Besides that, both sides expect greater synergies by virtue of the simple fact both TruServ and Sexton are headquartered in Winnipeg.

Over the years, TruServ has made similar supply agreements with other buying groups, including Castle Building Centres. About 40 Castle dealers currently fly both the True Value and Castle banners, and seven Sexton already customers operate under a dual-banner arrangement.

However, the latest deal is structured to make more programs available to Sexton dealers without having to sign on for a full bannered program. It’s all part of TruServ’s effort to offer a wholesale hardlines alternative to independents. “We’re not necessarily going to provide a full program, because that’s what the groups do,” says Ray Falkenberg, vice-president business development and marketing for TruServ Canada. “They can use TruServ as a wholesaler and can then grow within the program, if they choose.” He stresses that even if an independent takes on a full bannered True Value program, that program will be managed through the buying group, rather than requiring the dealer to join TruServ.

In its efforts to become a full-line national wholesaler, TruServ has been attempting since late last year to develop customers outside its base of members dealers, wooing independents from other buying groups. In fact, TruServ Canada already supplies about 25 Castle dealers on a similar basis, and two Sexton members have just committed to the new supply agreement on a strictly wholesale basis. Both dealers have said they would consider a full banner program down the road.

“We’re just trying to adapt to the marketplace, so we have a bannered program and a non-bannered program,” Falkenberg says. “It brings us in as a serious player. We really feel there’s a demand out there outside of Sodisco-Howden to supply these stores.”

Fort Wayne, IN — The previously announced decision of Sodisco-Howden Group to switch its Do-it center dealers to Ace Building Centre got a nudge from the banner’s licensee, Do it Best Corp. Considering that Sodisco-Howden purchased the assets of Ace Hardware in Canada, a major competitor of Do it Best, the U.S. co-op retailer has decided to terminate its agreement with Sodisco-Howden.

“It was our feeling that [the Ace purchase] was not consistent with our goals in Canada,” says Bill Zielke, vice-president of marketing and international development for Do it Best. “As a result, we sent a formal letter to Sodisco-Howden expressing our desire to terminate the agreement.”

Jos Wintermans, president and CEO of Sodisco-Howden, disagrees that his deal with Ace is inconsistent with the Do it Best agreement. “We certainly thought there was no violation and we looked at the agreement carefully before doing the [Ace] deal,” he says. In Canada, both the Ace and Do-it center banners are operated under license by Sodisco-Howden, a publicly traded for-profit wholesaler. In the U.S., these banners are owned by dealer-owned co-ops.

Although Sodisco-Howden services only about 60 Do-it centers in Canada, they are typically strong building centres that generate a lot of sales for Sodisco-Howden. Zielke affirms that his company had been pleased with the arrangement in the past, which managed to provide Do it Best with some brand recognition in Canada. It has also enabled the retailer to co-exist with two other Canadian co-ops, Home Hardware and Rona, with whom it shares membership in a hardware buying group, Alliance International LLC. “We were really comfortable with the Sodisco-Howden agreement until the Ace deal.”

Does the termination of the deal with Sodisco-Howden signal any further interest by Do-it Best in moving north of the border? “We’ll have to take a look at the Canadian market,” says Zielke, which includes looking at other licensing agreements or some other form of presence in Canada. “Anytime you incorporate change you have to take the opportunity to re-evaluate your goals and opportunities.”

In an interview with Reuters, Taylor said Home Depot is looking at New York’s borough of Manhattan “for the first time in quite a while.” Several years ago, rumors circulated within real estate and retail circles that the retailer was seriously looking at the land vacated by Alexander’s in midtown Manhattan. The retailer has multiple stores in every other borough, including its smaller urban neighborhood store format in Brooklyn and Staten Island.

It is highly likely that Home Depot would use the smaller format in Manhattan, said Taylor. He told Reuters that the company has already identified several prime locations, although he did not specify where. The urban neighborhood format ranges from 60,000 to 80,000 sq.ft.

Hardlines confirmed that Sunshine Ace has accused Home Depot of infringing on its trademarked slogan. It is seeking an injunction that would bar Home Depot from using the tag in any form. Sunshine is seeking more than US$500,000 in damages and wants Home Depot to open its books to reveal how much profit it has made during the time it has used the slogan.

Jerry Wynn, Sunshine’s president, told Hardlines that his company had informed Home Depot about its objections to the use of its tag on March 19. Home Depot asked for more documentation “and we haven’t heard from them since,” he says. Jennifer Whitelaw, the attorney representing Sunshine Ace, says her client has a federal protected trademark, and she has received “no substantive response” from Home Depot, which has 20 days from June 25 to answer the complaint.

Colour questions were next on the list, representing 42% of the design questions posed during the tour.

Surprisingly, the kitchen and bathroom were at the bottom of the list of rooms designers were asked about, garnering only 18% of questions. The room with the most design-related questions was the living room (28%), followed closely by the den (23%) and master bedroom (19%).

Sault Ste. Marie, ON — City council here has given approval for rezoning that will open the doors for the city’s first Home Depot. The retailer has been considering the site for about three years, choosing it over the Michigan Sault area, primarily because of the greater population base. Although city council’s approval was unanimous, there is a possible stumbling block to an early start on construction if the rezoning has to go for approval by the Ontario Municipal Board.

Vancouver, BC — Weyerhaeuser Co. has announced that five Crown timberlands operations and five sawmills on the coast of British Columbia will take periods of downtime in July. The company blamed weak market demand, falling prices resulting from a general oversupply of lumber, high costs associated with operating on the B.C. Coast, softwood duties, and a rapidly rising Canadian dollar. All five of Weyerhaeuser’s Crown timberlands operations on the coast, including West Island, North Island, Stillwater, Port McNeill, and Queen Charlotte Islands, will be down for the month of July. On the mill side, Somass and Island Phoenix Division will be down for four weeks, Alberni Pacific division for three weeks, New Westminster for two weeks and Chemainus for one week.

Easton, MD — Pettinaro Enterprises, a real estate company based in Wilmington, DE, has paid US$4.9 million to acquire Black & Decker‘s 58-acre, 245,910-sq.ft. manufacturing complex here. Previously B&D, the Towson, MD-based toolmaker, had announced its plans to close the plant as part of its ongoing efforts to move at least 75% of its manufacturing offshore to Asia or the Czech Republic. B&D had listed the property at US$5.9 million, according to the Washington Post. B&D is working with the developer to find new tenants for the facility.

Chicago, IL — Fresh from bankruptcy, Kmart Holding Corp. posted a loss in the first quarter ended April 30 of US$862 million, but the retailer’s loss narrowed from the US$1.44 billion loss it reported a year earlier, and its gross margin improved, sending its stock up more than 20%. However, same-store sales fell 3.2% the quarter.

Bellingham, WA — Fluid Enterprises, a subsidiary of Harbour Group, has acquired The Gonzo Corp., a Massachusetts-based manufacturer of branded cleaning products. Gonzo will become part of Harbour’s Fluid Enterprises group, which includes Homax, Krusin International and Tile Care Products.

New York — Bed Bath & Beyond Inc. has reported a first-quarter profit of US$57.5 million, a 24% increase over US$46.3 million during the same period a year earlier. Sales rose about 15% to US$893.9 million from US$776.8 million a year ago. Same-store sales were up 4.4%.

Paul Hètu, who has served as vice-president of advertising and communications at Réno-Dépôt Inc. since 2001, is taking over as vice-president in Montréal of the Canadian

Cam Silverson is retiring from Tremco Retail Products effective July 1. He’s been with the company since 1968 and vice-president and general manager since 1977 … Tony Duffy has been appointed the new vice-president and general manager, replacing Silverson. He was formerly vice-president of sales and marketing … Tom Lee has been named director of field sales. He was formerly national accounts manager. Reporting to Lee are: Monique Arsenault, customer service manager, and Chris Hatfield, field sales manager. Reporting to Hatfield are Rod Bubel, district manager for Western Canada, and Michel Olivier, district manager for Quebec … Dominic Iuticone is now director of national accounts at Tremco. He was promoted from national accounts manager … Replacing Iuticone as national accounts manager is Mark Gibb, who has joined Tremco from Norton Canada, where he was national accounts manager … Lawrence Genga has joined Tremco as trade marketing manager. He comes over from Dundas Jafine, where he was marketing manager. (1-800-387-9879)

Weyerhaeuser Co. has appointed Fred Rowson vice-president, Alberta. Rowson will continue in his role as Softwood Lumber area manager for Weyerhaeuser’s three Alberta lumber mills in Grande Cache, Drayton Valley and Grande Prairie, and its lumber mill in Big River, SK … Rowson replaces Cathy Slater in her role as leader of the company’s Alberta Management Council. Slater has moved to Weyerhaeuser’s Port Wentworth, GA mill as vice-president and pulp mill manager.

Walter Hachborn, president and co-founder of Home Hardware Stores Ltd., has been presented with the Queen’s Golden Jubilee medal. Lynn Myers, MP, Waterloo-Wellington, presented the medal last week on behalf of the Governor General of Canada. The medal is awarded to Canadians who have made a significant contribution to their fellow citizens, their community or to Canada, and it’s part of the Jubilee year celebrations organized by the Department of Canadian Heritage. (519-664-2252)

Higher property prices in the second quarter of 2003 helped to slow housing sales to normal levels in some parts of the country, says a mid-year report released today by Royal LePage Real Estate Services. However, markets on the east and west coasts experienced some of the heftiest price appreciation year-over-year. Strong housing activity in 2002 resulted in best-ever sales performance in many markets, but Toronto, Ottawa and Calgary are now trending towards more balanced conditions, says the report.

The composite leading index rose 0.2% in May, the sixth straight monthly increase. Half of the components edged up or were stable in May, while five components fell, one more than in April. The financial market indicators took over from household spending in offsetting the weakness in manufacturing that arose from slow export demand. Within household demand, only furniture and appliance sales continued to expand. The drop in the housing index in March and April moderated to just 0.1% in May, as existing home sales rose for the first time in four months.

U.S. consumer confidence went flat in June following a slight improvement in May, reports the U.S. Conference Board. The consumer confidence index stood at 83.5 in June, down 0.1 from May. However, consumers are optimistic about the future: the expectations index rose to 95.9 from 94.5 in May.

Housing sales in the U.S. are expected to rise this year, says a report from Bloomberg News. About 1.08 million new homes are forecast to be sold this year, up from 973,000, a record high set in 2002. Sales of existing housing rose 1.2% last month to 5.92 million annually adjusted, from 5.85 million in April.

These were just a couple of the tips provided recently by some of the key buyers from Canada’s leading home improvement retailers. They shared their experience and insights with almost 100 vendors who gathered for the third Hardlines Meet the Buyers Seminar at the Delta Toronto Airport West Hotel.

Pam Pike from Canadian Tire, Steve Lunny from Home Depot Canada and Bob Masich of Sears Canada talked frankly about the challenges they face sifting through proposals from new and existing vendors who want their products listed. Marc Dufresne, executive vice-president, purchasing and logistics for Rona Inc., gave additional insights, with an outline of what to expect as his company awaits the closing of its acquisition of Réno-Dépôt.

Even though they all compete against each other, these buyers came together to give their input and their time – something they all, in fact, have very little of to spare. “It’s a harsh reality,” said Steve Lunny of Home Depot Canada. “But we don’t want to have three meetings when we could have had two.” Get it right the first time, they exhorted. You may not get a second chance. Show you value the buyers time – and be prepared. As Bob Masich at Sears Canada pointed out, “We can make a fast decision, but we need the information to do this.”

Masich also stressed the concept of long-term planning. “Your role in this is to be my partner and help develop programs we can sell my customer,” he said of potential new vendors.

At Canadian Tire, development of the new 20/20 retail program, which will be rolled out this fall, will open up more space on the retail floor for new products, especially home décor. Pam Pike encouraged vendors of these products to take advantage of this opportunity. “It’s going to be very exciting,” she added.

The day closed with comments from Marc Dufresne of Rona. As senior buying executive for the company, he was in an excellent position to outline the course of the company, and its requirements to vendors. Over the next several months, Rona intends to finalize the acquisition of competing big box retailer Réno-Dépôt. Until then, said Dufresne, both companies – and both buying teams – are to be treated separately.

Dufresne parted company from his fellow buyers when it came to supplying national programs. Masich from Sears and Lunny from Home Depot both expressed their concern that potential vendors have the capacity and distribution network to supply their stores nationally. Rona, on the other hand, with a variety of store formats throughout the country, is willing to test new products in regional markets within various store formats. This way, said Dufresne, Rona can help a vendor develop their production and merchandising for more widespread rollout over time.

All buyers stressed many common themes: the need to understand the retailer they’re pitching, to be aware of the market and its competitors, and the importance of long-term partnerships based on mutual respect.

The crunch has been also given an unexpected boost to a new product from North Safety – a rubber half mask that uses replacement filters.

During the height of the epidemic, North Safety was shipping millions of masks a week. “We had the biggest three-day period in our history,” recalls Mark Baker, who is in charge of advertising and public relations for North Safety. Its biggest customer, Acklands Grainger, made a single $500,000 order one day, and went through 10,000 N95 masks in one week alone.

Through it all, demand has increased sales – but not margins. “We haven’t jacked up the price. They still sell for peanuts,” says Baker wryly.

Oak Brook, IL — Ace Hardware Corp. is developing broader hardlines assortments for dealer-members who cater primarily to professional customers.

About 950 of the buying group’s 4,900 dealer-members carry lumber and building materials in significant quantities. However, many of those dealers have been buying different kinds of hardware and in far greater quantities than consumer-oriented Ace hardware stores and building centres. Much of this sourcing comes from outside Ace’s own distribution, so the co-op wholesaler is beefing up its distribution centres with more contractor-oriented products.

“We see a lot of potential for identifying pro assortments of hardlines and finding a way to serve these dealers better,” says Amy Pellerito, Ace’s newly appointed LBM manager. However, she adds, Ace does not yet have enough sales data to construct a planogrammed hardlines program for these dealers. Such programs exist for DIY focused lines, such as the “Discovery” merchandise sets Ace has put together for its retail members in recent years. (About 215 of Ace’s LBM dealers currently participate in the co-op’s Data Warehouse program, which measures retail sales.)

Explaining the differences between the needs of retail-driven members and the pro-oriented dealers, Pellerito notes that the top 10 hardware SKUs purchased through Ace by both types of members are virtually the same, “but the next 10 are completely different.”

Ace initiated this effort only weeks after it terminated a supply agreement with Builder Marts of America, the South Carolina-based dealer services group. On Aug. 2, 1999, Ace merged its LBM division with BMA, and took an equity position in that company, which Ace has since sold back to BMA. The termination of its agreement with BMA occurred in late April, around the same time that rival TruServ Corp. terminated its noncompete agreement with BMA.

She adds that Ace is not looking to start warehousing or trading in commodities, and that dealer-members are free to buy lumber and building materials from any source. She even speculates that some dealers may decide to buy through BMA. However, Ace has struck preferred supplier agreements with at least two building products manufacturers – USG Corp. and PrimeSource – and some less-than-truckload shipping agreements with other suppliers that were not named.

Vaughan, ON — Canadian Tire Corp. opened a new 224,000-sq.ft. retail support centre last week to supply automotive products to its dealer stores in Ontario. The site, in this community just north of Toronto, employs about 160 people and has the material handling equipment necessary to support daily shipments of automotive hard parts and accessories to most Canadian Tire stores in the province. The facility will also support further expansion of Canadian Tire’s retail automotive business, both through its network of 449 associate dealers and through PartSource, an automotive parts specialty chain with 33 stores.

Atlanta, GA — Home Depot, which once balked at all the paperwork involved in becoming a supplier to the U.S. government, has been awarded a contract to supply building, repair and maintenance products to all federal agencies. That contract, which goes into effect July 1, makes Home Depot the largest retailer to have received a Hardware SuperStore Multiple Schedule contract from the General Services Administration. To meet the needs of the federal government on all levels, Home Depot is launching “The Home Depot Government Solutions Group.”

Mississauga, ON — Wal-Mart Canada has announced the next Sam’s Club opening in Canada. This one will open in the East Mall in Toronto’s west end community of Etobicoke in the fall of 2003. The 129,000-sq.ft. warehouse club will cost almost $20 million and create about 170 permanent jobs in the store. Wal-Mart Canada has already announced Sam’s Club openings this fall in Vaughan, Pickering, and Richmond Hill, ON. Another store will open in London, ON sometime in 2004.

Wilkesboro, NC — Lowe’s will follow Home Depot‘s lead and begin developing smaller stores that will fit into smaller markets of 15,000 to 35,000 households. Of the 130 stores planned for 2003, 20-25 will be these 94,000-sq.ft. prototypes. Two have already opened, one in Elkin, NC back in March and the other last month in Dickson, TN. Lowe’s big boxes typically measure 116,000-sq.ft. and cost close to US$17 million to build and US$5 million to stock, and generate on average about US$33 million in sales per year. The new stores, on the other hand, ring in at about US$12 million in construction costs and stock about US$3.5 million in inventory. Lowe’s expects the prototypes to generate US$20 million to US$25 million in sales annually.

London, UK — Kingfisher plc is continuing its efforts to pare down the company with the proposed demerger of Kesa Electricals and its separate presence on the stock exchange. With 790 stores, Kesa is Europe’s third largest electricals retailer. Pending shareholder approval of the demerger, the division is expected to start trading as a separate company on July 7. Kingfisher shareholders will continue to hold their shares in Kingfisher and will receive a direct pro rata interest in Kesa Electricals.

Jacksonville, TX — When employees of a Wal-Mart meat department tried to organize a union in 2000, Wal-Mart simply closed the butcher department in that store and switched to packaged meat. Now an administrative law judge has ordered the retailer to reopen the butcher shop – and bargain with unionized butchers whose jobs disappeared when the chain made the switch. Wal-Mart downplayed the judge’s decision, calling it “limited.”

Klamath Falls, OR — Jeld-Wen, a privately owned door and window maker with Canadian headquarters in Winnipeg, MB, has developed a campaign to unite its many brand names under a single banner. The company, which has been on the acquisition trail for years, currently has 27 brand names, says a report in the New York Times. But in an ad campaign on television, in print and through the Internet, which began last week, the company is spending more than $10 million to reintroduce itself under the Jeld-Wen name, retiring brands such as Aurora, Contours, Corinthian, Donat Flamand, DoorCraft, Elite, Energy Saver, Norco, Prestofix, ProBilt and Willmar.

Pat Bennett has joined Rona Inc. as senior operations director for traditional stores in Ontario. Bennett was formerly vice-president of sales at Ace Hardware Canada until that company was taken over by competitor Sodisco-Howden Group. Before that, he served as vice-president operations at Home Depot Canada. (514-599-5100)

Thomas Glenn has been elected chairman of the board of Ace Hardware Corp. Glenn is president of Ace Hardware of Chattanooga, a 13-store chain in Tennessee and Georgia … Veteran board members Eric R. “Rick” Bibens II, president of Bibens Home Center in North Springfield, VT; D. William Hagan, president and part owner of five Ace stores in northern Florida; and Richard A. “Rick” Karp, owner of Cole Ace Hardware, a three-store chain in San Francisco, were re-elected to the board … Lori J. Terpstra was elected to serve her first term. She and her husband own Rylee’s Ace Hardware, which operates three stores in the Grand Rapids, MI area. Each will serve three-year terms on the 10-member board, which helps set strategic policy and direction for Ace management.

According to Jos Wintermans, president and CEO of Sodisco-Howden, the move to switch the existing Do-it center dealers is being handled by the hardware distributor’s field reps. “The strategy here is to encourage the Do-it center dealers to convert to the Ace Building Centre banner,” Wintermans says. This, he adds, will increase the presence of a brand that is already well known in North America. Ace dealers in Canada will benefit from sophisticated store programs out of the U.S. and an extensive line of private label products.

“There are a number of reasons why someone might want to be an Ace dealer,” Wintermans says.

Do-it, on the other hand, doesn’t have the critical mass in Canada. (About 60 Do-it center dealers are strung across the country.) The banner started out as a DIY-focused home centre package developed for HWI (now Do-it Best Corp.), based in Indianapolis, IN. The program, characterized by upper and lower-case serif letters against an orange background, was developed by the Watt Group in Toronto. Watt used a similar approach, with only with upper case letters, when developing a look for Home Depot in 1978.

For now, Do-it dealers are taking a “wait-and-see” attitude. Jason Yates of McMunn & Yates Do-it center in Dauphin, MB says the dealers haven’t seen the full Ace program yet, leaving them feeling uncertain about which way to go. Yates isn’t averse to the change; he admits the Do-it banner just didn’t have adequate market acceptance because of the limited number of stores and is keen to see what Ace has to offer.

Steve Lundon, owner of Northern Do-it center in Fort Frances, ON, is a bit more wary of the proposed change. “We’ll look at it seriously, but who’s going to pay for the retrofit?” he wonders. Lundon expresses his concern about the Sodisco Howden service levels over the last few months, but recognizes they’re the only independent full line hardware wholesaler left.

Do-it Best is part of Alliance International LLC, whose Canadian members, Rona Inc. and Home Hardware Stores Ltd., are major competitors to Sodisco-Howden. Wintermans would not comment on whether his company was compelled in any way by Do-it Best in the U.S. to wind down the orange banner in Canada.

Calgary & Edmonton, AB — Robert Dutton, president and CEO of Rona Inc., did double duty in the Wild Rose Province for two groundbreaking ceremonies last Thursday. First stop was Calgary, where the planned construction of a new Western distribution centre was made official.

The distribution centre, located at 2015 60th Street, S.E., is a key part of Rona’s attempts to increase its presence and assert its commitment in Western Canada. The 300,000-sq.ft. facility will cost about $30 million and create up to 80 jobs.

Later in the day, Dutton was up in Edmonton for the ground breaking on a new Rona Home & Garden big box. The 140,000-sq.ft. store will include a 4,000-sq.ft. greenhouse next to a 29,850-sq.ft. garden centre and a big seasonal section. It will also be about 20,000 sq.ft. larger than another store, in Kingston, ON, which broke ground on May 13.

The Kingston store is slightly smaller in part because the Rona Cashway in town will remain, servicing contractor and heavy DIY customers. As a result, the new big box will have a slightly smaller lumber and building materials section. Nor can Rona’s third big box in Edmonton open with anything less than the big guns: Home Depot just opened a sixth store here last week, in the Sherwood Park area.

The newest Rona big box stores will continue to expand on the concept inaugurated in Mississauga, ON last spring. This includes more of a mix of Rona Regional and Rona big box elements, with emphasis on boutiqued departments, including paint and décor, door and window (new!) and lighting. Both stores are expected to open within a couple of weeks of each other in late October of this year.

Mississauga, ON — The Canadian Hardware and Building Materials Show is touting its next installment as the 100th, but the show is reaching back to its pre-history to do the math.

A century of shows would put its start date at 1905. In fact, the Canadian Retail Hardware Association, which owns the show, was not formed until a year later. On Good Friday, 1906, the Retail Hardware and Stove Dealers Association of Ontario was founded, which would later become the CRHA. Yet another year would pass before the association added a “trade show” component, when Guelph Stove Works became the sole exhibitor at the association’s 1907 annual general meeting.

“According to all of the history that anyone [at CRHA] has found, 1905 has been accepted for the past 99 years as the year the first “hardware show” was held in Canada. That history includes many, many photos and references in trade media to 1905 as being the first show,” explains Bob Elliott, executive director of the CRHA.

“At that 1905 Canadian National Exhibition, we do know from Hardware & Metal magazine that there was an exhibition of hardware products for “hardware merchants,” he continues. “They didn’t seem to make the same distinction between “trade” shows and “consumer” shows back then as we do now. Therefore, it seems that the first show may indeed have had members of the general public in attendance along with dealers.”

Wherein lies the confusion? The aforementioned copy of Hardware and Metal (the early name of present-day publication Hardware Merchandising) from September 1905 features a cover story encouraging dealers to attend that year’s Canadian National Exhibition. A large group of hardware and stove companies did indeed display their wares to Canadian families – alongside piano makers, tea companies, perfume makers, and sellers of canned preserves. These exhibitors included the aforementioned Guelph Stove Works, which baked cookies that attracted the attention of many of the women visiting the fair, reported the editors of Hardware and Metal magazine at the time. In fact, hardware companies had been involved in the CNE as far back as the public exhibition’s inception in 1879 and Hardware and Metal reported on these events regularly.

“Regardless, we consider this as the 100th show of the industry, no matter where the first one was held or who organized it. All those who came before us recognized it as such and we believe that history speaks for itself,” Elliott says.

Obviously, the hardware industry’s show business roots date back at least 100 years, and CHS follows in that strong tradition. Like any fine old lady, her exact age can remain a mystery. Hardlines will certainly be at the next birthday party, whatever the age of the show.

Crain’s Chicago Business, quoting unnamed sources, reported last week that Sears wanted to dispose of these assets to shore up its sagging balance sheet and to provide capital for a new strip-mall supercenter venture.

The San Jose, CA-based Orchard, a 72-year-old retailer that Sears acquired in 1996 for more than $300 million, operates stores that average 45,000 sq.ft. Last year, Orchard generated US$820 million in revenue, but has been plagued by profit woes, according to Crain’s.

Originally, Sears bought a profitable Orchard to give some merchandising and store design direction to its Sears Hardware Stores division, which at the time was foundering. However, the marriage never coalesced to Sears’s satisfaction. Attempts to duplicate Orchard’s format in the eastern U.S. have been erratic, at best, resulting in 2001 in a 55,000-sq.ft. prototype that has been rolled out to only a handful of markets.

It’s worth noting that Alan Lacy, Sears’s chairman, has all but stopped the expansion of the retailer’s other home improvement enterprise, The Great Indoors, a home furnishings retail format that at one time Sears envisioned expanding into a 150-unit operation. At the conclusion of 2002, only 13 Great Indoors had been opened.

The Orchard chain is expected to fetch US$300 million for Sears.

Home Depot becomes the second major home improvement-related company to embrace UCCnet’s services. Last year, Ace Hardware began registering its data with this organization.

In a prepared statement, Lawrenceville, NJ-based UCCnet pointed to a study conducted by the research firm A.T. Kearney which estimated that US$40 billion, or 3.5%, of total sales lost each year are due to supply-chain information inefficiencies. The study showed that 30% of items in retail catalogues have data errors, 60% of all invoices generated errors and 43% of all invoices resulted in deductions.

Home Depot and participating suppliers can register data into UCCnet’s industry-supported repository for standardized item, location and trading partner data. This system checks the data for compliance to industry standards, and will allow the retailer to synchronize its own data with its suppliers’, thereby ensuring that everyone is using identical standards-compliant information.

Within its first-quarter 2003 report submitted to the U.S. Securities and Exchange Commission, TruServ revealed that, effective April 21, it had terminated its non-compete, cooperation, and trademark and license agreements with Builder Marts of America.

On Dec. 29, 2000 TruServ sold its lumber and building materials business, consisting primarily of intangibles and inventory, to BMA, the South Carolina-based dealer services division of Guardian Building Products. At the time, TruServ explained that it had made this decision because it had concluded that BMA could provide lumber and building materials to the co-op’s members at lower cost. LBM had traditionally been a low-margin business for TruServ.

What prompted TruServ’s change of heart, and how it plans to move forward, are not clear. Bruce Schneider, BMA’s senior vp-operations, told Hardlines recently that BMA has been exploring getting into light manufacturing and installed sales, two areas that could, theoretically at least, be in conflict with the interests of TruServ’s dealer-members. Hardlines was not able to reach Terry Watson, BMA’s vp-marketing, for comment. Nor did it receive a response to an email sent to TruServ’s president and CEO Pamela Forbes Lieberman.

The supplement fees were awarded to the shutter manufacturer to cover the “risk” its attorneys took representing a company in precarious financial straits.

In recent weeks, Home Depot has been showing up as often on police blotters and court dockets as on the business pages:
oA former employee in Oklahoma was charged with stealing hundreds of thousands of dollars in merchandise using numbers from customers’ credit cards;
oAn investigation in Texas exonerated the company of criminal wrongdoing after a five-year-old boy was crushed to death by falling patio doors in the aisles of one of its stores in the Lone Star State;
oSix former and current employees in Indianapolis have filed a federal lawsuit against the retailer charging they had been discriminated against because they are African American;
oThe company paid US$300,000 to settle a suit filed by a Pennsylvania employee who alleged discrimination by Home Depot because she was pregnant;
oIn New Jersey, the chain agreed to pay fines of US$510,000 to settle a complaint filed by that state’s attorney general, whose office had investigated the chain’s practices concerning installation, advertising, refunds and delivery. The retailer participated in that investigation and, as part of its agreement, said it would revise its business practices to ensure its compliance with state consumer protection laws.

Irving, TX — Réno-Dépôt has licensed the forecasting and scheduling modules of the Timera Enterprise Workforce Management system for all company retailing operations. Réno-Dépôt had been using a manual approach to building schedules prior to hooking up with Timera.

Toronto, ON — Home Depot Canada has chosen Philips Lighting Canada as its exclusive supplier of branded light bulbs. The deal follows a similar agreement announced in the U.S. one year ago between Home Depot and Royal Philips Electronics.

Wilkesboro, NC — Lowe’s Home Improvement Warehouse has added three well-known national brands to its inventory. The Charlotte Business Journal reports that Lowe’s stores now stock a full assortment of portable and benchtop tools made by Hitachi, the Japan-based supplier. The retailer is expanding into food processors, mixers, coffee makers and juicers branded by Bosch. Also exclusive to Lowe’s is a floorcovering line called Premier developed by Living Mohawk Carpet.

Huntersville, NC — Irwin Industrial Tools announced last week a new global brand strategy to unite its contractor-grade hand tools and power tool accessories under the Irwin name. Irwin will be positioned as the primary brand for seven sub-brands: Vise-Grip wrenches, Marathon saw blades, Quick-Grip clamps, Speedbor wood boring bits, Strait-Line, Unibit step drill bits and Hanson taps, dies and extractors. Each of Irwin’s sub-brands will retain its name while sharing a common Irwin identity and endorsement.

Bill Wilson has announced his retirement from Sodisco-Howden Group. Wilson spent 32 years with the Howden Division (formerly D.H. Howden & Co.). He got his start as a Pro Hardware dealer in Toronto, but after six years sold his store to take a job with Howden in London, ON as a sales rep. Through the years he held several titles, and for the past two years served as director of national accounts, dealing with the buying groups and key national accounts (519-686-2200) … Mag Kassis has joined Sodisco-Howden Group as vice-president of sales. Working out of the Montreal head office, he will be responsible for increasing sales and improving dealer relations. He will also deal with key accounts and the buying groups, taking over from Bill Wilson, who had handled the job from Sodisco-Howden’s London office. Kassis moves to Sodisco-Howden from Fishery Products International, where he served as vice-president. (514-286-8986)

IRLY Distributors has announced its new board of directors for 2003-2004: Andy Anderson of Ashcroft has been elected president … Rex Millard of Vanderhoof has been named vice-president … the secretary is Jeff Davie of Kelso … additional directors are Carole Hamanishi (and past president) of Aldergrove, Eric Hodson of Prince Rupert, Gus MacLellan of Kelowna and Brian Tancock of Sicamous, BC.

Chicago-based TruServ Corp. has named Mimi Apelqvist director of international, reporting to Brian Kiernan, TruServ’s vice-president of retail development. Prior to joining TruServ, Apelqvist worked at Fellowes Manufacturing for six years.

The economy lost jobs for the second consecutive month in May as the national jobless rate rose to 7.8% from 7.5% in April. Employment across the country dipped by 13,100, although that figure includes a loss of 19,600 full-time jobs and a gain of 6,500 part-time positions, Statistics Canada said Friday.

Sales by merchant wholesalers in the U.S., after adjustment for seasonal variations, were US$235.7 billion in April, down 2% from the revised March level, says the U.S. Census Department. However, the rate is up 3.8% from April, 2002. Within the durable goods sector, sales of motor vehicle and motor vehicle parts and supplies decreased 1.8% from last month, while sales of non-durable goods decreased 3.6% last month, but were up 6.8% from the same month last year. Hardware, plumbing and heating equipment and supplies were down 0.6% from March, but up 5.7% from April 2002.

Toronto, ON – She’s in charge of Expo now, because, among other things, she’s a great operations person. But Annette Verschuren, president of Home Depot Canada, has also taught her U.S. counterparts a thing or two about marketing to women customers, a sensibility she’s sure to apply to her management of Expo. But one thing she won’t do is bring Expo to Canada anytime soon.

“Expo will come to Canada,” she told an audience at last week’s annual convention of the Retail Council of Canada. “But there are a number of markets we need to develop in the U.S. for Expo.” Expo, which has seen its expansion plans more than halved, from 200 stores to fewer than 100 in total, has some bugs to work out, according to Verchuren.

One aspect of Home Depot’s high-end décor format is Expo’s strong focus on the woman shopper. But Verschuren and her Canadian team pioneered Home Depot’s approach to “soft DIY,” not just in Canada, but across North America, with the sale of linens, pillows, soft window treatments and wall coverings, most notably in two Toronto stores, Yorkdale and Leaside.

Verschuren said her division, one of six in North America, had more leeway than its U.S. counterparts. “It was a bit of a lab for the entire chain,” she noted.

She foresees room for about eight Expo stores in Canada. But first, she says, she has more work to do expanding the traditional big box format. “We still need to develop the infrastructure of Home Depot here in Canada.”

Canada currently has 93 stores; by the end of the year, it will have at least 102. Verschuren believes the country can accommodate at least 120 big box Home Depot stores in total. With the development of smaller stores such as the one that opened in Lethbridge, AB on May 29 and in Kamloops on June 12, she sees room to enter other, smaller markets, as well, throughout Canada.

Another 3.4 million shares were sold by ITM Entreprises S.A., raising $57.2 million for the French co-op wholesaler. Rona is a member of ITM, which in turn still retains about 7% ownership in Rona.

The over-allotment option enables brokers to increase the size of a share sale, based on demand. “This means there was a healthy demand for the stock,” says James Durran, an analyst for National Bank Financial, adding that the stock was reasonably priced at the time of the offering. “It’s done extremely well since the Réno-Dépôt announcement.”

The underwriting syndicate was comprised of BMO Nesbitt Burns Inc., National Bank Financial Inc., Scotia Capital Inc., RBC Dominion Securities Inc. and Desjardins Securities Inc.

Special Report – The unadorned “warehouse look” of the original Home Depot concept, so prized by company founders Bernie Marcus and Arthur Blank, has left the chain with a lot of tired, shopworn stores. In the face of mounting competition from Lowe’s Cos., that philosophy is currently being revisited.

But that’s just one of the challenges being faced by Home Depot as it prepares to enter its second quarter century of existence, says a new study in the latest issue of our sister publication, Hardlines Quarterly Report.

Home Depot stores can generate tremendous volumes, but the traffic in the stores has taken its toll. Lowe’s, on the other hand, has a much newer base of stores. Home Depot has committed US$250 million this year alone to make its stores brighter – and enhance their appeal to female shoppers.

To find out how Home Depot is reinventing itself on both sides of the border, see the latest issue of HQR. If you’re not a subscriber to this incredible newsletter of industry analysis and research, contact Nancy Wright here at the World Headquarters for more information.

During their session at Sanford C. Bernstein‘s “Strategic Decisions Conference” here, Bob Tillman, chairman and CEO of Lowe’s, and CFO Robert Hull, reiterated many of the points they made several days earlier during Lowe’s annual shareholders’ meeting: that the company’s soft same-store sales in the first quarter were attributable to bad weather; that Lowe’s is still on track to open 130 stores this year and 140 stores next year; that 25% of its expansion will be in smaller markets of between 15,000 and 35,000 households with a 94,000-sq.ft. store, compared to Lowe’s 116,000-sq.ft. unit for major markets, where 65% of its expansion will take place this year and next.

However, the officials provided more details about some of the company’s programs. This summer, the company plans to roll out chainwide an installed sales program that it is currently testing in 128 stores, and which took Lowe’s 18 months to develop. Lowe’s expects to double its installed sales to US$2.2 billion by 2005.

Lowe’s is projecting a 25% increase this year in special order sales, to US$2.5 billion. The retailer is currently offering 500,000 special order items. Lowe’s also projects that, in the “near future,” special order sales could account for between 15% and 20% of its total sales. (Currently 43% of its special-order dollar volume is transacted electronically; Lowe’s expects that to rise to 100% in two years.)

In its larger stores, Lowe’s is stocking US$5.5 million in inventory at cost, vs. US$3.5 million in its smaller prototype. Tillman said that he felt that Lowe’s inventory position was solid going into the summer, and pointed to the support provided by the company’s distribution centre network, into which Lowe’s has invested US$500 million over the past several years.

In the second quarter, Lowe’s will step up its advertising as well as its “credit marketing.” However, the trend by dealers to offer “no payment, no interest” deals on larger purchases is having an impact on pricing and profitability in general. Hull said Lowe’s has estimated that these kinds of promotions “can take 10 gross margin points” out of a sale.

During their presentation, Tillman couldn’t resist taking pot shots at competitors. He mocked Sears‘ recent decision to lower its prices on appliances by stating sarcastically, “I thought Sears always had everyday low prices.” And he speculated that Home Depot could not accelerate its store-remodeling program while, at the same time, work on improving its same-store sales. He believes the “only advantage” Home Depot has over Lowe’s right now is “convenience, because they have more stores than we do.”

“The issue for us,” said Tillman, “is that I need 200 more stores in California and another 100 in Florida.”

The Sustainable Forest Products Global Alliance is the product of an agreement signed last week by the World Wildlife Fund, the U.S. Agency of International Development (which provides humanitarian and economic assistance worldwide), and Metafore, the name that the Certified Forest Products Council now goes by. The Global Alliance intends to channel US$7.6 million into programs that promote responsible forest management and certified wood products.

“To satisfy our corporate commitment to forest conservation, Home Depot depends on a reliable supply of wood products from responsibly managed forests. That’s why supporting the Global Alliance makes so much sense for us,” says Ron Jarvis, the retailer’s vice-president lumber merchandising, in a statement released by the World Wildlife Fund. According to Jarvis, Andersen Window will soon join this group as its second corporate sponsor.

The group’s formation comes on the heels of an announcement by the European Union that its member countries would only accept lumber from nations that had signed onto its Forest Law Enforcement, Governance and Trade agreement and could certify that their lumber had been cut legally. In environmental parlance, this means using responsible forest management practices. The E.U. said it was targeting wood products coming from Asia, South America, Central Africa and Russia.

In addition, Lanoga Corp., Dallas-based home builder Centex Homes, and International Paper last month declared that they would stop buying lumber from Indonesia, where illegal cutting is rampant.

WWF quoted World Bank statistics claiming that illegal harvesting is costing developing countries more than US$5 billion annually in taxes and other revenues.

London, UK – Kingfisher plc has reported a healthy bump in performance for the first quarter, with overall profit up 34%. Same-store sales increased by 4.1% in 1Q, with profits up 34.4% to £154 million, an 18% underlying increase. The retailer’s B&Q home improvement chain had a healthy 13% increase in sales, with profit jumping 16.7%. Good early spring weather in the U.K. helped the results by generating strong seasonal sales. Profit was up 3.6% at its Castorama France division on sales of 19.0%. Castorama is in the process of being integrated into Kingfisher’s operation. Same-store sales at Kingfisher’s Brico Depot chain were up 17.6%. Total sales from the home improvement division grew 17%. Growth was strong in Italy and China, while the company is in the process of selling off its Canadian Réno-Dépôt division to Rona.

Grand Ledge, MI – A new distribution centre here is the first for Lowe’s in the Upper Midwest. The flatbed distribution centre cost US$13 million and sits on 40 acres. It will start shipping products in bulk that lie flat, including lumber, pipes, gutters and fence material, to 62 stores in Michigan, Indiana, Ohio, Illinois and Iowa by early July.

St. Louis, MO – Now that Emerson has stopped making benchtop and stationary tools under the Ridgid name at its Paris, TN manufacturing plant, production of the Home Depot proprietary line is being moved offshore to Asia, says Brian Sponsler, vice-president sales and marketing for Emerson. Hong Kong-based Techtronics Inc., which makes Ryobi, Dirt Devil and Homelite branded products, has been asked by Home Depot to help Emerson with this transition, specifically in the areas of logistics and distribution, says David Imre, a spokesman for TTI.

Troy, MI – Sears Roebuck is feeling the pinch in its appliance department from the likes of Home Depot and Lowe’s. So it’s expanding its assortments and getting into more low-end models. The high-end ones are selling like hotcakes, but Sears has suffered 20 consecutive months of falling same-store sales. Appliances are the retailer’s biggest revenue generators, but the big boxes are devoting more and more space to white goods and Lowe’s is the number-two heavy appliance seller in the U.S., after Sears.

Issaquah, WA – Costco Wholesale Corp. reported net sales of US$3.20 billion for May, an increase of 9% from US$2.95 billion in the same period a year earlier. For the first 39 weeks of its 2003 fiscal year ended June 1, 2003, the company reported net sales of US$30.67 billion, a 9% increase from US$28.15 billion. Same-store sales for May increased 4%, and year to date they were up 5%.

Fort Wayne, IN – Do it Best Corp. has received a Half Century Business Award from the state of Indiana in recognition of the co-op wholesaler’s 58 years in business and its commitment to community service. Do-it Best and its employees focus support on a number of education and youth programs in Indiana, including United Way and Big Brothers and Big Sisters.

Despite charges against his company, Invemed Associates, of overcharging clients, Kenneth Langone has been re-elected to the Home Depot board of directors. The man who provided initial financing to Bernie Marcus and Arthur Blank when they formed Home Depot in 1978, Langone also helped current Home Depot CEO Bob Nardelli get his job. Langone also sits on the board of directors of Nardelli’s former company, General Electric.

The value of building permits issued in Canada in April were up a bit, though residential intentions for new housing dropped 6.8% and the value of non-residential permits increased 14.8%. According to Stats Canada, municipalities issued $3.7 billion in building permits in April, an increase of only 0.5%. Housing permits fell 6.8% to $2.3 billion, while intentions in the non-residential sector increased 14.8% to $1.4 billion. However, during the first four months of the year, the value of building permits reached nearly $15.6 billion, up 4.6% from the same period of 2002.

Employment dipped by 13,000 in May, the second consecutive monthly decline, says Stats Canada. A jump in the number of people entering the labour market in search of work pushed the unemployment rate up 0.3 percentage points to 7.8%.

Private spending on new housing in the U.S. reached a value of US$325.6 billion seasonally adjusted in April, dipping 0.5% below March’s rate of US$327.3 billion, says the U.S. Commerce Department. But it was still up 9.2% over April 2002. Public construction of housing and redevelopment was up 4.8% over March, and up 17.2% over April 2002.

· Is the company on the cusp of big growth – or big disappointment?
· What kind of growth and market share has Home Depot achieved in Canada?
· What new concepts is Home Depot trying out?
· How are vendors meeting the challenge of greater consolidation?
· How does Home Depot measure up against its toughest competitor, Lowe’s?
· What are Home Depot’s plans for Canada? What retail concepts will work here?
· What strategies does Home Depot have to beat the competition?

Falling share prices, falling morale, falling profits. Can the new management at Home Depot turn the tide? Of course it can. Find out how in the latest issue of Hardlines Quarterly Report — click here.

Last week’s ruling by the WTO has not deterred U.S. negotiators, however, who are likely to appeal. According to one trade official, the WTO identifies a subsidy component to softwood production and pricing in Canada, just the loophole the U.S. needs to justify continued countervailing duties, which average 27% on shipments that totaled about $10 billion annually before the tariffs eroded business.

Meanwhile, lumber suppliers in Atlantic Canada are feeling frustrated by the latest round of negotiations between the U.S. and Canada. Unlike the rest of Canada, the industry in Atlantic Canada has long been adhering to timber sourcing certification standards that keep it clear of the U.S. concern about unwanted subsidies. Unlike the rest of Canada, where timber rights are held 93% on Crown lands, more than three-quarters of the land in Atlantic Canada is privately held. Stumpage fees are based on a market value assessment acceptable to U.S. practices.

Despite the Atlantic’s pricing structures, which date back to the mid-’80s, when the first round of lumber disputes erupted under the fledgling Free Trade Agreement, one in three mills down east is currently closed.

“This proposal is a bad deal for Atlantic Canada and is unacceptable,” says Diana Blenkhorn, president and CEO of the Maritime Lumber Bureau, in a prepared release. “This current proposal punishes the only region in this country that has never received an allegation against its market based trading practices.”

Toronto, ON — Hudson’s Bay Co. saw sales creep up in the first quarter from $1.50 billion to $1.54 billion, but the company’s losses deepened from $6 million last year to $34 million in 1Q 2003. Sales increased at Zellers and Home Outfitters, largely due to sales of hardlines, but sales at the Bay declined, hurt by poor Spring weather, SARS and a write down on the discontinuation of the Martha Stewart line.

Sales and revenue increased over the last year by 0.3% to $1.53 billion in the first quarter of 2003. Same-store sales increased at Zellers by 0.2% and decreased by 4.0% at the Bay.

“The hardlines part of our business has increased 3% and certainly outpaced the rest of the company’s sales,” says Bruce Dinan, senior vice-president of merchandising at Zellers. Really, our results reflect apparel and seasonal businesses that were soft.”

Recognizing the growth potential of home décor and furnishings, HBC unveiled three new brands at its annual general meeting last week. They are House & Home, Waverly and SIA.

The House & Home line, a brand extension of House & Home Television, designed by Lynda Reeves, will feature everything from bedding and bath accessories to décor items for other parts of the house, including the garden. The brand will be introduced exclusively at the Bay this Fall.

Waverly is a line of bath and bedding that will be available at both the Bay and Home Outfitters stores later this year. Waverly décor, a sister brand, features a range of merchandise for the bedroom, kitchen, bathroom and living areas, and is already available in Zellers stores across the country.

SIA comprises a range of artificial flowers and plants, vases, accessories and candles, encompassing themes designed around particular themes and events, such as weddings and holidays. The brand will be available in Bay stores nationwide by this Fall.

During a recent teleconference with analysts, company officials showcased the performance of several departments that have been overhauled. While the chain’s same-store sales fell 1.6% in the first quarter, its kitchen and bath departments’ comps grew 22%, mainly on the strength of larger, better assorted appliance areas that are being rolled out chain wide.

Double-digit unit sales gains in its line of John Deere tractors (which are generating an average ticket of US$2,000) boosted the same-store sales in its stores’ lawn and garden departments.

Some analysts have criticized Home Depot for the turmoil caused by its ongoing efforts to reset many departments with new product lines. Company officials countered that criticism by stating that 15 of 22 reset departments produced sales increases that exceeded the chain’s as a whole. For example, resets of cleaning supplies enjoyed a 22% sales gain. When the carpeting department was reset, sales went up 15%.

Nine of 11 departments also reported increases in average ticket sales.

The company also noted that its “core services,” which include rental and installation, grew by 36% in the first quarter. Home Depot has identified services as being one of the drivers of same-store sales for the rest of the decade.

But it’s also just the first step to expansion beyond Ontario. “Right now, we’re converting the Ontario stores, but wait until we roll it out in the West,” says Ray Falkenberg, vice-president business development and marketing for TruServ. That move is simply awaiting the necessary distribution channels for Western Canada. “We’re busy lining up large animal feed suppliers. There are a number of existing co-op stores that fit the Country Depot format,” he adds.

At the recent TruServ Spring dealers’ market in Winnipeg, a complete Country Depot store was set up right on the show floor. “It was a huge hit with our existing dealers and many of them are considering adding on a new business,” says Falkenberg.

The 20/20 strategy goes right back to Canadian Tire’s distribution process. The new stores, although only slightly larger than a typical Canadian Tire “A” store, will have at least 15% more retail as the back end is downsized. The company is experimenting in a few stores right now with increased numbers of shipments that will reduce dealers’ inventory. Not only does the plan enable these stores to shrink their warehouse space accordingly, it also means higher turns.

Another aspect of 20/20 currently being tested in the two existing Kingston stores, plus one in Belleville, is equipment rentals. However, the notion of rentals is being expanded dramatically beyond heavy duty tools, cleaning and gardening equipment. Under the new program, consumers can rent everything from tents, canoes and other camping equipment to bar fridges and party sized barbecues.

The first four 20/20 stores will open at various times during the Fall. All except one will be located in Ontario: in Kitchener/Waterloo, Pembroke and Markham. The fourth will be a second store in Prince George, BC.

Vancouver, BC — Canfor Corp. has completed the previously announced purchase of Daaquam Lumber Inc. and Produits Forestiers Anticosti Inc., two privately owned lumber and timber harvesting companies based in Québec City. Daaquam is a lumber manufacturing operation located in Saint-Just-de Bretenières, Quebec, with an annual capacity of 150 million board ft., and timber-cutting rights in the surrounding region. Anticosti holds additional timber rights and has harvesting operations on Anticosti Island.

Toronto, ON — Canadian Tire has added the popular Schwinn line of U.S. bicycles to its sporting goods department, which falls under the aegis of Pamela Griffith-Jones, divisional vice-president, sporting goods. Canadian Tire claims one out of every three bike sales in Canada, but there are no bike racks in front of their stores (Oh, lay off Canadian Tire, already! – Editor)

Atlanta, GA — Home Depot has announced it will buy back up to US$500 million in stock. The open-ended plan will allow the company to repurchase shares on the open market “from time to time.” In the same announcement, CEO Bob Nardelli reiterated the company’s plan to invest US$4 billion this year to expand and rejuvenate stores. Home Depot has 1,568 stores throughout North America, 36 of which opened during the company’s first quarter ended May 4.

Issaquah, WA — Costco saw earnings increase rise 18% to US$153.8 million, up from US$130.4 million in the same period a year ago. Net sales for the quarter rose 11% to US$9.34 billion. Total revenue, which includes membership fees and other revenue, took that number up to US$9.54 billion from $8.62 billion a year earlier. Same-store sales rose 6% in the quarter.

Guelph, ON — With the right promotion, Porter-Cable Delta has found that the combination of a $100 rebate and price reduction managed to double sales for the power-tool manufacturer’s framing nailer and compressor combo kit. After a test, the “Incredible Compressor Rebate” program was expanded to include three more items. Sales through the program are expected to exceed $1 million, all flowing through Porter-Cable’s MAC Call Center in Apsley, ON.

Marysville, OH — The Scotts Co. will expand beyond lawn care and garden products into the pottery category through a couple of proposed acquisitions. With the purchase of Florida-based Pam Pottery, Scotts will add two pottery lines under the Miracle-Gro name in fiscal 2004, supported by aggressive advertising and merchandising. It has also signed a letter of intent to buy Scan-Pot USA. The entry into the estimated US$1 billion pottery market adheres to a company strategy to grow into new areas of lawn and garden.

London, England — Shareholders have insisted that Kingfisher plc revise the pay packages for its top directors, says an item in Reuters. Kingfisher is not alone: there’s a growing wave of shareholder discontent over executives who get handsomely rewarded even when the company’s results don’t warrant it.

Paul Levesque, COO of Michaud & Levesque Ltd., a True Value dealer in Sturgeon Falls, ON, has been awarded the 2003 Young Retailer of the Year Award. The award, presented by the National Retail Hardware Association in the U.S., recognizes outstanding performance by owners and managers of independently owned hardware and building centres throughout North America. Levesque won in the category of stores under $2 million in sales. His operation includes a V&S Variety and Just Ask Rental along with the True Value banner.

Robert Walker has been appointed Ontario plywood specialist for CANPLY — the Canadian Plywood Association, effective today. He brings 19 years in wood products promotion and sales to this post, having worked at Metric Forest Products and most recently at Oliver Lumber Co. He will be based in Brampton, ON. (For now you can reach him through head office: 604-981-4178)

With mortgage interest rates at 40-year lows, U.S. home resales stayed strong in April, rising 5.6%, says the National Association of Realtors. They grew to a seasonally adjusted annual rate of 5.84 million units from 5.53 million in March. Sales of new homes were up 1.7% to a seasonally adjusted rate of 1.028 million, according to the U.S. Commerce Department, the third fastest pace since the government began tracking the data in 1963.

Building permits for residential construction in the U.S. in April increased 1.2% over March, and the rate was up 2.8% over the same month a year earlier, says the Commerce Department. Privately owned housing starts, however, were down in April by 6.8% from March to a seasonally adjusted rate of 1,630,000. April’s starts were up, though, over April 2002, by 2.7%.

U.S. manufacturers report that orders being placed for the next several months have been picking up, and that could be a good sign for the U.S. economy. A survey of its members conducted by the National Association of Manufacturers found that two-fifths of the 75 respondents saw higher orders in May. By comparison, a similar survey taken last year found 56% of those polled stating that their April orders were off. Of those polled this year, 43% expect their orders in June to be higher than the same month a year ago.

· Is the company on the cusp of big growth – or big disappointment?
· What kind of growth and market share has Home Depot achieved in Canada?
· What new concepts is Home Depot trying out?
· How are vendors meeting the challenge of greater consolidation?
· How does Home Depot measure up against its toughest competitor, Lowe’s?
· What are Home Depot’s plans for Canada? What retail concepts will work here?
· What strategies does Home Depot have to beat the competition?

Falling share prices, falling morale, falling profits. Can the new management at Home Depot turn the tide? Of course it can. Find out how in the latest issue of Hardlines Quarterly Report — click here.

First, the numbers: Home Depot generated US$15.1 billion in the three months ended May 4, a 5.8% gain over the same period a year ago. Same-store sales were off 1.6%, but profits jumped 5.6% to US$907 million.

Lowe’s surprised many company observers when it reported that its same-store sales in the first quarter increased only 0.1%. Total sales grew by 11% to US$7.2 billion and net income rose 22% to US$421 million.

Both companies blamed cold and wet weather for their same-store sales softness. And while Depot officials spoke approvingly about sales of John Deere-branded tractors and mowers, Lowe’s admitted that its stores’ mower sales faltered because they hadn’t been stocking a mid-priced product.

On the day Lowe’s reported its quarterly performance, May 19, its stock fell by 9% to US$40.40 per share. After Home Depot released its numbers, the stock traded furiously and ended the day up US$2.60 to US$30.67 per share. Lowe’s stock price fell another US$1.30 per share.

Boucherville, QC — Rona Inc. has completed a share offering on the Toronto Stock Exchange. The money will be used to pay off some debt and finance the acquisition of Réno-Dépôt Inc., a deal which is expected to close by late Summer, as well as future acquisitions.

The deal has floated another 11,183,572 common shares into the market, with 7,770,000 of them issued from treasury and 3,413,572 sold by ITM Entreprises S.A. The shares were priced at $16.75, adding $130.15 million to Rona’s coffers.

ITM, the French-based co-op retail conglomerate of which Rona is a member, had previously held 14 % ownership in Rona. By selling off shares, the group has reduced its ownership by half to about 6% or 7%.

The syndicate of underwriters, comprising BMO Nesbitt Burns, National Bank Financial, Scotia Capital, RBC Dominion Securities and Desjardins Securities, have an option to purchase up to 1,165,500 more shares at the offering price for up to 30 days following the closing of the offering. This additional purchase will cover over-allotments and provide for market stabilization. If the over-allotment option is exercised in full, total gross proceeds to Rona will reach $149.67 million.

London, ON — With same-store sales up 6% year to date, TSC Stores, a chain of 21 hardware and farm centres across Ontario, has proven its format can fare well against big boxes – and anyone else, for that matter.

And with four of those 21 locations having been added just last year, and two more planned for the fiscal year ahead, the company has no concerns about continuing to stay strong.

“All our stores are up over last year,” says Roy Carter, president of TSC. “So including the initial sales from the new stores, our total sales year-to-date are up more than 15% over last year.” That increase follows a 12% gain over the year before.

The company’s fiscal year ends August 31, and a new store is planned for Leamington, ON sometime this Fall, with another site being considered in either Goderich or Essex for Spring 2004.

TSC has been experimenting with a hardware “store within a store” at Prout’s, a Castle building centre in Forest, ON. Here, TSC has been operating the store’s front end on a joint-venture basis with Prout’s with a hardware boutique called “Villager.” Carter says hardlines sales at Prout’s have tripled since the concept was put in place, and both parties have committed to run with it for another year. However, Carter says he wants to keep testing the concept before considering rolling it out to other building centres.

This year’s HTF included more than 30 breakout sessions on topics ranging from XML, bar coding, e-business strategies, AS1/AS2 solutions and electronic data interchange. The event was put on by the American Hardware Manufacturers Association and sponsored by Sterling Commerce, Stratix Corp. and QRS Corp.

Speakers included Jim Tompkins, president of Tompkins Associates. He said the current problem with supply chains is a proliferation of SKUs, a trend that is driven by demanding consumers. “It is possible to reduce inventory while improving service and increasing SKUs. It’s not relevant when you ship, but when the customer receives. You have to synchronize demand and have agile response,” he said.

Some companies have lean manufacturing operations but fat supply chains, Tompkins added. “DCs should flow product, not store it. Make sure all suppliers have Internet connectivity and do not treat all customers the same.”

During the conference, item synchronization guidelines were released by Home Depot. Item sync is the electronic transmission of price and product information from the manufacturer to the customer. Despite the high cost to vendors, it assures that trading partner systems are in sync and contributes to more accurate exchange of information throughout the supply chain process. As Home Depot’s Mark Healy noted, “Beyond direct benefits, item synchronization is the foundation for all forms of electronic collaboration.”

The Home Depot will be sending a letter to its vendors asking them to register with UCCnet and meet industry data synchronization standards by the end of 2003, Healy said.

Home Depot’s other focuses for technology in 2003 are electronic partner communication for special orders, self checkout system, EDI over the Internet, and back-end automation and re-engineering requirements for receiving. Healy also mentioned the development of a supplier web site, vendor.homedepot.com, which will store all documents/letters, timelines and links.

Remodeling expenditures, which increased 2.5% to US$163 billion in 2002, are expected to grow by more than 7%, to US$175 billion, this year, according to the National Association of Remodeling Industry. Each year, more than one million homes in the U.S. undergo major remodeling or renovation, according to NARI estimates.

The Remodelers Council of the National Association of Home Builders polls more than 600 remodelers quarterly, and found that remodeling activity in the first three months of 2003, while still below what it was in the first quarter of last year, is showing steady signs of recovery.

“Especially encouraging is that future expectations and backlogs of remodeling jobs in the pipeline are so strong,” says NAHB chief economist David Seiders. “Current additions, alterations and maintenance and repair work ordered by home owners ascended to very healthy levels at the beginning of this year, and professional remodelers are quite optimistic that conditions in this sector will continue improving.”

Moncton, NB — When Home Depot opened its first store here last month, it was not shy about leveraging New Brunswick’s legal Sunday openings, something that retailers have been slow to adopt wholeheartedly. However, once Home Depot was open for business, Kent, its competitor across the street, was quick to follow suit.

Meanwhile, the issue of whether to have Sunday shopping year-round or not continues to be a hot topic of debate for the rest of the province, one that goes before Fredericton city council today. According to a report in the Daily Gleaner, the Fredericton Chamber of Commerce did a study that shows more than 80% of retailers want the flexibility to open Sundays.

Fredericton has Sunday shopping from May to January in the downtown tourist areas and from August to January in the rest of the city.

Burnaby, BC — Taiga Forest Products Ltd. completed the fiscal year ended March 31, 2003 with sales of $912.7 million, up 7% from $854.3 million in 2002. Earnings for the year were $7.8 million, an increase from $6.2 million a year earlier. Sales for the first quarter were $209.9 million, a 2% increase over $206.5 million for the same period last year. The net loss for the quarter was $647,000, versus earnings of $719,000 last year.

Toronto — Canadian Tire Corp. has hired a new service provider to manage its card payment processing for the company’s retail businesses. As part of the agreement, Moneris Solutions will also provide Canadian Tire with card payment processing for its Canadian Tire Direct online and its catalogue business. The seven-year agreement will affect Canadian Tire’s $7.2 billion in annual retail sales.

Fort Wayne, IN – Growing customer demand for home décor has resulted in the introduction of a new, comprehensive program for Do it Best dealers at the company’s May Market. Everything from retail design, advertising and training comprise the program, aimed at helping dealer members drive up their sales of paint, cabinets, bath and flooring, through a partnership with Floor to Ceiling Corp., which will add more than 40 specialty vendors to the company’s list of suppliers.

Oak Brook, IL — Ace Hardware Corp. reports it’s on track to meet its goal of opening one million sq.ft. of new retail space in 2003. In the first quarter alone, 20 ground-up Ace stores opened, comprising a total of 256,800 sq.ft. In that period, another 23 stores converted to Ace from other co-ops. The company also plans to open a new one million-sq.ft. distribution centre in Placer County, CA in the first quarter of 2004. It will replace an existing facility in Rocklin, CA that’s half that size.

Montreal, QC — Domtar Inc. will temporarily cease operations at its White River Sawmill on June 23. The company blames a housing oversupply in the North American market, as well as U.S. duties on softwood lumber exports for “difficult market conditions” which have driven down prices. The White River sawmill is expected to stay shuttered for six months.

Sacramento, CA — It’s beginning to look a lot like … your supplier’s Christmas stand. That’s what a federal jury here sang last week when it ruled that Home Depot and a China-based manufacturer had illegally knocked off a patented stand manufactured by Decorations for Generations, which the jury awarded nearly US$13.6 million. Home Depot denied that the imports and their packaging were meant to be confused with Decorations’ line. The retailer intends to appeal the verdict.

London, England — Kingfisher plc has completed the acquisition of the minority shares in Castorama. As a result, Kingfisher now owns 100% of the issued share capital of Castorama and holds, directly and indirectly, 158,951,894 Castorama shares, representing 99.57% of the issued share capital voting rights. Through Goldman Sachs International, Kingfisher purchased the outstanding shares from Castorama Dubois Investments at the unit price of 67 euros. As a result, Castorama has been delisted from the French stock exchange.

Atlanta, GA — “Project Roadrunner,” a new initiative by Home Depot to cut costs, means the merchandising service companies that come into its stores will get treated more and more like poor old Wyle E. Coyote. By cutting back on the number of service contractors allowed in its stores, Home Depot hopes to save on the commissions it pays these contractors. However, they work on behalf of Home Depot’s vendors, and these vendors are concerned that the move will result in a restriction of trade. Lowe’s implemented a similar “vendor service consolidation program” about a year ago.

Patrick Brown has been promoted to Ontario sales manager at T.S. Simms & Co. Ltd. He has been with the company for seven years as a sales rep. He was formerly with Tremco and Lansing Buildall (416-458-2926) … Luc Papineau has joined Simms as a sales representative in Quebec. He was formerly with Henkel, LePage and Tremco. He is based in Trois Riviéres. (1-800-561-9100)

Troy, MI — Kmart Management Corp. named two general merchandise managers as part of the company’s push to improve merchandising efforts as it seeks to improve sales. Robert Atteberry and Joyce Dillon have both been appointed vice-presidents, general merchandise managers. Atteberry was formerly divisional vice president, merchandising, for home goods and Dillon was divisional vice-president, merchandising, of toys, sporting goods and electronics … Peter Whitsett, divisional vice-president of merchandising food and consumables, will assume responsibility for drugstore operations.

The composite leading index rose 0.1% in April, continuing a series of small gains since the Summer of 2002. Household demand continued to grow enough to offset weakness in manufacturing, where export demand has slowed.

Wholesalers sold a total of $36.6 billion worth of goods and services in March, down 0.5% from February. This decrease in sales follows a 0.2% decline in February. First-quarter sales were up 2.1% from the fourth quarter of 2002, and up 8.6% from the first quarter of 2002. The hardware, metals, plumbing and heating sector was up 4.5% in the first quarter.

· Is the company on the cusp of big growth – or big disappointment?
· What kind of growth and market share has Home Depot achieved in Canada?
· What new concepts is Home Depot trying out?
· How are vendors meeting the challenge of greater consolidation?
· How does Home Depot measure up against its toughest competitor, Lowe’s?
· What are Home Depot’s plans for Canada? What retail concepts will work here?
· What strategies does Home Depot have to beat the competition?

Falling share prices, falling morale, falling profits. Can the new management at Home Depot turn the tide? Of course it can. Find out how in the latest issue of Hardlines Quarterly Report — click here.

Same-store sales were up 3.1% for the first quarter. “Even though the quarter was marred by poor weather and low lumber prices, our earnings per share met expectations and increased 20%,” said Rona president and CEO Robert Dutton in a prepared statement. “In terms of internal growth, recruitment and acquisitions, our development is right on schedule. And we’re making sure we maintain the financial stability we need to pursue our plans for expansion.”

Retail sales for all corporate and franchised stores grew 6.8% to $255.8 million during the first quarter of 2003. The increase was helped by the opening of new big box stores in Gloucester, ON in May 2002 and Mississauga, ON in October 2002. The planned opening of a new big box in Kingston, ON (see pic) is the first of 5-8 such stores planned for the year ahead.

Dartmouth, NS — Pierceys, a privately held chain of four building centres in Nova Scotia, held the grand opening for its fifth store this past weekend. Located in Elmsdale, 20 minutes north of Halifax/Dartmouth on Highway 102, the 28,000-sq.ft. outlet had a soft opening exactly one month ago, with a grand opening celebration this past Saturday.

This marks the first new store for Pierceys since August 1998, when it opened an outlet in Tantallon.

Pierceys president Peter Korecki says the company’s sales increased more than 10% in 2002. He admits that bad weather has made for a tough start to 2003, but is certain enough about the year ahead to plan further store openings. In fact, he doesn’t expect to wait long before announcing store number six. “We have plans for a couple of potential locations that we’re looking at,” he says, although he intends to grow one store at a time. These, he adds, could either be acquisitions or greenfields startups.

One aspect of the program that has Terry Davis, vice-president, information and technology for Home Hardware, excited is the ability to track vendor-direct shipments. “In the past,” he says, “it has gone direct from the supplier to the store and we just don’t know about it.” The HomeBase program will provide better data on sales flow and volumes. The improvements are expected to help manage inventories for Home’s LBM side, which grew considerably with the addition of more than 100 former Beaver Lumber stores when that company was purchased by Home in 1999. Home Hardware now counts more than 400 building centres and home centres in its ranks.

In fact, says Davis, the change reflects a “Beaver mindset” whereby Beaver dealers were partners in their stores with Beaver’s parent, Molson Cos. Molson, he says, wanted to know in detail what was going on with each partnership. Home Hardware has historically left such details to its own dealers, who are independents within the Home Hardware co-op. Home Hardware, Davis notes, was always more concerned with the warehouse in the past.

With more details on who’s ordering what, Davis hopes to be able to get a better handle on inventory requirements and start shipping more LBM through the warehouse, thereby cutting down on the number of vendor-direct sales. By consolidating those purchases through head office, Home will be able to cut better deals on behalf of the members, he says. “It will bring more consistency to our negotiations.”

Home is developing HomeBase with Retek, a company that specializes in retail software and services. The program fits in with one of the co-op wholesaler’s mandates over the next five years to bring “excellence” to its supply chain operations. The design phase of HomeBase was completed early in April; it will be rolled out over the next 36 months.

In Canadian Tire’s retail division, sales climbed 5.8% to $1.05 billion, compared with $988.9 million in 2002. Same-store sales increased 4.3%. CTC profited from the inclement weather throughout much of the country with strong sales in its seasonal products, as well as automotive hard parts, accessories and tires. During the quarter, CTR opened three new-format stores and introduced the Kitchen Place merchandising concept into 13 more stores. The company will roll out the first of 19 planned “20/20” concept stores in late Fall 2003 in an unspecified location. These stores will put increased emphasis on seasonal, including camping, patio furniture and garden, as well as tools, sports clothing and equipment rentals. The expansion will bring the total number of Canadian Tire stores to 470 by 2005.

Gross revenue for Canadian Tire’s retail division during the first quarter reached $865.0 million, down 2.1% from $883.8 million a year earlier. The decline in revenue was due to a 2.3% reduction in product shipments, the result of a planned change in supply chain processes to flow seasonal product shipments closer to consumer demand (Hell’s bells, I don’t know what that means, either! — Michael).

Earnings before taxes and minority interest were $24.1 million, an increase of 8.0% from $22.3 million in the first quarter of 2002.

The 268-unit company had been racing to expand the reach of its four divisions: Lumbermens in the Northwest, Spenard Building Supplies in Alaska, United Building Centers in the Midwest and Home Lumber in the West. Dixeline, with sales last year of US$230 million, will be the basis for the company’s fifth division.

Lanoga reported revenue of US$1.451 billion in 2002, 8% higher than 2001 sales. Hylbert projects that his company is on track to crack the US$2 billion barrier this year. He also views a recent slowdown in acquisition activity by two other large pro dealers – Stock Building Supply and Builders FirstSource – as another window of opportunity for his company. “We’re not competing with other bids so much these days.”

Oak Brook, IL — Ace Hardware Corp. reported that wholesale hardlines sales for the first quarter ended March 29, were US$722.4 million, up 2.9% from US$702.2 million in the same period last year. Net earnings were US$14.3 million, a 73% jump from US$8.3 million in the first quarter of 2002.

Fort Wayne, IN — Do-it Best‘s current level of expansion activity is most marked in departments such as information technology, which has been bursting at the seams. As a result, the co-op is taking 100,000 sq.ft. of warehouse space in its corporate headquarters here and creating larger and more modern office facilities. And by the end of 2003, the co-op should complete the expansion of its smallest distribution centre, in Waco, TX, by 25% to more than 500,000 sq.ft.

Toronto, ON — Home Depot‘s 11 stores and Canadian Tire‘s 19 outlets in the Greater Toronto Area were open on Victoria Day as part of an initiative, called “Toronto: You Belong Here,” to boost business in the city following the SARS epidemic scare of recent weeks. Retailers across the city, including Sears and the Eaton Centre, kept their doors open in support of the effort.

Chicago, IL — Gardening continues to grow in popularity, with four out of five U.S. households involved in some kind of lawn and garden activity last year. In fact, they spent an average of US$466 pottering around last year, says the National Gardening Association.

Berlin, Germany — Metro AG is focusing on technologies aimed at boosting store efficiency, providing better sales tracking and speeding up checkout lines. By replacing bar codes with RF (radio frequency) systems at POS, this German supermarket retailer is working with Intel on a test store in Rheinberg, near the Dutch border.

The New Housing Price Index rose 0.1% in March from February, says Statistics Canada. The index of contractors’ selling prices increased 4.8% over March 2002, down slightly after three consecutive months of annual increases of 5.1%. Of the 21 urban centres surveyed, 12 registered monthly increases, led by Saskatoon, SK (+1.3%), London, ON (+1.1%), Hamilton, ON (+0.8%) and Winnipeg, MB (+0.8%).

The Composite Price Index for non-residential building construction in the first quarter was up 1.0% from the fourth quarter of 2002, and up 2.7% from the first quarter of 2002, says Statistics Canada. This marks the highest year-to-year increase since the second quarter of 2001.

Following an increase in consumer spending in March of 2.3%, U.S. retail sales fell 0.1% in April. Despite poor weather in parts of the country and a slowing economy, retail sales, not including a 5.9% drop in gasoline sales, were up 0.4%, but excluding automobiles, sales slumped 0.9%, the biggest monthly drop since the Sept. 11, 2001.

We’re very excited about our new publication. If you’d like more info about Hardlines International, just call us here at the World Headquarters! — Michael

Winnipeg, MB — Léo Charrière has announced his resignation from TruServ Canada to join North West Co. as vice-president, CFO and secretary. He replaces Gary Eggertston, but with added responsibilities and reporting to North West’s CEO, Edward Kennedy. He’ll remain at TruServ until May 15.

A 20-year veteran of the dealer-owned co-op, Charrière ably steered the company as it severed ties with TruServ in the U.S. last year, after taking over the helm from former CEO David Grubbe.

Charrière says the decision was strictly a personal one, and in no way reflects any dissatisfaction with his current employer. In fact, he says the company is in very good shape, with a strong executive team. “TruServ is strong financially and we’re having a pretty good year here. Sales are up 24% in the first quarter, and profits are up 24% in the first quarter, as well.”

These factors made Charrière’s decision to leave that much easier. In addition, North West had been wooing him for some time, and made him an offer “he couldn’t refuse,” says one source inside the company.

Charrière is also looking forward to a new challenge at North West, where he’ll be second in command. “It’s a larger company, and I’ll have multiple departments reporting to me. It’s a very different environment, with all corporate-owned stores,” he says of the retailer, which dominates Northern Canada with 141 combination food and general merchandise stores, in addition to seven convenience stores and a chain of 23 AC Value Centers stores in Alaska.

“I’ve never had experience with a public company and I felt this was an opportunity to broaden my experience. It was,” says Charrière, “definitely one of the hardest decisions I’ve ever had to make.”

But not all the new stores will necessarily be as big as their predecessors. Home Depot Canada is actively developing store footprints up to 20% smaller than the standard 135,000-sq.ft. size. A 105,000-sq.ft. store opened in Moncton, NB on April 24, after three years of delays. And just last Thursday, a similar-sized store opened in Bracebridge, a town in Ontario’s northern cottage region with a population of 13,233 that almost doubles during the summer.

That smaller format also opens up doors for Home Depot to expand throughout Atlantic Canada. Next stop, says Annette Verschuren, president of Home Depot Canada, is Charlottetown, PEI. “I’m so pleased with how we’re doing in Halifax and Dartmouth,” says Verschuren. “We’re ready to take it to the next level.”

In addition, Home Depot has its sights set on stores in Sydney, NS, Saint John, NB and St. John’s, NF. “I’m really close to doing deals in all these places, says Verschuren, “sometime over the next two to three years.” Another city that has been mentioned as a possible site in the past is Fredericton. However, Verschuren gave no indication that this was on the short list any more.

Rona’s continued expansion strategy is three-pronged: by recruitment of new dealers, organic growth with existing dealers and other acquisitions.

“If there’s an acquisition possibility that reflects exactly what we want, namely a company that’s aggressive and strategic, a company with good management and a company with potential for growth, we’ll decide who to go with,” says Sylvain Morissette, director of communications for Rona.

What about expansion into the U.S.? “The future for Rona is in Canada. We want to reinforce our network in all formats and in all segments of the country,” says Morissette. “That includes both acquisitions and additions to Rona’s co-op dealer ranks.” He notes there’s still room to grow and consolidate further within the Canadian market, which remains, he says, fragmented at the independent level.

Through the first 10 months of its fiscal year, which ends the last Saturday in June, the third-largest dealer-owned buying group in the U.S. saw its out-of-warehouse sales increase by 3%. Most of those gains, though, came from shipments to new members, says Bob Taylor, the co-op’s president. “Our business from existing members has been pretty flat.”

Nevertheless, in its last fiscal year, Do-it Best paid out US$95.7 million in rebates to its 4,300 members, the highest amount in its history. One member received a US$2 million rebate, and two others received US$1 million each. But Taylor acknowledges that, in the period of economic and political uncertainty which has shaken U.S. consumer confidence, the co-op needs to find new ways to create foot traffic and profit for its members – and itself.

Consequently, Do-it Best is urging more members to sign onto a category management program dubbed “Opportunity,” which provides historical data that can be used to determine product assortments. Since its inception, 704 members have purchased planograms through this program. The co-op offers market analyses and store redesign consultation through a program called RetailPLUS!. It’s already done 104 of these projects, with 50 on tap for its next fiscal year.

Para, which produces a full line of architectural and related products, is also exclusive distributor of Sikkens stains in Ontario. The deal effectively doubles Sico’s market share in Ontario, and especially the Greater Toronto Area. Para services a network of about 400 paint retailers across Canada.

The deal comes on the heels of Sico’s 1Q results, when it posted a 1.6% increase in revenues, despite the poor weather that put much of the industry on hold during that time. Not only that, but sales in the West are growing as Rona‘s former Revy stores continue to switch paint lines. The company reported net income of $2 million on sales of $59.4 million, up from net income of $1.4 million on sales of $58.4 million.

However, he said that Emerson was losing money on the US$80 million in Ridgid branded benchtop and stationary tool sales it generated annually through Home Depot’s stores.

Farr said he and other Emerson officials had been in discussions with Bob Nardelli, Home Depot’s chairman and CEO, for 18 months, “to see how we could add value” to their relationship. In an agreement struck between the two companies, Emerson will provide the technology and branding, and would outsource the actual manufacture of those power tools to other companies. A company spokesman, David Baldridge, said in an interview with Hardlines that Home Depot would play a major role in deciding which companies got that outsourced business.

Farr said that Emerson expected to sell through its benchtop and stationary inventory within the next three months. He added, without elaboration, that Emerson anticipated “other opportunities” to put the Ridgid name on other products sold in Home Depot’s stores in the future. Emerson will continue to make Ridgid-branded shop vacs and pro-grade plumbing products.

Domestic makers of cord sets for consumers have been under competitive pressure from Asian imports for several years. In September 2001, General Cable, the Kentucky-based supplier, exited the consumer cord set business. “The materials weigh a ton, shipping is costly, and there have been virtually no price increases for years,” Zaccaria explains.

A source familiar with Leviton’s situation added that Levition’s decision may have been precipitated by Home Depot telling the manufacturer that it would be switching to an Asian supplier for extension cords.

Vancouver, BC — Professional Paint Inc., through its wholly owned subsidiary, General Paint Corp., has acquired Toronto-based Ideal Paints. General, a leading supplier in Western Canada, has been expanding in Central Canada with the development of outlets in five Ontario cities. The deal will add four Ideal outlets, plus a distribution centre, for a total nine in Ontario. PPI is a privately held company with a number of regional brands in the Western U.S. and Canada, including Frazee, Hanley, Parker Paint and Kwai Paint.

Rona Inc. breaks ground tomorrow on its latest Rona Home & Garden store, this one in Kingston, ON, about 2½ hours east of Toronto. The 120,000-sq.ft. store is expected to open in October 2003, featuring 45,000 SKUs and creating some 200 jobs.

Toronto, ON — A program to help consumers choose paint colours has been adopted by Home Depot Canada. The Colour Solutions Centre, first announced in the pages of Hardlines a few weeks back, comprises a 32-ft. section that features more than 3,000 paint samples, including Ralph Lauren and Disney by CIL. The Centre includes a kiosk by Behr with an interactive touch screen that allows customers to scan in the colour of their choice, and to see how that colour, which has been pre-matched with a wide range of trim color options, would look when applied to different rooms.

San Diego, CA — Lanoga Corp. has agreed to acquire the assets of Dixieline Lumber, a home center chain that sells into California, Nevada and Arizona. Dixieline includes 10 home centers, a truss plant, a mill remanufacturing plant and a lumber distirbution facility. Its sales last year rose 5% to $230 million. Based in Redmond, WA, Lanoga is a 268-unit chain.

Duncan, BC — As Doman struggles to escape bankruptcy protection, it reported an increase in sales in the first quarter of 2003 to $149.2 million, from $131.7 million in the first quarter of 2002. Net earnings also increased to $52.2 million, up from a net loss of $39.4 million in the first quarter of 2002. Sales in the solid wood segment decreased slightly to $98.7 million.

Atlanta, GA — Home Depot will host DIY workshops on May 14 exclusively for women. The North America-wide initiative will take place in all of Home Depot’s 1,500-plus stores starting at 7 p.m. Put on by Home Depot staff and suppliers, the special clinics are designed to help women learn how to use power tools, build a patio, and install outdoor lighting.

New York, NY — Masco Corp., which owns everything from Delta Faucet to KraftMaid cabinets, reported net income of US$165.8 million in its first quarter, compared with US$57.8 million a year earlier. Sales rose 19% to US$2.5 billion, from US$2.1 billion.

Hillary Stauth has joined Home Outfitters as director of corporate communications. She was most recently at the Toronto Stock Exchange, and before that with the government of Ontario as then-Premier Mike Harrison‘s press secretary. The Home Outfitters PR function was formerly handled by the retailer’s parent, Hudson’s Bay Co. (416-861-6905)

Anders Moberg, who spent time as head of Home Depot‘s international division, has just moved from Ikea to join Royal Ahold, a food retailer based in the Netherlands, as CEO. He’s got his hands full: the company is saddled with accounting irregularities that leave US$880 million unaccounted for in its books.

The value of building permits issued across Canada declined 4.4% in March to $3.6 billion, after falling 11.7% in February. The decline was in non-residential construction intentions, which fell 15.9%, as the value of residential permits rose 3.1% from February to March, to $2.4 billion. However, the year started strong, and January’s record level of $4.3 billion in building permits was more than enough to push construction intentions for the first three months up 6.6% to $11.8 billion, from the first quarter of 2002 and 18.1% from the first quarter of 2001.

Winnipeg, MB — A new Ontario distribution centre for TruServ Canada will be open for business by early Summer, says TruServ president and CEO Léo Charrière. And with it, he adds, will come the capability to begin filling a role as a full-line hardware distributor to Canada’s home improvement industry.

Until recently, the Western-based co-op wholesaler had a mandate to supply only its own bannered dealers. These include True Value Hardware stores and J&S Variety outlets across Canada. But since last November, when Charrière sent a letter to buying group members nationally, he tipped his hand that he wants more.

The Ontario team, comprising members of the Growmark retail division that TruServ took over earlier this year, will move from Growmark’s Mississauga, ON headquarters by June 30 at the latest.

In preparation for the opening, Charrière admits he’s in discussions with various buying groups, but wouldn’t be more specific about any possible negotiations. “We’re trying to fill a void that we think is there. But right now everybody is talking to everybody.”

Boucherville, QC — Rona Inc. wants to roll out another share offering, this time to pay for the acquisition of Réno-Dépôt Inc. That deal is expected to close by the end of August 2003.

Rona has filed a preliminary prospectus with the securities regulatory authorities in each province in connection with a public offering of common shares. The syndicate underwriting the offering consists of BMO Nesbitt Burns, National Bank Financial, Scotia Capital, RBC Capital Markets and Desjardins Securities. Approval is expected within a couple of days, after which the shares will go on the market, with the offering closing a couple of weeks after that. Rona expects to raise between $100 million and $130 million, depending on the response of the market.

Besides using the money to buy up the outstanding shares of Réno-Dépôt, Rona also intends to reimburse a portion of its current credit facilities. (In order to make the bid for Réno-Dépôt, Rona put together a finance package worth a total of $700 million.) But the company wants to keep those other credit lines intact, so they can be used for other expansion opportunities and to maintain a good balance sheet, says Sylvain Morissette, Rona’s director of communications.

“Right now is the good time to make the move. We think the market will react positively to it.”

The Canadian Retail Building Supply Council represents the dealers’ associations from each region of Canada, namely the Atlantic Building Supply Dealers Association, the Association des detaillants de materiaux de construction du Quebec, the Lumber and Building Materials Association of Ontario, the Western Retail Lumbermens Association and the Building Supply Dealers Association of BC.

Donald O’Hara is the executive vice-president of ADMACQ. He’s also this year’s chairman of the CRBSC.

“The mission of the Council is mainly to work on national education programs that would benefit dealers across Canada. We are also working on benefit packages that will help our members.” The group also tries to identify trends in the market.

“It’s a useful exchange forum for the chairpersons to see what’s being done in different parts of the country.”

O’Hara says the Council chose its meetings around the Hardlines Conference Series for a number of reasons. “The conference touches on a broad spectrum of subjects useful to each association,” he says. “The various sessions offer a unique forum to meet vendors, retailers and other association members in one central venue.”

O’Hara also finds a great deal of content in the seminars and keynotes that bears reporting in the pages of his association magazine, Quart de rond. “There’s a lot of useful information at the Conferences that I can take back that will benefit my member dealers.”

Now in its eighth year, the Hardlines Marketing Conference runs September 3-4, 2003 at the Delta Hotel near the Toronto International Airport (formerly the Four Points Sheraton). The event comprises an International Business Seminar, Retail Strategies Symposium and the industry’s executive summit, the Hardlines Marketing Conference. For the first time this year, Hardlines will host the industry at a gala dinner on September 3. For more information, check out https://hardlines.ca/html/marketing_conference.html or contact: nancy@hardlines.ca

(Why not arrange your meetings to tie in with the Hardlines Conference Series? The industry’s decision makers will all be there! If you’d like Hardlines to help you arrange your meeting, contact Beverly Allen, bev@hardlines.ca.)

The company’s expansion plans also include a move, scheduled for early September, of its corporate headquarters into a new “customer support centre” in Mooresville, NC.

These are some details that Lowe’s recently disclosed in its 10-k filing with the U.S. Securities and Exchange Commission, which reported on the company’s financial and operational performance in 2002. During that period, Lowe’s revenue rose 19.8% to US$26.5 billion, its store count by 15% to 854 units, comp-store sales by 5.6% and its net income by 43.8% to US$1.47 billion.

Over the past several years, Lowe’s has become more secretive, and its 10-k documents reflect that competitive position. However, the document does provide some insights.

In 2003, Lowe’s intends to open 130 new stores, including five relocations of older stores. These additions are expected to increase Lowe’s sales floor square footage, which was 94.7 million at the end of fiscal 2002, by between 15 and 16%. The company expects that about 64% of those stores will be located in metro markets with populations of 500,000 or more, putting further competitive pressure on rival Home Depot.

The company’s capital expenditure budget for fiscal 2003 is US$2.9 billion, 80% of which has been earmarked for store and distribution expansion. Over the past several years, Lowe’s has followed Wal-Mart‘s lead by building huge distribution centres to handle and redistribute merchandise into its stores. Currently the company has nine of these regional centres, and nine smaller facilities that handle lumber, building materials and imports. Half of all its inventory goes through this distribution network. In fiscal 2003, the company begins construction on its latest regional distribution centre, in Poinciana, FL. This year, Lowe’s also plans to open between three and five of these smaller “flatbed” facilities.

Last year, Lowe’s spent US$114.3 million on advertising, which represented a 21.2% increase over its ad expenditures in 2001, but was about the same as what the company spent in 2000. A significant, though undisclosed, percentage of the retailer’s ad funds comes from suppliers in the form of co-op allowances. A new accounting rule, which went into effect last year, requires retailers to treat all vendor funds, including co-op ad allowances, as “a reduction of inventory cost unless they represent a reimbursement of specific, incremental, identifiable costs incurred by the customer to sell the vendor’s product.” This treatment is required of all agreements entered into or modified after December 31, 2002. Lowe’s stated that virtually all of its ad allowances for fiscal 2003 had been negotiated prior to that date, so the rule change wouldn’t have any “material impact” on its balance sheet for last year.

Lastly, Lowe’s broke down its revenue in 2002 by product category, as it does every year. Appliances again generated the greatest portion of those sales, at 11%. Compared to the previous year, Lowe’s reported declines as a percentage of total revenue in the sale of lumber, hardware, and building materials. It reported gains, as a percentage of the total, in paint, wall and window coverings and home organization.

Indianapolis, IN — Despite the U.S. dollar’s strength throughout much of 2002, members of the Worldwide DIY Council reported strong export sales during the year, and they are even more optimistic about sales being up in 2003.

Through the first quarter of 2003, 67% of members said business is up; 72% expect it to be up by the time the year ends.

Responding members sell their products in as many as 150 countries around the world, though the average manufacturer’s sales efforts are more limited. The average number of countries in which members sell varies widely depending on product category, but breaks out as follows:

As the dollar weakened against the euro, making U.S. and Canadian products more competitive, most members did not change their sales tactics to take advantage of the more favourable exchange rate, although a few did appoint more sales representatives and/or distributors to broaden their market penetration. However, several member companies did make some strategic moves to help them. Among the actions taken:

· elimination of currency relief discounts, and the addition of new product categories that were previously too price-sensitive;
· establishment of more exclusive distribution by country;
· price increases to gain back lost margins from previous price discounts;
· favourable exchange rates give clients price decreases without vendors having to change prices;
· aggressive promotions, conversion incentives, etc.;
· more time and travel devoted to prospecting in Europe this year, at the expense of South America and the Middle East;
· pricing and shipping allowances, minimum-order quantities and liberalized payment terms to increase sales;
· addition of a new employee and the opening of a second distribution warehouse.

In another question, regarding any anti-American feelings since the war in Iraq, only two of the 40 members responding to the survey reported there was a change in buyer attitudes, and both were noted in France.

During the coming year, DIY Council members will be traveling extensively. On average, they will visit from five to 15 countries in 2003, with a few going to as many as 40 countries.

The United Kingdom has been one of the best markets for Council members in 2002, followed by Mexico and Canada. Australia and the Central American and Caribbean regions were also primary sales targets last year.

In 2003, members will be concentrating their sales efforts in Canada and a number of European and Latin American countries. Germany and Mexico were specifically named as key targets for this year.

For more information about the Worldwide DIY Council, contact: Tom Delph, executive secretary, tdelph@indy.net or phone: 812-376-9299.

Toronto, ON — Two Toronto area garden centre chains have merged with the purchase by Sheridan Nurseries of five Weall & Cullen outlets. According to the Toronto Star, another store, in Etobicoke, will close this summer, and a tourist-oriented theme centre, Cullen Miniature Gardens, is not part of the deal.

St. Jacob’s, ON — Home Hardware is kicking off Spring with a new series of television ads that build on the retailer’s tradition of spotlighting innovative products exclusive to Home Hardware. The first one, which rolled out at the beginning of April, featured the Earth Blender. A second ad, unveiled last week, features a patio treatment product called Tech Stone.

Atlanta, GA — Home Depot spends almost eight times as much on advertising as its closest rival, Lowe’s, although its sales are only twice those of Lowe’s. Advertising last year amounted to almost US$600,000 per store.

San Francisco, CA — Building Materials Holding Corp. reported an increase in net sales for the first quarter of 2003 of 11.8% to US$276.4 million. Sales of construction services and manufactured building components were up 21.6% to US$162.3 million, representing 58.7% of total sales, compared with $133.5 million, or 54.0% of total sales in the same period a year ago.

Ste-Marie, QC — MAAX Inc. had an increase in consolidated sales for fiscal 2003 of $616.9 million, up 19% over $518.5 million in fiscal 2002. Operating cash flows rose 45.4% to $64 million, compared with $44 million last year. During the three-month period ended February 28, 2003, comparable net income (before amortization of goodwill) rose 40.7% to $6.0 million, up from $4.3 million in the corresponding quarter of the previous fiscal year.

Guelph, ON — GSW Inc. reported the highest operating profits in its 155-year history in 2002. During the year, its share price rose 120% to around $17. Net income reached $6.5 million on sales of $413.9 million for the year, up from a net loss of $2.6 million on sales of $222.5 million in fiscal 2001.

Newton, IA & Seoul, Korea — Maytag has forged a manufacturing agreement with Daewoo Electronics, whereby Daewoo will manufacture top-freezer refrigerators for Maytag, moving production form Maytag’s plant in Galesburg, IL. Production at that facility will begin phasing out later this year, and it will be closed in late 2004. In addition, side-by-side refrigerators produced in Galesburg will be redesigned and produced at Maytag’s plant in Amana, IA and at a new manufacturing facility being built in Reynosa, Mexico.

New York, NY — Both MasterCard International and Visa USA have settled out of court with a group of retailers, including Wal-Mart, warding off a trial. The multibillion-dollar lawsuit, which challenged the debit card policies of MasterCard and Visa, charged that the credit card companies in question exacted excessive fees on customers using their debit cards. The credit card companies have agreed to pay US$3 billion and lower their transaction fees.

Brian Mahoney has joined the Home Outfitters division of Hudson’s Bay Co. in the role of senior buyer, hardlines and seasonal. He’s heading up an 11-member team, reporting to Maurice Chelli, Home Outfitters’ director of merchandising. (416-861-6728)

Phil Brown, formerly divisional manager for consumer products at Growmark Canada, has joined Weyerhaeuser as area general manager for Ontario. Working out of the company’s Brampton facility, he oversees the sales operation for Ontario and into Buffalo. Brown reports to Steve Buckle, Weyerhaeuser’s regional general manager of Eastern Canada. (905-792-9903)

At Wickes Inc., Jim O’Grady has been appointed president and CEO of Wickes Lumber. Most recently, O’Grady was vice-president of operations at Hope Lumber and Supply Co. An industry veteran with 25 years of management experience, he served as senior vice-president of operations for Wickes prior to leaving the company in May 2002. O’Grady will be part of the company’s strategic restructuring plan. (847-367-3400)

Montreal, QC — Rona Inc. reaffirmed its position as the key consolidator in the Canadian home improvement marketplace with its announced acquisition of Réno-Dépôt Inc. last week. Rona will pay Réno-Dépôt’s parent, Kingfisher plc in the U.K., $350 million in cash, which includes $257 million for the company’s assets and operations, plus another $93 million for Réno-Dépôt’s operational real estate.

The deal includes all 20 of Réno-Dépôt’s big box stores, 14 of which are located in Québec and six in Ontario that operate under the Building Box name. Réno-Dépôt represents about 2.1 million sq.ft. of retail area and employs approximately 4,300 people. In 2002, it had sales of $846.6 million and operating profits (EBITDA) of $57.6 million. The deal will give Rona 61 large surface stores, and put its top line sales almost at par with Home Depot Canada‘s, which were an estimated $3.9 billion in 2002. The Réno-Dépôt takeover will give Rona about 12.5% of the market in Canada, including about one-third of the Quebec market.

Kingfisher will use the sale proceeds to reduce its debt. Excluded from the sale is a portfolio of real estate for future retail development in Canada that has a current book value of around $36 million. Kingfisher intends to sell this off over time.

The transaction, subject to customary conditions and approval by the Competition Bureau, is expected to close by late Summer 2003. The two companies will continue to operate as separate entities until that time. However, Rona will develop an integration team right away to evaluate synergies between buying teams and within the various operations of the two companies. Within days of the anticipated Summer-end closing, Rona will unveil an integration plan that will include a distillation of best practices from both companies.

The team will also evaluate the dual banners. “There is a lot of awareness of both companies in the Quebec market and every year they are listed in the top five most admired companies in the province,” says Sylvain Morissette, director of communications for Rona. “So that means the two names are really important for consumers and for the people of Quebec,” he adds.

Rona has already committed about $60 million to advertising, flyers and promotion this year and has about $100 million left in its war chest following the initial share offering it floated last Fall. This deal, however, has been funded by a syndicate of financial institutions – Bank of Montreal, Royal Bank of Canada, National Bank of Montreal, Bank of Nova Scotia and Desjardins – with bridge loans and credit lines totaling $700 million. To keep from depleting its cash reserves, RONA is reviewing the possibility of a new stock offering, depending on favorability of market conditions in the months ahead.

In the meantime, cash flow from Réno-Dépôt’s operations will go into a holding account for Rona, effective March 29, although profits and sales won’t be tacked onto Rona’s books until the deal closes. Rona will pay Kingfisher interest charges on the purchase price during that period. The company expects this cash flow to total about $25 million after interest payments and taxes.

Speaking with analysts last week when the deal was announced, Rona president and CEO Robert Dutton pointed out some of the distinctions between the two companies. Réno-Dépôt maintains a traditional big box format, with emphasis on lots of selection, maintaining a SKU base of around 60,000, versus about 45,000 for the likes of Rona or a Home Depot. Réno-Dépôt is also considered stronger in contractor sales, with about 25% of sales going to pros, and puts more emphasis on construction. Rona, on the other hand, is strong in lawn and garden and seasonal, while its décor business is a core category for it.

One of the synergies Dutton anticipates is the ability to develop Rona’s private-label programs in the new stores. He also expects the existing distribution facilities in Boucherville to handle added capacity from the Réno-Dépôt stores. In fact, a lot of the logistics of that process will include simply cross-docking through the Rona warehouse or direct shipments to the Réno-Dépôt stores.

The benefits of the deal are many for Rona, Dutton adds: it will increase the retailer’s buying power and provide an influx of experienced personnel and best practices to Rona’s rapidly growing store network. It will also beef up its presence in the all-important Ontario market, and reinforce the company’s presence in the major urban areas of the Quebec-Windsor corridor. Rona expects to save about $35 million (pre-tax) through synergies realized on the merger of the two operations, with half of that saving being realized over the next 12 months.

Rona has filed a long-form application with the Competition Bureau, and is confident the company will be able to hold on to all of Réno-Dépôt’s stores, even the ones that are distinctly overlapping. Redundancies occur in Scarborough, in Toronto’s east end, where a Building Box and Rona Home & Garden are right around the corner from each other. A Rona l’Entrepôt competes agains Réno-Dépôt in Sherbrooke, QC, and stores in St. Hubert and St. Bruno also overlap.

Dutton says he expects sales growth from both the Rona and Réno-Dépôt operations to increase by about 5% in 2003.

Purchases through the group by all members were up 11% in 2002, while Commercial Independent Dealers, TIM-BR Mart’s commercial arm, had an increase of 9%, accounting for close to $100 million of the group’s total of $350 million in purchases. Top line sales by all members from both divisions were well in excess of $600 million, says Don Nash, president of TIM-BR Mart Ontario.

CID was started five years ago within the TIM-BR Mart Ontario offices (then known under its corporate name, Homecare Building Centres). Starting with 20 window, door and siding companies, CID has grown to include gypsum specialty dealers and building oriented lumber suppliers.

“We’ve slowly been able to pick players off, says Nash, “and give them our buying power in Ontario – and nationally – through Matreco. We’ve been able to offer great comparable programs.”

Nash says other synergies exist between the two divisions, in addition to the increased buying power. The technology driving the TIM-BR Mart website can be applied to the CID website, and existing credit card rates for TIM-BR Mart dealers can be applied to the CID members.

CID now numbers 40 members, a dozen of them having joined within the past two years. Except for two who came over from the group’s retail side when CID was young, all the commercial members represent incremental growth over and above TIM-BR Mart’s existing membership.

Nash says TIM-BR Mart Ontario purchases have already grown by 5% for the first quarter, despite the cold weather that has delayed construction throughout the province.

These and other tidbits about the world’s largest home improvement retailer could be gleaned from Home Depot’s 10-k filing with the Securities and Exchange Commission, which provides details about the company’s financial and operational performance in fiscal 2002, but also offers a glimpse of its plans for the year ahead.

While Home Depot intends to open 206 stores this year, only two – in Phoenix, AR and Cleveland, OH – will be Expo Design Centers. However, Expo will get beefed up a bit as the chain consolidates five Georgia Lighting showrooms into Expo’s operations. Georgia Lighting’s distribution will be consolidated into the chain’s Your “other” Warehouse division, which is currently handling Depot’s special order business in plumbing and bath.

What else is in store? Home Depot’s total capital expenditures, which were reduced by 20.5% to US$2.7 billion in 2002, will rise to US$4 billion in 2003, much of that being earmarked for in-store remodeling and technology. Six Landscape Supply outlets will open in Texas and Georgia in 2003, bringing the total for that division to nine units. The chain will also open two more urban neighborhood stores in 2003, reportedly in Boston, St. Petersburg, FL or in Toronto.

And while some building products suppliers continue to question whether Home Depot’s Pro Initiative is actually increasing its penetration with contractor customers, the chain’s commitment to this program remains unquestioned: it will expanding into another 204 outlets this year, in addition to the 1,135 stores that carried it at the end of 2002.

Discussing the wood procurement policy of Lowe’s Cos., Michael Chenard, that retailer’s director of environmental affairs, declared Lowe’s commitment to “phase out purchases of wood products from endangered forests … and give preference to wood products from independently certified, well-managed forests.”

Though not represented on the panel, Home Depot had introduced a new, undefined concept of “endangered regions” and a 2002 target date to end lumber sourcing from them. Home Depot adopted a list of the “most vulnerable forest eco-regions,” defined by the World Wildlife Federation as regions from which the retailer would not secure lumber unless certified by the Forest Stewardship Council. The list includes a lot of tropical forests, yet the company claims that 94% of its wood comes from North America.

A Home Depot policy review emphasizes the promotion of FSC products. “We sell more FSC certified wood than any other retailer in America and, at the same time, we have transitioned more vendors to FSC certified wood than any other retailer in America,” the company said.

About 4% of Home Depot’s annual sales of wood products are derived from certified forests.

Seattle, WA — Home Depot plans to open a 91,000-sq.ft. warehouse in Woodland, WA, just north of the Oregon border. It has already opened a distribution centre in Olympia. Home Depot has 23 stores in Washington, 14 of them in the Seattle area.

Toronto, ON — Home Depot Canada has partnered with the Clean Air Foundation to launch “Mow Down Pollution,” a program for customers to exchange old two-stroke lawnmowers and trimmers for rebates of between $10 and $100 toward the purchase of a new, environmentally friendly mower or trimmer. The program will run until May 4 at all 90 Home Depot Canada locations. In the past, it was only run out of two Home Depot locations over one weekend.

Chicago, IL — TruServ Corp. has introduced online ordering capability for its commercial and industrial members, under a program called “Pick and Pack.” The program will be available to the entire TruServ membership during the summer of 2003. Members can place as many orders as they want each day until noon Central Standard Time. The items are then shipped directly to members or to their customers that evening. The member and their customer will receive an e-mail that confirms the shipment and contains a UPS tracking number, as well. More than 17,000 items are available, including hand and power tools and electrical and plumbing supplies, plus new offerings of about 1,200 SKUs of safety related products.

Federal Way, WA — Weyerhaeuser Co. had a first-quarter loss of US$54 million, which includes after-tax charges of $11 million, compared with net earnings of US$30 million for the same period a year earlier. Sales increased to US$4.61 billion, compared with US$3.99 billion in 1Q 2002.

Montreal, QC — Tembec Inc. had consolidated gross sales for the second quarter of $857.8 million, up from $848.7 million in the same period last year. The company generated net earnings of $34.2 million, compared with a restated net loss of $63.0 million. EBITDA totaled $12.5 million, down from EBITDA of $50.0 million a year ago. During the quarter, the Forest Products Group generated negative EBITDA of $10.8 million on sales of $236.1 million. This compares to negative EBITDA of $7.2 million on sales of $232.3 million in the prior quarter.

Oak Brook, IL — Ace Hardware is raising money to support the families of military personnel engaged in the Iraqi war through sales of “patriotic” products available on Ace’s website. Ace will contribute the money to the American Red Cross Armed Forces Emergency Services with matching funds from the specially identified products.

Montreal, QC — Globe Electric has signed a long-term contract with UPS Supply Chain Services Group to manage the distribution of Globe’s products across Canada. Under the deal, UPS SCS will operate and manage all core logistic functions within Globe’s Canadian supply chain, including warehousing and distribution. Three warehouse operations will be consolidated into a single distribution centre in Oakville, ON.

Chicago, IL — Kmart Corp. has received court approval to go ahead with its reorganization plan, and expects to emerge from bankruptcy within the next 10 days. U.S. Bankruptcy Judge Susan Pierson Sonderby signed the confirmation order after negotiations last week cleared away scores of objections to the plan from creditors, competitors and others.

London, UK — Wolseley plc has made a conditional offer for Pinault Bois & Materiaux for a cash consideration of £390 million, including net debt acquired. With about 300 locations, PBM is the second largest LBM distributor in France with more than 8% of the French market share and sales of £897 million. The offer, which is recommended by PBM’s parent company, Pinault-Printemps-Redoute, is to be submitted to PBM’s workers’ councils by April 30, 2003. The acquisition will be financed from Wolseley’s existing resources.

Dale Heiydt

At Maytag Corp., Thomas A. Briatico, president of Maytag’s Dixie-Narco vending business unit, has been promoted to president, Hoover floor care business unit. Briatico succeeds Keith G. Minton, who will retire effective May 1, 2003 … Douglas C. Huffer, vice-president sales and marketing – vending at Dixie-Narco, replaces Briatco as president of Dixie-Narco. (641-787-8185)

Despite a decrease in housing starts in March compared with February, the underlying housing market remains strong thanks to employment growth, increasing incomes and low mortgage rates, says CMHC. Actual starts for the first quarter of 2003 exceeded last year’s first quarter by 6.1%.

Wholesale trade in March continued on a strong pace with an increase of 11.8%, or $28 million, compared with March 2002. According to the Canadian Institute of Plumbing and Heating, overall year-to-date sales are ahead of 1Q 2002 by 7.2%, or $49 million. British Columbia was strongest, up 20%. The West, which comprises Saskatchewan, Manitoba, and Thunder Bay, increased 12.7%; and Quebec showed gained a healthy 15.0%. Ontario, on the other hand, showed a decrease of 0.5%, and Atlantic Canada was down 1.0%. For the first quarter, HVAC/R was up an estimated 12%, hydronics was up 12%, plumbing increased 11.6%, PVF gained 12% and waterworks was up 17.5%.