“We are very excited to leverage our general merchandise offerings to a quality organization such as Triple 4,” says Dave Leonzio, national growth manager for TruServ Canada. “We have the opportunity to service over 400 locations, providing general merchandise and hardware offerings, which fits well with our current infrastructure.” Leonzio adds that 10 Triple 4 locations have already signed on and more are being added each month.

According to Leonzio, TruServ is actively pursuing other retailers outside of the hardware industry, to provide for their general merchandise needs. “We are in the process of working with a number of companies that we expect to announce in the next few months that also have a similar void for general merchandise.”

With the arrival of warm summer weather, Quebecers are getting outside to enjoy the pleasures of outdoor work. In this regard, 68% of the Rénovex Survey respondents indicated that they have invested in the purchase of flowers and/or plants this spring, and a third of them have also purchased gardening tools.

For more information about the Renovex study, contact, Donald O’Hara at ADMACQ: 450-646-5842, info@admacq.qc.ca.

Hoy says that ties in well with NRHA’s mandate. “Membership is our biggest drive and a lot of that is based on education.” In fact, he anticipates that NRHA’s presence in Canada can exceed even the membership levels of the former CRHA, which were estimated at around 1,500 dealers at the time of its demise.

To establish more firmly operations north of the border, the NRHA has just completed incorporation of NRHA Canada. Although it will be governed by the Indianapolis-based association’s U.S. board, John Hammond, managing director of the NRHA, says the move will keep Canadian money up in Canada.

NRHA is currently testing a new online training program. “We’re not trying to re-invent the wheel. We’re just trying to educate the retailers,” regardless of any existing banner affiliation they may have, Hoy says. The program will begin rolling out in earnest in August.

Hammond says the program offers a comprehensive, multi-relational online tool. “It takes everything you need to know about a product and co-locates it with that product,” he says. “You can pull up streaming video and FAQs, tips on add-on sales and merchandising, and even safety tips related to that product or project.

“We have driven a large number of individual memberships down here based on this program,” Hammond continues. “I think it’s going to be a great deal for all independents.” He expects the new program to be “Canadianized” in time, as well, to take into consideration differences such as metric measurement.

NRHA’s annual convention and AGM starts today in Vail, Colo.

The new layout will be especially effective in accommodating shows that feature larger equipment or require larger exhibits, says Brüggemann.

A furniture show being held in January 2006 will be the first event to be held in the newly renovated halls. The International Hardware Fair/Practical World, March 5-8, 2006, is already more than two-thirds sold, and exhibiting companies include 150-plus power tool suppliers, many of whom are returning to the show following an absence of several years.

Brüggemann admits that the big guys – Bosch and Black & Decker – have yet to sign on. However, he says, as these companies look to expand their presence in the fast-growing Asian market, the international scope of the show will offer strong incentives for supplier involvement.
(For more information on Practical World or Spoga and gafa, contact: Barbara Hills, b.hills@koelnmessenafta.com; 416-598-3343.)

WOODBRIDGE, Ont. — Continuing losses and poor sales as a result of unseasonable weather have further hurt Royal Group Technologies, even as it seeks a buyer for some of its real estate assets. It may also trim manufacturing costs, as it faces another quarter of losses. Its 2Q results will be released Aug. 12.

SHANGHAI —Wal-Mart will open its first store here on July 28, adding to the 47 stores it already has in China. However, Shanghai is already well served by French retailer Carrefour, which has eight stores there, and by Germany’s Metro AG.

MONTREAL — MAAX Corp. reported net sales for the first quarter ended May 31 of $140.8 million, up 3.4% from $136.1 million for the first quarter of 2005. Operating income for the first quarter decreased by $3.6 million or 31.5% from $11.4 million to $7.8 million. Profits fell from $1.77 million to a loss of $2.34 million.

TOKYO —Three of Japan’s leading home improvement retailers have agreed to merge their operations under a single holding company by Sept. 1, 2006. The three dealers — Homac Corp., Kahma Cop., and Daiki Co. — operate 369 stores in 37 of the country’s 47 prefectures. Their combined annual sales for the year ended March 31 were 420 billion yen (the equivalent of US$3.78 billion, using current currency exchanges). That total represents about 10% of Japan’s retail home improvement sales and exceeds the revenue generated by Japan’s leading dealer Cainz Corp.

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LONGUEUIL, Que. — A fire that broke out last Tuesday has destroyed Groupe BMR’s warehouse here. But the privately owned wholesale buying group is already back up and running from makeshift offices nearby.

The hardware distribution centre and head offices were razed by the fire, while the company’s building materials distribution facility, at the back of the property, and its fleet of trucks, were untouched. That hardware warehouse and offices were a recent addition to BMR’s infrastructure, representing a $3.2 million expansion in early 2003, and a serious investment in BMR’s own hardware wholesaling operations. That investment resulted in the formation of Quincaillerie Matreco Hardware, which ships hardlines to dealers beyond BMR’s own membership of 125 stores.

While the cause of the fire remains unknown, a number of people onsite say that a chlorine tank, which fell off a skid while being moved by a lift truck, may have been the culprit. As of today, however, BMR has relocated its offices to a space near the existing warehouse, and product is being shipped through a combination of methods. Another warehouse, in nearby Boucherville, will provide some backup distribution, while a number of suppliers will operate on a direct ship basis with many of BMR’s customers in the interim.

“We’ve recovered pretty well with our team and our supplier partners,” says Wilson, “so we’ll be back in business [today].”

Brafasco joins the growing ranks of acquisitions by Home Depot on both sides of the border that are aimed at bolstering its growing professional customer business. Back in January, Home Depot’s Canadian division purchased Litemor, a commercial lighting supplier based in Montreal. The Brafasco acquisition gives Home Depot Supply an expanded product line – and an estimated $25 million in sales – and will leverage Home Depot’s sourcing capabilities.

Terms were not disclosed and completion of the transaction is subject to customary conditions. The deal is expected to close in a matter of weeks.

Canadian Tire proves it really is the store women prefer to “start with,” rather than end up at for big purchases, as 27% of women polled spent $11-$20 there. However, when it comes to spending more than $100, only 5% of respondents chose Canadian Tire, compared with 14% for big boxes and 20% for building centres.

“Women in Home Improvement” is an exclusive survey of 7,800 women across Canada by ACNielsen. It appears in the latest issue of Hardlines Quarterly Report. For more information, <click here> or contact Isabel Bisong: Isabel@hardlines.ca; 416-489-3396.

The secondary offering, by Taiga’s two major shareholders, has also been put on hold. One of those investors, 3Cs Investments Ltd., has withdrawn completely from the secondary offering. Taiga is continuing discussions with the other investor, Berjaya Group (Cayman) Ltd., regarding its desire to proceed with the secondary offering of stapled units.

Based on Taiga’s financial results for its fiscal year ended March 31, the transaction without a treasury offering would give New Taiga available cash of $36.3 million for distribution. After a holdback of $4.0 million (89% payout ratio), that distributable cash would total approximately $32.3 million and represent approximately $1 per New Taiga stapled unit.

The proposed changes to the transaction are subject to regulatory and court approvals. If the secondary offering of stapled units proceeds, New Taiga intends to file an amendment to its preliminary prospectus dated June 2, 2005 as soon as practicable.

“Combining the decades of experience gathered by the global market leader with CIHS’s outstanding knowledge of the market has made Practical World Asia/CIHS a major player in the world’s most dynamic market and lent it a highly international character,” said Oliver P. Kuhrt, executive vice-president of Koelnmesse. “By strengthening this cooperation, we are laying the foundation for further increases of exhibitors, visitors and exhibition space. That will bring major benefits for our customers in this booming economic region.”

This year, Practical World Asia will be held in Shanghai from October 11-13, in tandem with CIHS for the third time. More than 1,500 companies are expected to exhibit, occupying almost 58,000 square metres of exhibition space – a 20% increase over last year’s show – in five trade fair halls at the Shanghai New International Expo Center. An estimated 38,000 visitors will flock to the two trade fairs over the three-day period. While most will be from China, about 15% will come from abroad, representing around 100 countries.

In addition, the 49th World Hardware Convention, the international conference of the International Federation of Hardware and Housewares Association (IHA), will be taking place in Shanghai prior to PWA / CIHS. The IHA is an international organization for the global hardware industries. It currently has around 31,000 members from 17 countries.

Visitors can register online for both shows free of charge at www.practicalworld-asia.com.

There is no doubt that pricing plays a role in any builder’s choice of supplier. But 71% of those polled said that service trumps price every time in their selection.

Surprisingly, 80% of the builders polled said they don’t rely on pro dealers for installation services. But nearly half say they are likely to in the future, a response that no doubt reflects current labor volatility. And many custom builders adamantly resist buying from or sending clients to warehouse home centers. In fact, big boxes were named by at least one-quarter of the builders polled as places where they shop in only five of 36 product categories: tools and fasteners, lighting, locksets, caulks and adhesives, and shelving and storage.

While garden centers retained their market share leadership in terms of overall sales of garden goods and services in 2004, (43% market share in outdoor living goods vs. 32% market share among the big boxes), when shoppers are asked where they made outdoor living purchases in the past year, some 80% reported shopping for plants at big boxes, as compared with only 52% who bought plants in garden centers.

The independent garden centers are losing their edge in the outdoor living market as shoppers turn more frequently to home center stores for their outdoor living needs. Garden centers must become more sophisticated and more knowledgeable about their core shoppers in order to maintain their loyalty and support in the coming years, Danziger explains.

The consumer insights study, Outdoor Living Market, 2005: Understanding and Predicting Consumers’ Passion for the Outdoor Living Lifestyle, provides details of a survey among 1,000 home owners with incomes of $25,000 and above. The Outdoor Living Market, 2005 report can be ordered at www.unitymarketingonline.com.

NEW YORK — Building Materials Holding Corporation has managed to increase its credit limits with a group of lenders. The amended credit agreement increases BMHC’s revolving credit facility to $300 million and adds two years to the maturity date. The amended agreement also provides a new term note of $75 million. In addition, the rate of interest on an existing $125 million term note was reduced by 0.25%.

MONTREAL — Second quarter sales for Richelieu Hardware jumped by more than 9% to $7.4 million, pushed by increased sales in the U.S. and Canada. Consolidated sales reached $92.6 million, up 13.8% million over the same period last year.

BOCA RATON, Fla. — Eljer Plumbingware Inc. has been purchased by a division of Sun Capital Partners, Inc., a private investment firm that specializes in leveraged buyouts and investments. Dallas, Tex.-based Eljer, which makes kitchen, bath, and plumbing products for the residential and commercial markets, was bought from Jacuzzi Brands.

LAKE FOREST, Ill. — Even George Forman can’t seem to help Salton Inc., which received a warning from the New York Stock Exchange last week that its shares may be delisted because of low market capitalization. Fearing it may slip into bankruptcy, investors have been wary of the small-appliance maker in recent months. And last month, Salton missed an interest payment, causing further concern about its solvency.

BENTONVILLE, Ark. — Wal-Mart will raise its stake in the Japanese affiliate Seiyuto by 50% this year, further boosting its presence in the Japanese market. Japan’s fourth-largest retailer will become a subsidiary as Wal-Mart increases its share of the company, which has lost money for three years running, from its current 42.4%, as it continues to expand in the Asian market.

At Do it Best Corp., Robert Schmelz has joined as e-commerce manager. He will manage all business-to-consumer online retail e-commerce programs and be responsible for the doitbest.com website. Schmelz will oversee online order fulfillment, site design and development, and online marketing, merchandising and new program development. He will also assist Do it Best Corp. members with the development of their online retail operations. He was most recently with Innotek Inc.

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The concept takes the convenience offerings currently inside the store, such as McDonald’s and donut shop, and enhances them outside the store, making for a convenience destination for anyone looking to pick up a jug of milk and a couple of two-by-fours.

Canadian Tire announced a similar, but more refined, convenience model earlier in the spring. Called “Q,” it’s a convenience gas-and-groceries format that involves Canadian Tire gas stations, along with a scaled down Sobeys store, called “Sobeys Express,” which carries everything from fresh flowers to deli. The concept is rounded out with a Starbuck’s and a Richtree restaurant. Two trials are up and running in Ontario so far – in Milton and Windsor.

Like other Canadian retailers, such as Canadian Tire, Hbc is taking a page from Target’s book. For the Bay, that strategy includes ongoing upgrades of its existing stores, plus focus on higher end brands that deliver a value proposition at a slightly higher price. Those brands will often be purchased through “power buys” or in an off-price situation that finds them ending up in a new stand-alone format called “Designer Depot.” The company’s “Big Ticket Initiative” puts added emphasis on sales of home electronics, furniture and major appliances, all of which figure prominently in the Bay’s latest flyer promotions.

At Zellers, the discount department store chain, the focus is on upgrading and revamping existing stores to make them brighter, and adding focus to lines such as clothing, some grocery items and packaged foods.

“Taking our business to the customer: the power of B2C”: Albert Plant, retail consultant and RBC Retail Industry Advisor, is will launch the Conference on Day One as our keynote. What are the top issues facing retailers today? And how can you cope with those issues – and better yet – profit from them? Plant, our numero uno retail guru, has wowed Conference audiences in the past – don’t miss him this year!

“Growth Mining: the new imperative for retailers”: Al Meyers, Senior Vice-President with Retail Forward, will continue our program on Day One with information that will make you re-think how you do business. (I’m not exaggerating here – both these guys will give you profitable, business-building insights! — Michael)

Finally, Michael McLarney, your very own Hardlines Editor, will offer the latest data on the size of the industry, and identify which retail formats are growing fastest – and why.

For more info on the Hardlines Conference Series, Sept. 12-13, <click here> or call Isabel Bisong at 416-489-3396; isabel@hardlines.ca.

To avoid upsetting younger, aggressive dealer-members, Griffith has formed a “progressive Ace leader” advisory council of dealers 40 and under. It is this next generation of owners that Ace realizes it must satisfy as it seeks to grow.

MOORESVILLE, N.C. — Lowe’s has announced it will add even more space to its ever-growing headquarters facilities here. The Charlotte Observer reports that the industry’s second-largest dealer will begin construction early next year on the expansion that will allow Lowe’s to accommodate 2,000 more employees, including 500 information technology associates who will relocate from another Lowe’s facility in Wilkes County, N.C. The construction should be completed by 2008. Fifteen months ago, Lowe’s announced it would add to the Mooresville campus to handle another 600 employees. That construction should be completed this fall. Ultimately, the Mooresville site will have the capacity to hold 8,000 associates.

ATLANTA — Home Depot has finalized the acquisition of a pro-oriented lumber yard chain, Williams Brothers Lumber. The company has 16 outlets, selling exclusively to residential and commercial builders. It will operate within Home Depot’s pro supply division, Home Depot Supply. The acquisition adds sales of US$444 million to Home Depot.

SUMNER, Wash. — Ace Hardware has announced it will open a warehouse in this area near Tacoma, to handle imported products from the Orient. Ace spokeswoman Natalie Danaher told the Tacoma News Tribune that Ace will bring imports into the 427,000-sq.ft. warehouse for distribution to its 15 regional distribution centers, or on a direct-ship basis to its stores. Ace opened a buying office in Hong Kong last year to facilitate exports from the Far East, mainly China.

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EIGHTY FOUR, PA – 84 Lumber, the second-largest pro dealer in the United States, has confirmed that it has begun the process for an eventual move into Canada, which could occur as early as 2007.

In 2004, 84 Lumber generated US$3.46 billion in sales from 463 stores. Those stores average 20,000 sq.ft. of inside selling space on several acres of land. Earlier this year, company officials revealed plans to open a minimum of 52 stores in 2005, which will include 84’s 500th unit. Nobers said that, over the next few years, the company intends to open between 150 and 175 stores, the majority of which will be in the Western U.S.

“Once we reach that point where we have some critical mass in the west, Canada will be another way for us to grow.”

84 Lumber is looking north at a time when another major American-based retailer, Lowe’s, has disclosed that it will open as many as 10 stores in Toronto by 2007.

MONCTON, N.B. – Alvin Leger didn’t look to building materials or hardware when he wanted to expand his retail business. With a Home Hardware Building Centre already in the Moncton neighbourhood of Elmwood, and a second store in Dieppe, Leger, who owns the business with his wife Rachel, wanted to add a new dimension to their third store, which was going up in a former bowling alley in Magnetic Hill.

About 12,000 sq.ft. of the 40,000-sq.ft. store have been devoted to the Home Furniture business, and even though both operations share a common entrance, once inside, the two stores offer a distinct retail environment.

“I tried to keep it separate from the building supplies,” says Leger. “It’s a different shopping experience. The Home Furniture creates for us a shopping destination.” He adds that people will drive a considerable distance to shop the Furniture store, so that business has to deliver an atmosphere of quality at a reasonable price. A Home Furniture store’s typical product mix includes major appliances and home electronics.

According to Bill Ferguson, dealer support manager for Home Hardware in St. Jacobs, Ont., more and more Home dealers are adopting the Home Furniture program, driving the dealer-owned co-op’s organic growth through its existing dealers. “The biggest growth for Home is coming from within the dealer ranks themselves,” says Ferguson. “They see the synergy between building a house, and decorating a house, and filling it with furniture and appliances.”

Leger says he’s seen a real improvement in Home’s management of the Furniture program. It’s expanded its catalogue, pursued a quality offering, and backed it all up with effective marketing, he says.

TORONTO – Mark Foote, president of Canadian Tire Retail, says the company’s current 20/20 concept will get re-evaluated – and possibly reinvented – again in another five or six years. Speaking at the recent annual convention of the Retail Council of Canada held here, he pointed out how the 20/20 concept, introduced in the fall of 2004, has marked a “successful renewal” of Canadian Tire’s merchandising, one that depended on three things: clarity of strategy, a belief that “the store is everything,” and a recognition of the fact that “renewal is a process.”

Foote expects these efforts to drive the retail division from its sales of $6.5 billion to more than $8 billion in a few short years.

From the other end of the DIY spectrum, delegates at this year’s conference will get a rare bird’s eye view of the industry. As the number-two guy at the number-one home improvement retailer, John Costello, Executive Vice-President of Merchandising and Marketing for Home Depot will join us from Home Depot’s headquarters in Atlanta to make a rare appearance in Canada.

Other speakers include Stephen Bebis, President and CEO of Golf Town. But he’s best remembered in this industry as the man who brought the home improvement big box to Canada. He founded Aikenhead’s on behalf of Molson more than a decade ago. It was taken over in turn by Home Depot.

Your customers, colleagues and competitors will all be at this year’s Hardlines Conference Series and Awards Gala, September 12-13. Don’t miss it. For more info, <click here> or contact Isabel Bisong here at the World Headquarters: isabel@hardlines.ca; 416-489-3396.

Praktiker’s core market in Germany, though, has suffered through a prolonged period of stagnant job growth and competitive over-saturation within the retail home improvement sector.

PALATINE, Ill. – Sears Essentials, a new convenience format from Sears, with some Kmart DNA thrown in, has been the fate of some two dozen Kmart stores since April, with plans for a total of 400 of the 1,500 Kmarts to make the switch by 2007. Sears Essentials is part of the company’s “off-mall” strategy, this one to showcase leading Sears and Kmart brands such as Kenmore appliances, Craftsman tools, and Land’s End clothing.

JOHANNESBURG, South Africa – Mica South Africa, the retail home improvement business of Super Group, has formed a supply deal with Ace Hardware Corp., based in Oak Brook, Ill. Ace, which is now in 70 countries, has recently made a similar deal with Mitre 10, a leading dealer-owned co-op in New Zealand.

DALLAS – Builders FirstSource Inc. has completed its IPO, raising US$196 million. The shares were priced at US$16, and actually opened at US$16.52 and the number of shares was increased from 11.25 million. UBS Securities and Deutsche Bank Securities Inc. managed the sale of the offering. The IPO drew the attention of Wall Street based on the continued hot real estate market in the U.S. to which Builders FirstSource supplies products and services.

DENVER, Col. – Johns Manville has entered the next phase of the expansion of its formaldehyde-free fiberglass insulation capacity with the production of a new loose-fill line at its Canadian manufacturing plant in Innisfail, Alta. Construction has begun and the new line will be operational in early 2006. This new line, when combined with recent technology investments across JM facilities, will increase North American loose-fill capacity by 50%, or by up to 200 million pounds. The expansion supports the accelerating demand for JM’s Formaldehyde-free insulation products. The capacity increase coincides with tougher requirements by Environment Canada for thermal insulation that carries the “EcoLogo” mark.

MARYSVILLE, Ohio — Scotts Miracle Gro, North America’s largest supplier of lawn care products, last week cut its senior-level management team by 15%. The move – which included directors and executive vice-presidents – is expected to eventually save the company US$7.5 million annually. Scotts also plans to offer early-retirement packages to between 120 and 150 employees, and hinted that further layoffs could be in the offing.

NEWTON, Iowa – Maytag Corp. has received a preliminary non-binding proposal from Bain Capital Partners LLC, Blackstone Capital Partners IV L.P. and Haier America Trading, L.L.C. to acquire all outstanding shares of Maytag for US$16 per share cash, even though it has already agreed to a takeover offer by another investor group. On May 19, 2005, Maytag agreed to be acquired by an investor group led by Ripplewood Holdings LLC for $14 per share cash. According to the preliminary non-binding proposal, completion of due diligence is expected to take 6-8 weeks, and the Bain proposal is conditional and may not necessarily result in a definitive agreement.

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The Windsor store, which now features beige and burgundy limning the traditional gold colour of the Castle logo, has become a destination for Castle members to see the new look first-hand. “That’s generated interest in all regions across Canada for the program,” says Frame, with up to 10 stores expected to be ready for implementation by this fall. “We’re in a go-forward position.”

And even though the program was still in the development stage, the owners of the Windsor store wanted to make the switch right away. A Home Depot store opened in town recently, and a major Home Hardware dealer had updated their store. Nevertheless, the 6,000-sq.ft. operation has become an effective ambassador for the new look of Castle. “What it does is give us the platform to demonstrate the full capacity of all the marketing components of the offering,” says Frame.

The program was designed by Burlington Merchandising & Fixtures of Burlington, Ont., fronted by Rob Wilbrink, Phil Dwyer and Mike Serecin, all ex- of Rona and Lansing. Just last week, Castle’s board approved the final draft of a store development program manual that outlines in detail all aspects of the program, covering everything from store layout and interior signage to exterior fascia, signage, and ancillary branding, such as truck signage and even uniforms. “The purpose is to create a brand entity for Castle,” says Wilbrink. “This is the best looking program in the industry. When the Castle dealers see it, they say ‘wow’,” he adds.

The new Castle program remains focused on Castle’s core categories of lumber and building materials, while offering complementary hardlines merchandising that helps expand the front end of the store and caters more directly to the consumer. However, since Castle has a philosophy of offering its members greater independence and latitude than other groups, it will neither mandate the new design, nor offer a cookie-cutter solution to all, explains Frame.

If the pilot project is successful, Hbc will continue to offer a selection of tools at the Bay and will perhaps widen the assortment that’s currently available, says Di Rezze.

TORONTO – A reception featuring décor maven Debbie Travis was held at Canadian Tire’s mid-town store at Yonge and Davenport last week. The event gave some radio contest winners the opportunity to meet Travis in person. But it was also a great opportunity see Travis “uncut,” as she demonstrated a more unrestrained wit and humour than she typically reveals on TV – and offered some insights into the evolution of the Debbie Travis paint line.

Travis also noted the power of styles and trends in driving home renovations. People will consider changing the colour on a wall within as short a time as six months, she said. Furniture is no longer purchased with a lifetime of use in mind. “Why buy a sofa for 30 years?” she quipped. “The marriage is only going to last for two years!”

The acquisition of Wire Products, which Home Depot will manage under its White Cap Industries division, is expected to close in August. The purchase gives the company a presence in Hawaii with three locations. The dealer expects to close its purchase of Utility Supply by July. Utility Supply sells under the name USA Bluebook to municipalities, non-municipal government facilities, and industrial and private water and wastewater facilities and labs.

OAK BROOK, Ill. – Ace Hardware’s plans to add 1,100 stores to its network by 2008 will depend largely on how willing some 3,800 independent retailers will be to give up some of their independence. Those 3,800 retailers currently operate more than 4,800 stores.

However, 1,600 stores so far have resisted the modernization/ standardization efforts. And Ace also discovered that nearly 550 of its units did not even want to identify themselves as Ace stores by using the name in any way. Those dealers who choose not to use the Ace name can no longer enjoy all the financial benefits received by Ace-identified stores.

Griffith says all new stores are to be at least 12,000 sq. ft. in size, considerably larger than the average Ace store of 9,000 sq. ft. today. In fact, there are many older Ace member-dealers operating stores of 5,000 sq. ft. or less, particularly in urban areas and very small towns.

Griffith says dealers who signed up for Vision 21 are enjoying greater sales gains than the average Ace dealer – 4% in 2004 compared with a 1.5% increase for those not participating.

RIVERSIDE, Calif. — A Superior Court judge here has ruled that assistant managers at Home Depot can sue the retail giant as a class of plaintiffs for unpaid overtime. Managers in California are typically exempt from overtime rules. But the lawsuit contends that assistant managers regularly perform the same duties as their hourly coworkers. Those tasks include stocking shelves, operating cash registers and picking up merchandise at other stores. As many as 2,000 assistant managers, who worked for Home Depot in California from July 1997 to the present could be included in the class action, whose total damages could reach more than $100 million.

MINNEAPOLIS – The Valspar Corp. has completed its acquisition of stain and finish company Samuel Cabot Inc., for an undisclosed amount. The deal, which was originally announced on May 10, adds approximately $60 million in sales to Valspar’s operations.

TEMISCAMING, Que. – Tembec has recently begun offering FSC-certified Softwood Kraft and Temcell High Yield pulps to the market. FSC certification is a third-party endorsement for environmentally and socially responsible forestry practices and the only system that tracks market pulp from the forest to the final product, according to a release by Tembec. Three operations being audited by FSC produce approximately 770,000 metric tonnes of pulps annually, and use FSC wood fiber from a combined area totaling 10 million acres.

LAKE FOREST, Ill. – Salton Inc. may face Chapter 11 as early as this fall, based on its inability to make a US$6.7 million interest payment due last week on US$125 million in debt. Salton, well known for brands such as the George Foreman grill and other home appliances, has until September to come up with a plan for restructuring its bonds, which are due in December.

DALLAS – Kimberly-Clark Corp. will begin formal testing of “Generation 2” Radio Frequency Identification hardware this summer. The Generation 2 hardware provides a universal solution to RFID technology on a global basis, replacing numerous and incompatible systems with one system used worldwide. The tests, scheduled to begin July 6th at Kimberly-Clark’s dedicated RFID research lab in Neenah, Wis., will allow the company to determine which hardware is the most compatible with its conveyor, packing, logistics and shipping systems.

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TORONTO —Just 11 years after Home Depot arrived in Canada, its chief competitor has announced it will follow suit, even though no store openings are planned until 2007. By then, Lowe’s Cos. expects to roll out up to 10 stores, starting with the Greater Toronto Area. It wants to fine-tune the Canadian model there before rolling out as many as 100 eventually. The man in charge is Doug Robinson, president of Lowe’s Canada, whose first experience in Canada was running Beaver Lumber Co. for its parent, Molson, before it was sold off to Home Hardware Stores in 1999.

The competitive advantage it intends to bring – and which has worked effectively for it in the U.S. – is its bright, clean stores that appeal to female shoppers and give it an edge in its battle against Home Depot. Nevertheless, Lowe’s faces some distinct challenges here. First, Home Depot has got a big head start, with a presence in all 10 provinces through more than 120 big boxes. Rona inc. has 65 big boxes of its own, along with almost 500 traditional hardware stores and building centres. Rona’s multiple store formats and varied ownership model – including many dealer-owned big boxes – gives Rona a unique edge.

Another strong retail brand is Home Hardware, which represents more than 1,000 stores Canada-wide. And while not a direct competitor, the presence of Canadian Tire, whose retail division represents 465 stores and total sales in 2004 of $6.5 billion, just makes the retail landscape all the more crowded.

Industry observers have also questioned Lowe’s ability to secure good retail sites, which need anywhere from 10-13 acres to accommodate more than 100,000 sq.ft. of big box plus the space for a garden centre and parking.

Yet Lowe’s is doing a lot of things right in the U.S., providing a tough competitor there for Home Depot. The company’s first-quarter sales reached US$9.91 billion, up 14% from the previous quarter, while Home Depot’s sales, at US$18.97 billion, were up only 8%. Lowe’s same-store sales during the quarter were 3.8%, vs. Home Depot’s at 2.1%. So expect those retail smarts to come to Canada, as well.

“We have now formalized that process,” says Tom Donaldson, president of CanWel and Sodisco-Howden. “We have sent packages to interested parties and many of them have formally declared their interest. Once we have qualified who are the serious bidders for the Pro banner, they will be able to formalize their proposals and get back to us by the end of June.”

More than 500 independent hardware and building supply retailers across Canada operate under the Pro Hardware. Sodisco-Howden supports the banner program with a line of private label products, advertising and marketing programs, and an electronic catalogue. Approximately 200 more dealers, operating under the Ace banner, will continue to be managed by Sodisco-Howden, in association with Ace Hardware Corp. in the U.S.

Amar Doman, chairman of CanWel, adds that he wants to see this proposals process move along quickly. “I don’t want this to drag out. The dealers have waited six months already,” he says emphatically.

Qualified bids will be considered on the basis of three things: the “value proposition” they add to the Pro dealers; the security of the Sodisco-Howden revenue model, i.e., continued use of Sodisco-Howden as a supplier; and the offering price, if any, of such a partnership.

What’s actually for sale? The rights to the Pro banner, says Donaldson. The Ace banner will remain in the hands of Sodisco-Howden. But any deal for Pro must ensure that Sodisco-Howden continues to supply the banner. So any group with its own distribution may end up working out a kind of joint venture with Sodisco-Howden. Doman says bids from companies that do have their own distribution would certainly be considered. “Who knows what that strategy might be, but we can certainly look at that.”

The country’s largest hardlines distributors, aside from Sodisco-Howden, are Home Hardware and Rona. But some buying groups manage their own banners as well, and many of them include Pro dealers in their ranks. They, too, will receive packages from CanWel.

What about outside of the country? Could this be an opportunity for Ace to try once again to establish a presence in Canada? Doman would say only that they “haven’t disqualified any suitor,” and invites anyone that may have been overlooked to contact CanWel.

“CanWel’s core business is building materials and hardware distribution,” says Donaldson. “The Pro Hardware brand belongs in the hands of a group who understands branding at the retail level and can increase the value proposition to dealers and consumers.”

CanWel converted to an income fund on May 18, 2005.

“Home Depot has always been very respectful of every competitor it has,” says Annette Verschuren, in an exclusive interview with HARDLINES. “And it has more than one in Canada already,” she adds, referring especially to a couple of retailers that don’t have parallels to the competitive landscape Lowe’s is used to in the U.S. “Don’t underestimate Home Hardware and Canadian Tire in Canada.”

Verschuren says that a healthy respect for those competitors, and the likes of Rona inc., which already has 65 big boxes of its own, keeps Home Depot on its game. “I think [competition] is actually important to get ahead of the customer.”

Lowe’s expects to open 6-10 stores in its first year, in the Greater Toronto Area (Home Depot already has 35 there) with plans to roll out up to 100 nation-wide over time. Home Depot is planning 20 openings and one relocation this year, for a total of 137 by the end of the year. Rona plans 6-10 big box openings of its own this year, and another 6-10 openings of traditional building centres.

Verschuren questions Lowe’s ability to “greenfield” its expansion in Canada, citing the difficulty in finding good real estate. In so doing, she has been hinting at the possibility of an eventual takeover of Rona inc. by Lowe’s. Although Rona’s varied store formats would make such a takeover unwieldy for Lowe’s (and it has spent recent years unloading its traditional building centres in the U.S.), the inference has had the effect of undermining the value of Rona’s shares, which were trading as low as $24.70 on Friday before closing at 24.90, down from a 52-week high of $27.10.

The fifth-largest pro dealer in the U.S. generated US$2.06 billion in sales and US$51.6 million in net income last year, the latter being considerably higher than in the previous four years. Through the first quarter of 2005, BFS reported an US$18.9 million loss on sales of US$509.3 million that were up 18.6%. Its yards generated an average of US$32.6 million in sales in 2004, and the company got one-third of its revenue last year — US$680.4 million — from manufactured products. Sales to the 10 largest production builders rose to US$451.8 million in 2004 from US$260.8 million in 2001.

Hardware stores have been the biggest losers, while big boxes continue to appeal most strongly to women. Meanwhile, the efforts of one of Canada’s leading hardlines retailers, Canadian Tire, to woo women more effectively, is beginning to show positive results, according to the findings of the survey.

(“Women in Home Improvement,” a survey by ACNielsen Canada exclusively for HARDLINES, appears in the latest issue of Hardlines Quarterly Report, which is published by Hardlines. For more information, contact Isabel Bisong at 416-489-3396, or isabel@hardlines.ca.)