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If the format looks incorrect or you would like to print this newsletter why not view the PDF version? This week’s password is “ceramic” |
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Michael McLarney, President & Editor mike@hardlines.ca Beverly Allen, Publisher bev@hardlines.ca John Caulfield, Contributing Editor Phone: 416-489-3396 |
| May 26, 2008, Vol. xiv, #21 | |
| In This Issue | ||||||||||||||||
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“Every accomplishment starts with the decision to try.” — Anonymous |
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| Retail giants get whacked in first quarter | ||||||||||||||||
| ATLANTA & MOORESVILLE, NC — For the first time since they switched places at the top of the retail home improvement ladder in the late 1980s, Home Depot has relinquished its position to Lowe’s as the industry’s leading earner, at least for the first quarter of 2008.Lowe’s profits for the quarter declined 17.99% to $607 million, while same-store sales were down 8.4%. Home Depot’s first-quarter profits, including a one-time charge, were $356 million, down 66% from $1.0 billion. Excluding that $543 million charge against earnings to cover the closing of 15 stores and removal of 50 others from its expansion pipeline, its net earnings would have been $697 million, making it very close to Lowe’s earnings of $607 million.
That’s cold comfort for Lowe’s, whose sales dropped 1.3% in the second quarter to $12.01 billion. Home Depot’s sales for the first quarter totalled $17.9 billion, down 3.4%; same-store sales fell 6.5%. Both dealers are getting hammered by a housing slump that Robert Niblock, Lowe’s CEO, says is likely to persist through the remainder of this year. On top of that, a higher percentage of consumers’ spending is now going toward food and gas, whose retail prices continue to skyrocket. Almost 80% of Lowe’s existing stores are in markets where home sales are in decline. While Lowe’s plans to open 120 new stores this year, it put about 20 store openings on hold in those down markets. Home Depot has been seeing strong sales activity from stores outside the U.S., in China, Mexico and Canada. But its chairman and CEO, Frank Blake, warned analysts and investors that the company’s net income could be off by as much as 24% for the full year in 2008. Home Depot, too, has major exposure in markets hardest-hit by the housing downturn, such as Florida and California. Both companies tried to put some positive spin on their numbers by stating that they had gained market share in the quarter. Lowe’s pointed out its expense-control successes, while Home Depot restated its focus on improving its stores’ customer service.
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| TIM-BR MARTS adds locations, new member | ||||||||||||||||
| CALGARY — Two large TIM-BR MARTS members have added stores. Winnipeg-based North American Lumber has opened a new location in Kerrobert, SK, its 23rd. Specializing in smaller yards that average 3,000 sq.ft. and estimated sales in excess of $30 million, North American is TIM-BR MARTS’ larger member in terms of outlets, having added five new stores since 2005.Consolidated Gypsum Supply, one of the group’s original commercial dealers, will open its seventh outlet on June 1 in Saskatoon. This new operation will continue with Consolidated’s core offering of gypsum, insulation and steel.
TIM-BR MARTS has also added a new dealer, Pinnacle Building Materials Ltd. of Red Deer, AB. Dealer Barry Wunsch, owner of this brand new operation, will open the doors for business in the coming months. Anticipating a near-100% contractor customer-base, the location will carry core LBM products such as insulation and drywall, along with complementary hardware and hardlines items. TIM-BR MARTS Ltd. now represents more than 650 dealer locations across Canada, over $2 billion in annual purchases and $3.4 billion in retail sales, making it Canada’s largest LBM buying group. |
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| Renovation spending climbs in Canada | ||||||||||||||||
| OTTAWA — An estimated 1.5 million households in 10 major Canadian centres indicated they completed renovations totalling almost $20 billion last year — and they’re using contractors more than ever to get the job done.According to the latest “Renovation and Home Purchase Survey” by Canada Mortgage and Housing Corp., homeowners spent $2 billion more in 2007 on renovations than in the previous year, reflecting an average expenditure of more than $12,800.
CMHC’s latest survey reports on actual renovation expenditures made in the previous year, as well as intentions to buy or renovate a home in 2008 in the following 10 major centres: St. John’s, Halifax, Québec, Montréal, Ottawa, Toronto, Winnipeg, Calgary, Edmonton, and Vancouver. More than a quarter — 26% — of households that undertook a renovation project hired a contractor for a portion of the work, up slightly from 24% that undertook renovations in 2006. Do-it-yourselfers accounted for 31% of renovators in 2007, down slightly from 34% in 2006. However, many households — 41% — chose to contract out the entire renovation project. The main reason given by households for renovating in 2007 was to update, add value or to prepare to sell (59%). About 27% of respondents stated that the main reason for renovating was needed repairs. The top three renovations completed last year were: remodelling (31%), painting or wallpapering (27%), and hard-surface flooring and wall-to-wall carpeting (26%). Of the 10 major centres surveyed, the highest percentage of households that spent $1,000 or more on renovations in 2007 was in Winnipeg, at 36%. That city was followed by St. John’s and Halifax at 35%, while Québec showed the lowest percentage (28%). Similarly, renovation intentions for 2008 across the 10 major centres are strongest in Winnipeg and St. John’s, where 50 and 48% of consumers, respectively, indicated they plan to undertake renovations costing $1,000 or more. The proportion of potential renovators is lowest in Québec, where just 35% of households indicated they intend to renovate in 2008. |
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| RONA upgrades Réno-Dépôt stores with focus on service | ||||||||||||||||
| BOUCHERVILLE , QC — RONA has completed renovations of four of its Réno-Dépôt stores, reflecting an investment of more than $8 million. The Marché Central store in Montreal and the stores in Brossard, Rosemere and Quebec City have been overhauled. These follow the first such renovation, which RONA undertook with the Réno-Dépôt store in Gatineau last February.“Réno-Dépôt is well-loved by people in Quebec, and we’re always working to find ways to innovate, to meet the ever-changing needs of our customers,” said Pierre Dandoy, RONA’s executive vice-president, big-box stores, in a prepared release. There are 16 Réno-Dépôt stores in Quebec.
The four newly renovated stores were updated to reflect the new Réno-Dépôt concept. Emphasis is placed on competitive prices, a broad range of products, detailed selections within each product category, and fast, efficient shopping. Inside, the selection of products has been upgraded and enlarged with improved signage. The location of products in the store has been retooled to facilitate easier shopping. The space is laid out around a widened central aisle, where fast-moving products are displayed and highlighted. This power aisle branches out into more open aisles and in-store boutiques featuring products for home decoration and finishing, including flooring, doors and windows, kitchens, bathrooms, paint, and interior decoration. There’s also a new boutique for storage products. At the centre of the store is the Project Area (L’Espace Projet), a consulting area where consumers can meet with experienced staff advisors, called Project Guides, to discuss their home renovation projects. This program, inaugurated at the Gatineau store, enables customers to get advice on product selection and installation, including getting estimates, setting up appointments, and ensuring satisfactory results. Project Guides can also help out with financing options for any project with customers. |
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| INDIANAPOLIS , IN — Maurice Chevalier, owner of Morinville Home Hardware in Morinville, AB, has been named Young Retailer of the Year. The 2008 Young Retailer of the Year program, which is coordinated by the North American Retail Hardware Association, recognizes outstanding achievement by hardware retailers age 35 and younger.Chevalier, who won in the over $2 million in sales category, didn’t start his retailing career in hardware. In 2001, he and his wife, Elizabeth, took ownership of the Bumper to Bumper auto parts franchise his father had owned. After talking with Home Hardware, he built his new store right next door.
While Chevalier was starting out with a customer base of male shoppers, he also wanted to create a strong niche in home décor products to attract more female customers. He then added a lawn and garden department, which posted a 50% sales growth in its second year. Overall, in 2006, Chevalier’s store posted a 38% increase in sales over the previous year, which was a 110% sales increase from his first full year in business. This year, he opened the town’s first furniture store. In the next two years, he plans to expand his current building by 3,000 square feet. Aware that his employees are the key to the store’s success, Chevalier continually works toward open communication among staff and gives them a number of perqs, including cash bonuses for completing training programs, a staff discount on merchandise, and a full benefit program that includes a retirement savings plan with matching fund opportunities. Chevalier is also active in the community, supporting the Knights of Columbus and local community efforts. In 2006, he received the Small Business Award of Distinction from the local Chamber of Commerce. The year prior, he received the Chamber’s Triple Bottom-Line Award for his exemplary business practices and commitment to the community. (Chevalier and the rest of this year’s winners will be special guests at NRHA’s 2008 National Convention, July 28-30 at the Hyatt Regency Monterey Resort in Monterey, CA.) |
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Classifieds
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| Industrial Thermo Polymers Limited is one of North America’s largest polyethylene foam profile extrusion operations, producing a broad range of retail and commercial products. We have an immediate opening for a
NORTH AMERICAN SALES MANAGER to develop our U.S. and Canadian market. The successful candidate will have a minimum of 3 years experience in Consumer Goods or the Food Service Industry and will have acquired exceptional business development skills. A minimum of community college is required. Travel throughout North America will be necessary. Duties will include sales and marketing strategy development, market analysis, trade show participation, lead follow up, and customer presentation and follow up. Industrial Thermo Polymers offers competitive wages and a benefit package and we are an equal opportunity employer. Interested applicants should fax or email their resume to: Industrial Thermo Polymers Limited We thank all applicants for their response however only those selected for an interview will be contacted. No phone calls please. |
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Cubbon Building Centre (Home Hardware) Cubbon Building Centre is a highly successful and profitable five store chain of Home Hardware building centres in BC, Alberta and the Yukon The President is accountable to the Board and is responsible for providing effective and dynamic leadership and direction to all aspects of Cubbon Building Centres Ltd. The President ensures that the organization’s strategic and operating objectives are achieved, provides leadership to the management team, and is accountable for exceptional results in a very competitive retail environment. As the ideal candidate, you will bring demonstrated senior management success with a geographically dispersed multi-unit retailer with annual sales in excess of $100-million. An enthusiastic leader and coach, you will bring outstanding business acumen combined with a strong customer service orientation. For more information please contact Lorraine Scrimshaw at 506-388-1848. |
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Primus Business Services , a division of Primus Telecommunications Canada Inc. offers exceptional communication solutions – including voice, data and hosting services to over 45,000 small, medium and large enterprise organizations and is at the forefront of telecommunications in the Canadian marketplace. To broaden its data centre footprint in Canada and to meet increasing customer demand for colocation and managed services, Primus Business Services recently expanded its Internet Data Centre Operations in Toronto and Ottawa. In addition to these new centres, Primus Business Services has opened a Data Centre in London, Ontario – a result of our commitment to servicing the needs of our existing clients in this area. Currently we are offering tours through our new state-of-the-art facility in London. If you are interested in a private tour please visit: www.primus.ca/london-event. |
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| Resumés | ||||||||||||||||
| Andy Moncrieff has a proven sales record with key national accounts and their independent dealers in the hardware, building materials, and paint industries and superior business development skills. Click here to download Andy’s Resumé |
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Marketplace
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Sell your company – or buy one – with HARDLINES Classifieds! Do your executive search, find new lines or get new reps in the HARDLINES Marketplace. Only $2.75 per word for three weeks in the classifieds. To place your ad, call Barb Hills at 416-489-3396 or email: barb@hardlines.ca |
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More Information
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To ensure you receive your HARDLINES newsletter each week, please add bev@HARDLINES.ca to your address book. Did your email system make this newsletter unreadable? Publishing Details: Michael McLarney – President – mike@HARDLINES.ca The HARDLINES “Fair Play” Policy:Reproduction in whole or in part is very uncool and strictly forbidden and really and truly against the law. So please, play fair! Call for information on multiple subscriptions or a site license for your company. We do want as many people as possible to read HARDLINES each week – but let us handle your internal routing from this end! Subscription:$285 (Canadian subscribers add $14.25 GST = $299.25 per year/ GST #13987 0398 RT).Secondary subscriptions at the same office are only $46 (Canadian subscribers add $2.30 GST = $48.30).Ask about our reduced rate for branch offices.You can pay online by VISA/MC/AMEX at our secure website or send us money. Please make cheque payable to HARDLINES. |
| Our first-ever Hardlines Webinar was a resounding success. But if you missed this information-packed hour of tips on how to stay competitive in the current economic slowdown, don’t dismay! You can order a copy of this audio-visual extravaganza for yourself. Just contact our man Brady here at the New World Headquarters: 416-489-3396. —Michael |
| COMPANIES IN THE NEWS |
| TORONTO — Home Hardware’s celebrity kitchen experts, “The Cooking Ladies”, Phyllis Hinz and Lamont Mackay, are currently on a road tour from Orillia, ON to Osoyoos, BC, that will make 30 stops between May 1 and Aug. 12, 2008. Covering some 14,000 km in their signature 40-foot custom motor home, they will make special appearances at Home Hardware stores along the way.TEMISCAMING , QC — Forestry products company Tembec has extended a series of shutdowns at its sawmills located in Elko and Canal Flats, BC, which will be closed during the weeks of July 28 and Aug. 4. Four sawmills and one value-added facility in Eastern Canada are being idled indefinitely, and nine other facilities — six in Eastern Canada and three sites in British Columbia, are either taking periodic downtime or running at reduced rates.
MISSISSAUGA , ON — Wal-Mart Canada has hired J. Walter Thompson as its advertising agency of record for English Canada. J. Walter Thompson replaces Publicis. Allard-Johnson remains the company’s agency of record for Quebec. LAKE FOREST , IL — W.W. Grainger Inc. has revealed that it will open up a branch in Panama this summer, and increase its presence in Mexico, as part of an effort to expand into Central America. In Canada, the company is looking to add outlets of its Acklands-Grainger business in Eastern Canada. PARAGOULD , AZ — An Ace dealer here was the victim of thieves who broke into his store and stole almost $600 worth of copper fittings and valves. Escalating metal prices appear to be the cause of a growing number of similar thefts from stores and construction sites, both in the U.S. and in Canada. |
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People on the Move |
| Stewart Mathie has joined UPM Marketing Inc. as general manager, effective June 1. He will be work out of the company’s Markham, ON facility. UPM supplies energy conservation, monitoring and home comfort products. smathie@upm-marketing.com (905-305-0537)After 18 years, Jim Birchall has left Black & Decker Canada to join TTI as that company’s agency of record, in the role of director of advertising and PR. “Our vision is to make Milwaukee number-one in the marketplace in three years,” he tells HARDLINES. (905-338-7600) |
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Economic Indicators |
| After a decrease in February, retailers saw their sales remain relatively stable in March, edging up 0.1% to an estimated $35.5 billion. Sales by building and outdoor home supplies stores were down 0.5% from February to March, but actually up 3.3% over March 2007. Home centres and hardware stores were similarly impacted by the late spring, with sales from February to March down 0.1%, but up 4.2% from the same month a year ago. Thanks to the strong rise in January, overall retail sales in the first quarter were actually up 1.8%. (Stats Canada)The Consumer Price Index rose 1.7% between April 2007 and April 2008, up from the 1.4% increase in March. This was the first acceleration of the all-items index since November 2007. Consumer prices accelerated for the first time in five months in April in the wake of higher gasoline prices and fewer incentives on passenger vehicles. (Stats Canada)
The Composite Index rose 0.1% in April after remaining flat in March. Household demand was sustained by further gains in spending on durable goods, although housing suffered its seventh straight decline, as housing starts retreated sharply in April. (Stats Canada) Wholesalers reported a modest rebound in March, as sales increased by an estimated 0.6% to $42.7 billion, following a 2.1% decline in February. The increase was helped by higher deliveries of building supplies and machinery and electronic equipment. (Stats Canada) |
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NOTED… |
| NEW YORK — The residential green building market in the U.S. is expected to be worth $12 billion-$20 billion this year. According to research by McGraw-Hill Construction, that figure is expected to more than double by 2012 to $40 billion-$70 billion, representing 12%-20% of the market.The study determined that green homes are becoming very marketable, as 40% of builders said green building helps them market their homes in a down market. Quality has emerged in this down market as the number-one reason for building green. Previously, builders were motivated by energy cost savings of green homes and by “doing the right thing”, which was still the number-two reason this year. |
| Register Now for the 13th Annual Hardlines Executive Conference |
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October 23 -24, 2008 in Toronto at the Renaissance Toronto Airport Hotel & Conference Centre. Register now for the Early Bird price and get Coffee with Yves Gagnon, President of Group BMR; Greg Hicks, COO of TSC Stores; Ray Griffith, CEO & President, Ace Hardware. view the conference webpage here! |
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Did you know about these
other products from Hardlines? |
Bruce Shuh, retired director of marketing at Home Hardware Stores, is currently on a motorcycle trek across North America to support Special Olympics Canada. Shuh’s 35-day motorcycle trip (he worked at Home Hardware for 35 years) will take him through the Grand Canyon, Death Valley, Vancouver Island, the Canadian Rockies and Yellowstone Park. To support this Special Olympics Canada fundraiser, visit: 
first -timer was Stand-Up Stix, based in Lafayette, CA, showing an innovative bracket to supporting new doors for production painting. Allas, from Farmington Hills, MI, presented a unique rolling toolbox-trailer product. High-tech innovations always caught a lot of attention on the show floor. itouchless.net featured a range of household products using motion-activated opening and closing mechanisms that were incorporated into a number of waste and recycle bins, and even a paper towel dispenser.
chosen from among hundreds of entries, is the Shark, the first tool to combine a professional wire stripper and utility knife. It was the only Canadian this year to win this award.
Home Depot intends to open 55 stores this year, of which 36 are in the United 11 openings are planned for Canada. However, its net increase in square footage will only be 1.5%, and the retailer has taken 50 locations out of its new-store pipeline – among them, locations that have been under consideration for up to a decade. About $400 million of its pretax charge is related to this decision.
Bill Morrison, president and CEO of the western-based wholesale hardware distributor, anticipates a healthy year ahead, as well. Although Central Canada is bracing for a slowdown, TruServ’s dealer base, which is strongest in the still-booming West, expects another five dealer-to-dealers transactions and 18 new stores in 2008. Support of existing stores will continue, as well, with 22 renovations already on the books.
“Lowe’s is a house of brands, and our customers expect to find those quality brands in our stores,” he explained to an audience of vendors at the recent annual meeting of the Canadian Hardware and Housewares Manufacturers Association. His company, he said, will focus heavily on the repair and renovation market, which is better likely to survive a downturn in the economy – and a slowdown in new housing construction.
Since the Richmond store opened in 2005, a number of additional points of sale have materialized for RONA in the British Columbia market, including key acquisitions such as Dick’s Lumber and Curtis Lumber in Burnaby. It also has 19 affiliate dealers in the province, including Mack Foster Building Supplies, a proximity-type store only minutes away from the Richmond big box.
up to more style and design, coupled with more technological innovations.
sustainable materials or reduced packaging to ease the impact on landfill. “We think there’s responsibility by the retailer to be even a little ahead of the curve,” Morrison said. “Rather than wait, we think that independents should just seize the opportunity.”
a presentation to showcase some of the products that Home Depot has rallied for its chemical-free cause. These included weed sprays rely on acetic acid instead of 2,4-D or Mecaprop, and insecticides that use borax, soap or silicon dioxide rather than Malathion or Captan.
dedicated to supporting the communities where we do business right from the Company’s inception, in 1939,” said RONA president and CEO Robert Dutton.
“Our operations are solid, and we’re making investments in both our retail and wholesale infrastructure for the benefit of both the short- and long-term,” said Ace President and CEO Ray Griffith. “We are pleased to have the audit of our 2007 financial statements complete and are encouraged by our 2007 results, especially in light of the economic pressures on our sales and overall operating expenses.”
While the show was not marked by any major new programs (Home launched a major store design and merchandising program two years ago), a number of existing initiatives are gaining traction among the member dealers. These include Home Installs, the industrial-commercial-institutional business, and an expanded gift card program, with a new provider (see our April 7/08 issue –Editor).
With his departure, Home will combine the marketing efforts of its hardlines and LBM divisions under Jack Baillie, who has paralleled Shuh’s role on the building materials side. The two marketing teams will come together under Baillie.
document Kimberly-Clark’s management and logging of the Kenogami Forest. It alleges the company violated its previous policy not to use “environmentally significant” old-growth fibre in its consumer products.
Christine Hand, owner of Handyman Home Hardware in Conception Bay South, NF, was awarded the Walter J. Hachborn Award at Home Hardware’s latest dealer market, held last week in St. Jacobs, ON. Hand is the first dealer to ever to receive the award twice. (She is also an amazing past speaker at our 2006 Hardlines Conference–Editor).At its latest annual meeting, the Canadian Hardware and Housewares Manufacturers Association appointed its new board. Bill Calasina of Bissell Canada has been named chairman, replacing Gerry Byle of Kaz Canada, now past chairman; James Mumby of Dynamic Paint Products is first vice-chairman; Peter Thomson of Taymor Industries is second vice-chairman; and Doug Whaley of Rust-Oleum Consumer Brands Canada is treasurer … Three new members have also joined the board: Dave McKellar of Masco Canada, Kris Ovstaas of Philips Lighting, and Mike Wilson of Recochem.
More than 175 retail and vendor executives are expected to participate in the HARDLINES Conference program, which will include a comprehensive series of interactive breakout sessions.
Home Hardware Stores released its “2008 Annual Shopping Guide”, a 340-page catalogue filled with a range of products reflecting the 60,000-plus SKUs available through the Home Hardware distribution system. Home’s paint division gets a big boost in this edition, with the cover devoted to the company’s Beauti-Tone Designer Series paint line. Other product lines featured include upscale children’s lawn furniture, brand-name kitchen appliances such as Betty Crocker and Delfino, and complete bathroom ensembles under the Flex brand.
Amidst the 52-page publication’s product ideas is an explanation of RONA’s new project guide program, which dedicates a staff-member to a customer from beginning to end of the project. The magazine also showcases RONA’s new ECO line of products
Despite the foggy morning, Haligonians appeared receptive to the new store, with about 1,200 people going through the doors within the first half hour. With the opening of this new store, RONA now operates seven stores in Nova Scotia and a total of 25 stores in Atlantic Canada.
According to new findings from the HARDLINES Data Research Team (not exactly as shown), sales by the retail home improvement industry grew at a compound annual rate of 7.4% from 1997-2006. Growth in 2006 remained strong, increasing by 7.3%, but slowed to just over 6% growth in 2007. In the current year, the industry faces a slowdown in new housing construction (though still forecast to remain above 200,000 starts), and repairs and renovation spending has been slowed by a late start to spring.
RONA, Home Depot, Canadian Tire, and Home Hardware Stores — fell below the industry average. Collectively, their sales grew by only 5.5%, while the industry grew by more than 6%. Those four still account for more than half the industry’s sales overall, according to the HARDLINES findings.
Rob Hagborg has joined TruServ Canada Inc. as national distribution centre manager. Hagborg has more than 20 years experience in Logistics with Canada Safeway, most recently as director of distribution in Edmonton. There, he worked on implementing lean distribution methods, developing policies, and identifying areas to increase efficiency. He has worked in both automated and conventional warehouses with varying levels of technology.
brings more than 15 years of industry experience to the job. Besides Patene, MacDonald has worked for Dietrich Metal Framing Canada and Commercial Drywall Supply.He also has experience on the supplier side, having worked for CGC, where he built relationships in the company’s sales division, eventually becoming CGC’s regional sales manager.
The gift cards are now available at all 1,000-plus Home Hardware stores nationwide, and in Shoppers Drug Mart stores. They come in four themes – spring/summer, holiday gift-giving season, celebrations (Mother’s Day, graduation, etc.) and a generic gift card. They are re-loadable and have no expiry.
an audience of about 800 RONA personnel, the bulk of them store staff.The business portion of the program consisted of a mock “talk show” featuring “guests” who included Robert Dutton, RONA’s president and CEO, Claude Bernier, vp of proximity and specialized stores; Michael Brossard, vp of marketing; and Pierre Dandoy, vp of big-box stores.
And it intends to do the same this year. HARDLINES has confirmed that nobody from the RONA buying team will head to NHS this year. This, despite the fact that the show has grown to more than two million square feet in size, with some 3,500 exhibitors representing 150 product categories.
