor & Publisher (extension 1): mike@hardlinesfax.com Beverly Allen, Marketing Manager (extension 2): bev@hardlinesfax.com Nancy Wright, Administrative Assistant: nancy@hardlinesfax.com Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 © 2000 by Michael McLarney. Reproduction in whole or in part is very uncool and strictly forbidden and really and truly against the law. Call for information on a site license for your company. 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.)