Jan. 24, 2005

John Caulfield, Contributing Editor

vol. xi, #4, January 24, 2005

IN THIS ISSUE:
• Builders FirstSource: independent goes public
• Industry helps tsunami victims
• TIM-BR Mart looks to bright future
• LBMAO Show positioned as buying event
• Huttig completes purchase
• Restoration founder resigns
• Ace dealer gets embezzled

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“It’s curious how much more interest can be evoked by a mixture of gossip, romance and mystery than by facts.”
—Eleanor Roosevelt (and no cracks about the content of certain e-newsletters!)

BUILDERS FIRSTSOURCE WILL GO PUBLIC

DALLAS — The management and owners of Builders FirstSource disclosed last week that they plan to take the national pro dealer public, and have apparently scuttled their plans, revealed last fall, to sell the company.In a prepared statement, Builders FirstSource said that next month it would register its initial public offering with the U.S. Securities and Exchange Commission, and expected to complete the IPO by the summer. Prior to the offering, the company plans to refinance its existing debt, pay a dividend to its stockholders and make a cash payment to its option holders in lieu of a dividend.Floyd Sherman, Builders FirstSource’s CEO, said that the “strides in performance” that his company has achieved in recent years have “positioned” Builders FirstSource “to access the public capital markets.” Paul Levy, founder of JLL Partners, the investment firm that owns Builders FirstSource, added that his company would continue to be a large stockholder in the retailer after the IPO. Company officials did not reveal what their price target was for the stock offering.

Interestingly, Levy told Hardlines last September that JLL at the time was against taking BFS public because JLL would have to hold onto the company’s stock for at least three to four years (so as not to scare off other investors). That’s not something JLL wanted to do, because, as a mid-size equity investor, it needs to maintain certain levels of liquidity. Last fall, JLL retained two investment firms — Deutsche Bank AG and UBS — to auction off BFS’s assets. It was not clear at press time what changed JLL’s mind.

Kevin O’Meara, Builders FirstSource’s COO, said he was restricted from commenting about the offering because his company was in a “quiet period” prior to its S.E.C. filing. However, when asked what changes to the company’s operations or competitive strategy might result from its going public, he responded that in “anything that matters to the customer, the answer is none.”

Builders FirstSource operates 42 manufacturing facilities and 63 yards in 11 states. Its sales last year increased nearly 7% to $1.7 billion.

TIM-BR-MART MERGER COMBINES MARKETING SAVVY WITH BUYING CLOUT

CALGARY —The merger of TIM-BR Mart Ontario (aka Homecare) with its larger sister organization, Tim-BR-Marts Ltd., at the end of last year, marks a major, substantive move by a buying group to effect consolidation.According to Tim Urquhart, president of the new group, the deal only made sense. “When you look at the buying groups, we are the employees,” he says of himself and his executive vice-president, Don Nash. “Our job is to serve the dealers in the best way we can.” Nash was formerly president of the Ontario operation. The merger required the paring down of that operation, and centralizing the business into Tim-BR-Marts’ Calgary head office, to serve the entire dealer base.Those dealers range from the eastern-most borders of Ontario to the Western shores of British Columbia. They number 340 stores, and their combined sales at retail will total about $1.8 billion. Tim-BR-Marts in the west accounts for about $1.2 billion of that.

Despite similarities, including joint membership in a larger umbrella buying group, Matreco, the two groups both bring different strengths to the union, says Urquhart. “The west is good on the purchasing side,” he points out, “bringing the volumes and working with preferred suppliers. The Ontario TIM-BR Mart brings the marketing skill.”

He’s impressed by TIM-BR Mart Ontario’s success at developing the TIM-BR Mart brand among its members. Of LBM 130 dealers (the Ontario group also has some commercial dealers), fully 110 of them carry the TIM-BR Mart banner, supported by strong standards for carrying that banner. “That’s something we did not have in Western Canada.”

Sixty-four of the 170 Western dealers currently fly the TIM-BR Mart banner, but the program is not as rigorous or extensive as the one developed in the East. Nash expects to raise that number to 90, says Urquhart.

TRUSERV RENEWS CURLING SUPPORT

WINNIPEG — True Value Hardware has renewed its support of the sport of curling, both nationally and in communities across the country. True Value has been an official sponsor with the Canadian Curling Association’s Season of Champions for six years. The Season of Champions is a combination of seven televised national and international curling events.At the local level, many True Value Hardware owners sponsor curling bonspiels in their communities. True Value is a banner of the Canadian co-operative, TruServ Canada.

HUTTIG COMPLETES PURCHASE OF TEXAS DISTRIBUTOR

ST. LOUIS, Mo. — Huttig Building Products, based here, has expanded its distribution network by completing its acquisition of Dallas-based Texas Wholesale Building Materials. Hutttig will pay $15 million in cash and assume Texas Wholesale’s liabilities.This deal gives Huttig — which operates 44 branches serving 47 states — its first full-line distribution operation in Texas. In a prepared statement, Huttig estimated that sales from Texas Wholesale would fall between $90 million and $100 million in 2005. Texas Wholesale, one of the Southwest’s largest regional distributors of millwork and building products, operates through a 260,000-square-foot distribution center in Dallas and a branch in Tulsa, Okla. (In October, Huttig had signed a letter of intent to acquire Texas Wholesale for $16.5 million in cash.)”The Texas market is a key part of Huttig’s strategic growth,” said Mike Lupo, Huttig’s CEO. “Our entry into this market allows us to increase its residential market opportunity by over 150,000 annual housing starts and increase our coverage to over 80% of the U.S. housing market.”

In related news, Huttig has signed a definitive agreement to sell its four remaining one-step operations in Tennessee and Alabama in a transaction expected to close in the current quarter. Huttig sold its other one-step operations in Merriam, Kan., and Baltimore, Md. in August and December, respectively.

ONTARIO LUMBER GROUP READIES FOR SECOND SHOW

MISSISSAUGA, ONT. — The Lumber and Building Materials Association of Ontario is about to put on its second show. The 2005 Winter Buying Show will be held Feb. 5-6, 2005, again in London, Ont., at the Progress Building, Western Fair Grounds.The show targets more than 2,000 retailers and 150 vendors in the hardware, lumber and building materials industry. “We are very excited about this year’s show,” says Dave Campbell, President of the LBMAO. “To date, we have signed up more exhibitors, and pre-registration for both the show and the social events is up over last year.”The social events include a Friday night Welcome Reception at the Sheraton Four Points hotel with a Las Vegas theme, while on Saturday night the LBMAO will host its annual Gala dinner, “An Evening with the Stars,” also at the Sheraton Four Points.

Registration for attendance to the show or any of the social events can be made on-line by visiting www.lbmaowinterbuyingshow.com or by calling 866-535-0520.

HABITAT STEPS IN TO HOUSE TSUNAMI VICTIMS

AMERICUS, Ga., & MOORESVILLE, N.C. — Habitat for Humanity International said that over the next two years it intends to build an estimated 25,000 transitional housing units for victims of the underwater earthquake that has devastated several countries bordering the Indian Ocean.The cost of that effort, which Habitat estimated at US$25 million, will be partly defrayed by a US$1 million pledge from Lowe’s Cos., the second-largest home improvement retailer in North America. The retailer also hopes to raise an equal amount of money through customer donations. Those funds will go towards helping Habitat build 200 or more homes in Sri Lanka.Lowe’s 1,050 stores are serving as cash donation sites for Habitat’s tsunami relief program. Donations can also be made through Lowe’s website. The retailer will accept donations through Feb. 21.

“Every gift is important, every gift will make a difference,” said Paul Leonard, CEO, Habitat for Humanity, which has an active presence in six of the countries impacted by the tsunami including Indonesia, Sri Lanka, India, Thailand, Malaysia and Bangladesh.

RESTORATION HARDWARE FOUNDER RESIGNS

CORDE MADERA, Calif. — Stephen Gordon, the founder of Restoration Hardware, the specialty hardware and home décor chain, has resigned. Gordon, who was also the company’s chairman, said he is leaving to pursue other interests, but gave no specifics.Gary Friedman, the company’s president and CEO, has been appointed by the board as interim chairman for the 102-unit chain.Gordon’s resignation comes only days after Restoration Hardware reported that its holiday sales for the nine-week period ended Jan. 1, 2005 were up 11%, to $142.8 million over the same period a year ago, while same-store sales for that period increased 3.2%. Friedman projected that the company’s sales for all of 2004 would be up more than 19% to $520 million. However, the company’s profitability remains problematic, as the chain lost $9.1 million for the nine months ended Oct. 30, 2004. That was on top of a $10.8 million loss for the same period in fiscal 2003.

NOTED…

The recent Westcoast 2005 Trade Show and Convention, held by the Building Supply Dealers Association of B.C., managed to fill the aisles with dealers from all over the province, despite fluke snowstorms that closed airports and highways throughout the lower mainland.There were 242 booths at the trade show, enlivened by a series of show specials and opportunities to view new products. Despite the lower attendance, many suppliers reported significant increases in orders over 2004. Congratulations to BSDA president George Tracy and his team for delivering the goods despite the odds! (Next week, we’ll announce some of the winners of the association’s dealer awards.)

COMPANIES IN THE NEWS

TORONTO — Home Depot Canada will in fact open 25 stores over the next 14 months, as promised, points out Nick Cowling, their PR Manager. Although Home Depot chairman and CEO Bob Nardelli announced 19 store openings for Canada in the coming fiscal year, that number does not take into account another six opening before the 2004 year end on January 31.FORT WAYNE, Ind. — Masters Ltd., a Bermuda-based Do it Best Corp. member, recently received two honors for its commitment to customer service. Masters received a “Best of Bermuda Gold” award in the Shopping & Services category. The 14^th annual Best of Bermuda Gold awards were chosen by a panel of judges enlisted by The Bermudian, Bermuda’s premier magazine, to celebrate the island’s treasures. This was Masters’ fourth receipt of a Best of Bermuda Gold honor. With annual sales approaching $3 billion, Do it Best Corp. is the second largest co-op in the U.S., and serves 4,100 member-retailers in the United States and in 45 foreign countries.MOORESVILLE, N.C. — Lowe’s Cos. says it will put a new data center in Winston-Salem. The data center is the hub for the company’s computer processing and information technology operations and will include redundant power and telecommunication sources, plus capacity to expand as the company’s tech needs grow.

RHINELANDER, Wisc. — A Vilas County woman was convicted of embezzling almost $470,000 from Nelson’s Ace Hardware of Eagle. The 57-year-old woman, Judith Wolff, ended up getting sentences to seven years behind bars, plus eight years of probation and extended supervision. Considered a career criminal, Wolff stole the money to support her gambling addiction. The money, which began being siphoned into an account in her husband’s name, was stolen over a four-year period.

LONDON, U.K. — In yet another case of retail lines becoming blurred, grocery giant Tesco plans to open a number of stores this year that sell only non-food items. The first outlet, which will feature an array of products, including clothes, electrical goods, CDs and DVDs, is expected to open within months.

MONTREAL — Forestry company Tembec reported consolidated sales for the first quarter ended December 25, 2004 of $888.8 million, up from $766.3 million from the same period last year. Tembec generated a net loss of $0.7 million, a swing from net earnings of $52.1 in the first quarter of last year.

PRINCESS ANNE, Md. — Wal-Mart, struggling away to grow its little business, has applied for a federal grant worth up to $1.3 million, to help offset the construction of its newest planned distribution center here. It’s received approval by Somerset County Commissioners this month. Most of the grant would be used to help fund Wal-Mart’s purchase of land for the proposed center, while the remaining $500,000 would help fund street improvements.

LONDON, U.K. — Kesa, the electricals chain spun off by Kingfisher last year, saw sales rise in the latest quarter by 6.2%. Sales were especially strong in multimedia and digital products. Sales for its French Darty chain were up 9.2%, while same-store sales rose 7.2%. In the U.K., the Comet chain enjoyed sales growth of 3.8%.

ATLANTA — Georgia-Pacific Corp. says it expects to report between a loss of 1-4 cents per diluted share for the fourth quarter 2004, based on preliminary unaudited results. Unusual items are expected to include pre-tax asbestos-related charges of $159 million.

NEWTON, Iowa — Maytag Corp. says it will no longer sell Maytag-branded appliances to specialty retailer Best Buy, although Maytag’s Hoover brand of floor care products will continue to be sold there. According to Ralph Hake, chairman and CEO of Maytag, sales of its major appliances through Best Buy have declined “significantly over the years” and last year represented only about 1% of Maytag’s consolidated revenue.

PEOPLE ON THE MOVE

At Bélanger.UPT, the plumbing manufacturer and distributor, Dominic Prégent has joined as executive vice-president/general manager. He will be responsible for planning and organizing the company’s strategic activities as well as overseeing the sales, marketing, finance, and administration departments.Mike Hladysh has been named director of engineering at Selkirk Canada. He has been with Selkirk, and before that, GSW Heating Products, which was purchased by Selkirk in 1999, for 18 years and previously held the position of engineering manager … Jim Vargyas has been appointed director of logistics. A 16-year veteran of the Selkirk and GSW, he served most recently as logistics manager. In addition to their current roles, both men will take on responsibility for Selkirk Canada’s new Energy Vent Division.At Western Forest Products Inc., the second largest coastal woodland operator in British Columbia, Paul Ireland has been appointed CFO, effective today, January 24. He comes over from Diavik Diamond Mines Inc. where he spent two years as vice-president, finance. Ireland succeeds Phil Hosier, who will be retiring, effective January 31, but continue to work with the company in a consulting role.

U.S. MARKET INDICATORS

Housing starts in December 2004 were 2,004 thousand, up 10.9% from November 2004 but down 3.0% from one year ago, according to the Commerce Department. Building permits were 2,021 thousand, down 0.3% from November but up 2.1% from December 2003.The latest survey of business conditions by the Federal Reserve has some good news for the economy. Consumer spending increased in most of the 12 districts surveyed. Retail sales were good, especially for electronics, jewellery and home entertainment products.

CANADIAN MARKET INDICATORS

The composite index advanced 0.2% in December, says Stats Canada, as six of the 10 components in the index were up. They included manufacturing and services, which were reinforced the steady growth of household demand. In fact, household demand posted its strongest and most widespread gains in over two years, led by the booming housing market as well as steadily falling import prices and rising incomes. Furniture and appliance sales grew 0.9%, its largest monthly gain in six months, raising annual growth to 10.0%. Sales of other durable goods advanced 1.1%, driven by autos.Investment in non-residential building construction remained unchanged at $6.6 billion in the fourth quarter, compared with the previous quarter, says Stats Canada, but the year overall closed higher, up 1.4% over 2003. Commercial and industrial investment reached $4.6 billion for 2004.

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HELP WANTED

TSC STORES LTD. is a Canadian owned company with 25 retail stores in Ontario and a distribution center located in London, Ontario. We have been in the hardware, automotive and farm supply retail sector for over 35 years in Canada and have an aggressive plan for future growth.

We are currently looking for a Chief Financial Officer at our Corporate Office in London, Ontario.

The Chief Financial Officer is responsible for accurate and timely financial reporting, budgeting, investment management and debt management. Responsible for all areas of finance within a chain of retail stores that are corporately owned. The Chief Financial Officer holds full collaborative authority and accountability for all decisions made and is accountable for the complete execution of company policies, practices and plans. The CFO would be the liaison with external auditors and banking institutions, and would negotiate and execute contracts, drafts and loan agreements. This person would provide direction and leadership to an accounting department of six.

The ideal candidate must possess 8 to 10 years management experience with an extensive, multi-unit progressive retailer. Must have CA designation. Must have superior communication and presentation skills and the ability to effectively communicate with all levels of management and across all functional areas. Must possess strong computer skills (MS Office – Excel, Word).

We offer a competitive salary and benefit package. Please apply by January 17th to:

TSC Stores Ltd.
1950 Oxford Street E.
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N5V 2Z8
Fax: 519-451-1235
e-mail: humanresources@tscstores.com
(01.10.17.24/05)

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Jan. 17, 2005

John Caulfield, Contributing Editor

vol. xi, #3, January 17, 2005

IN THIS ISSUE:
• Home Depot projects double-digit growth
• Loblaw to relocate hardlines buyers
• Milwaukee, with Vancouver firm, introduce new technology
• Era of strong U.S. independents coming to an end
• Banks close in on Canada’s second-oldest retailer
• Concealed weapons concern for some retailers

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“If everyone demanded peace instead of another television set, then there’d be peace.”
— John Lennon (1940-1980)

HOME DEPOT EXPECTS HEALTHY SALES GROWTH FOR YEAR

ATLANTA — Home Depot held an investors’ conference last week, in anticipation of the company’s year end on January 31, 2005. Home Depot executives shared company projections for the year ahead, as well, with expected fiscal year 2005 sales growth of between 9% and 12% and earnings growth of 10%-14%. Same-store sales are expected to increase 4%-7%. The company also plans to update existing stores and add 175 new ones for a capital investment of $3.7 billion.However, the stated number of new stores for Canada was only 19, lower than the 25 already promised by Home Depot Canada president Annette Verschuren.During the conference, Home Depot also mapped out plans to expand its auto-replenishment programs, which promises to take more costs out of the supply chain. Currently some 10% of SKUs are on the program; by year’s end, that percentage is expected to double.

The company also offered some expected results for fiscal 2004: sales growth of 12.5% to $72.9 billion; earnings per share of $2.26, an increase of 20%; same-store sales increase of 5%; and gross margin expansion of approximately 160-180 basis points.

LOBLAW TO RELOCATE GENERAL MERCHANDISE BUYING TO TORONTO

CALGARY — Grocery giant Loblaw is centralizing its operations to a new facility Southern Ontario, which means the company’s general merchandise buying teams will relocate from here, where they currently operate within the company’s West Fair offices.The Canadian grocery giant has been aggressively expanding its ranges of hard goods, including patio furniture, barbecues, kitchenwares and décor items, especially in its new Supercentres.Centralization of the Loblaw operations will take place at the new Weston Centre, in Brampton, about an hour north of Toronto, starting in June 2005. I don’t know how many will actually make the move, but they are being offered a package to relocate. However, many had relocated just a few years ago, many from Toronto in the first place. During that time, housing prices in Toronto have skyrocketed, making the notion of moving back a fiscally challenged one. As a result, a number are reportedly not planning to take up the offer.

Besides Calgary, Loblaw’s team in mid-town Toronto (Yonge and St. Clair) must decide whether to move to suburban Brampton or commute there for up to two hours daily.

MILWAUKEE TOOL ADDS POWER TO CORDLESS LINE

BROOKFIELD, Wis. — Milwaukee Electric Tool is adding considerably more juice to its line of cordless power tools for professional customers — with help from a Vancouver company.The company, based here, announced this week that it is rolling out a new line of cordless tools that company officials say will be the first to be powered by 28-volt batteries, which reportedly will have twice the life of more conventionally used 18-volt batteries. The line will be introduced in April and will include a band saw, circular saw, reciprocating saw, impact wrench, hammer-drill and work light. A cordless rotary hammer and two-way radio will follow in 2006.Milwaukee, which was recently acquired by Techtronic Industries, spent more than $10 million developing its battery technology in partnership with E-One Moli Energy of Vancouver, B.C. The lithium-manganese batteries deliver high power and longer-lasting charges, and the circuitry is as much of a breakthrough as the use of lithium batteries, explains Gary Meyer, Milwaukee’s research and development manager. “Essentially, it optimizes battery performance by regulating the charging and discharging of the battery,” he says. Each battery comes with a “fuel gauge” so that users know how much power remains.

“I would say it’s the biggest breakthrough in the 81-year history of the company because it involves an entire platform of tools,” said Joseph Smith, vp-marketing at Milwaukee Electric Tool, in an interview with the Milwaukee Journal-Sentinel. Smith cited statistics which show that demand for power and hand tools in the U.S. would increase 4.7% this year, to $14.2 billion. “Basically, all of the growth in the power tool category has come from cordless tools,” Smith said.

The 28-volt tools will cost about 40% more than 18-volt, professional-grade tools, Smith said. Most of the 28-volt tools will be made at the company’s plants in Arkansas and Mississippi.

SCOTTY’S LIQUIDATION ENDS AN ERA

WINTER HAVEN, Fla. — The decision by Scotty’s, once one of the dominant home improvement dealers in the United States, to liquidate its remaining 40 stores removes from the market perhaps the last major regional retail chain to have withered under the competitive onslaught of Home Depot and Lowe’s.After filing for protection under Chapter 11 of the U.S. Bankruptcy Code last September, and stating that it had liabilities of nearly $46 million — including $12.3 million in long-term debt — to more than 200 creditors, Scotty’s was unable to negotiate new financing for its operations. Its managers filed documents on Dec. 17 citing their decision to close down the company.At the end of 2004, the company operated 53 stores that generated $32.5 million. When it started closing its stores in early January 2005, it had 470 employees.

Scotty’s saga over the past 25 years represented a case study of how warehouse retailing has disrupted and transformed home improvement retailing in North America. A small lumberyard retailer that began operations in 1924, Scotty’s grew to become Florida’s largest retailer of hardlines and building products, with 164 stores. In the late 1970s and early 1980s, it had what was generally thought to be one of the industry’s strongest merchandising teams. Its gregarious president, Ray Cooney, was a high-profile presence at industry functions and trade shows. And the company was ahead of its time by operating a separate wholesale division that supported its stores and its commercial/industrial account business.

However, when Home Depot opened its first Florida stores, in Orlando and Tampa, it specifically targeted Scotty’s, whose prices Home Depot portrayed as being exorbitant and whose product mix the rapidly growing big box operator depicted as being anemic. Apparently, Floridians agreed: as Home Depot deepened its penetration into Florida, and opened a regional headquarters in Tampa, Scotty’s seemed to feel the brunt of that competition more than any other dealer.

Its response — to open warehouse stores of its own — proved disastrous. In 1988, the Belgium-based GIB Group, which had owned a piece of Scotty’s since 1979, bought the company outright, and owned it for a decade until its current president, Tom Morris, assumed control in a management-led $100 million buyout.

Morris did what he could to revive the company by scaling back its store count and store size, and converting the company to more of a hardware-store operator. But for at least the past four years, Scotty’s has been on life support.

The liquidation of its stores, equipment and inventory is expected to run through March 31.

CANADA’S SECOND-OLDEST RETAILER FACES BANKRUPTCY

BARACHOIS, Que. — A Canadian retail tradition is getting pressure from the banks to close its doors once and for all. Robin Jones & Whitman began in 1766 selling fishing supplies in this community in Northern Quebec. (Only Hudson’s Bay Co., founded in 1670, is older.) Lawrence Legros, the owner of Robin Jones & Whitman, is a direct descendant of the stores’ founders, who emigrated from England.But now the venerable retailer is under court protection from creditors, mainly the Bank of Montreal and the Business Development Bank, but that protection expires in mid-February.The store here, atop the Gaspé peninsula, has been in business since 1909, and it’s the only one out of the six stores in the $10-million chain that sells lumber. Its manager, Carl Bond, has been there for 38 years. He says his store was, until two years ago, a BMR member, though not a bannered dealer. Another BMR dealer was already nearby, so Bond’s store relied on BMR, a Quebec City-based wholesaler and buying group, for product only.

Because of his remote location, BMR encouraged him to order direct from the suppliers, he said. Servimat, the LBM distribution arm of Sodisco-Howden Group, became a key supplier, as a result. Then, in the summer of 2003, BMR held its annual golf tournament up on the peninsula. “They saw Servimat products in the yard,” says Bond. After that, BMR stopped supplying the store.

Bond regrets that they didn’t have a banner affiliation. He thinks that might have helped their buying position. Competition is starting to heat up: while the nearest Canadian Tire is 130 kilometres away, a new Home Hardware store is reportedly going up nearby.

HARDWARE RETAILER YIELDS TO GUN TOTERS

FAIRFIELD, Ohio — The power that the gun lobby exerts in the United States extends even to retail policies. Consider Handyman Ace Hardware, a seven-unit dealer based here, that recently agreed to remove signs which stated that customers bearing concealed firearms could not shop in its stores.In a recent letter sent to the political action committee “Ohioans for Concealed Carry,” Handyman’s president David Grimes wrote that the signage was not meant “to offend anyone, but rather to try to make all of our customers feel comfortable.” He said that his stores had removed the signage, and requested that Handyman be removed from OFCC’s “list of retail stores to boycott by your members.”On its website, OFCC stated that several other local retailers, including Home Depot and the supermarket chain Kroger, had “responded to questions about why these businesses were posting signs” which the group characterized as discriminatory. It stated that Handyman had made “a responsible decision that is in the best interests of its customers.”

A listing of Ohio retailers that have removed signs banning concealed-weapon holders from their stores includes Wal-Mart, True Value Hardware, Beechwold Ace Hardware, and all of Carter Lumber’s stores in the state.

COMPANIES IN THE NEWS

LEBANON, Ore. — Lowe’s intends to build a 1.4-million-sq.ft. regional distribution center here that, when completed in two years, would support its stores in six western states. The Albany (Ore.) Democrat Herald, quoting local government officials, reported that this DC, on 204 acres, would employ between 400 and 750 workers, and could be expanded to nearly 2.2 million sq.ft. if market demands warrant. At press time, however, the city of Lebanon and Lowe’s had not signed a definitive agreement and reportedly were still working out the details of the pact. If consummated, construction on the DC could begin in September. If Lowe’s does decide to build this DC, it would be adding to a distribution network that includes 11 large regional distribution centers and 12 flatbed distribution centers for the handling of lumber, building materials and other long-length items.DURHAM, N.C. — A jury here has awarded $500,000 to a family whose eight-year-old son sustained brain damage when a 154-pound, eight-foot-high door fell on him inside a Home Depot store in March 2001. The jury deliberated for four days before deciding that Home Depot had negligently created or allowed a dangerous condition to exist in the store, and that the injuries suffered by the boy, Will Baker, were severe and permanent. Home Depot’s attorneys presented evidence that the boy had been playing with the door displays in the store, and also tried to prove that Baker had learning disabilities before the accident occurred. The parents of the boy, James and Martha Baker, had sought $20 million in damages for physical pain and mental anguish. Their attorney presented evidence that the door had not been properly attached to its display for 40 months before the Baker boy was injured.VANCOUVER — CanWel Building Materials confirmed last week the successful purchase of fully 90.2% of the common shares of Sodisco-Howden Group, enabling the new parent of this national hardware wholesaler to take Sodisco-Howden private.

CHICAGO — Grainger, a North American supplier of facilities maintenance products, today announced its Lab Safety Supply subsidiary has signed a definitive agreement to acquire AW Direct Inc., a direct marketer of products to the service vehicle accessories market. AW Direct sells general towing and work truck equipment and accessories to customers in the auto service, utilities, government, and construction markets. The deal is expected to close in the first quarter of 2005.

NEW YORK — Facing a lot of bad press of late (everything from store overdevelopment and low wages for staff to union bashing), Wal-Mart is going on the offensive to shore up its bruised rep. The campaign includes a full-page ad that ran last week in more than a hundred U.S. newspapers, describing the employment opportunities and benefit packages awaiting would-be workers.

PEOPLE ON THE MOVE

At Georgia-Pacific Corp., Tyler Woolson will rejoin the company as senior vice-president of finance and strategy, effective Jan. 24, 2005. He will assume the additional title of treasurer upon the retirement of Phillip Johnson, the company’s vice president and treasurer, at the end of February. Woolson will report to Danny Huff, Georgia-Pacific’s executive vice-president of finance and CFO. Currently CFO of Consolidated Container Co., Woolson previously worked for Georgia-Pacific from 1995-2001.

U.S. MARKET INDICATORS

Retail sales for December 2004 were $349.4 billion, up 1.2% from the previous month and up 8.7% from December 2003, reports the Commerce Department. Excluding automobiles, retail sales were $266.7 billion. Total sales for 2004 were up 8.0% from 2003.Wholesale inventories in November 2004 were $326.8 billion, up 1.1% from October and up 11.5% from one year ago. According to the Commerce Department, sales were $283.7 billion, up 0.7% from October and up 14% from November 2003.

CANADIAN MARKET INDICATORS

Housing starts reached a seasonally adjusted annual rate 234,400 in December, down from 242,600 in November, according to CMHC. For the year, however, new home construction posted a 17-year high in 2004 reached an estimated 233,000 starts, up 6.7% over 2003 — and a 17-year high. Residential construction in December fell 3.8% to a seasonally adjusted annual rate of 205,900 units, although urban single detached starts inched higher (+0.9%), while urban multiple starts declined 8.1%. December is expected to mark the beginning of a trend, as housing starts are forecast to decrease 9.8% to reach 210,200 units in 2005.The price of new homes in Canada rose 5.3% in November compared with the same month in 2003, according to Stats Canada’s New Housing Price Index.

OVERHEARD…

“We are staying on our strategy of enhancing the core, extending the business and expanding the market.” — Bob Nardelli, president, chairman and CEO of Home Depot, during a conference in Atlanta last week for the investment community.

We are currently looking for a Chief Financial Officer at our Corporate Office in London, Ontario.

We offer a competitive salary and benefit package. Please apply by January 17th to:

TSC Stores Ltd.
1950 Oxford Street E.
London, Ontario
N5V 2Z8
Fax: 519-451-1235
e-mail: humanresources@tscstores.com

DIRECTOR, INDUSTRIAL SALES

DIRECTOR, SALES & MARKETING—HOME DEPOT

DIRECTOR , RETAIL SALES

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DIRECT MARKETING MANAGER-Harrisburg, PA

This well-established home improvements company has built their success on top quality service for window, door and siding products and recently added the Owens-Corning basement finishing system to their portfolio. Business growth requires the addition of a Marketing Manager to complement their existing management team. Reporting to the President, he/she will operate and manage all marketing staff and programs to obtain leads for their inside and outside sales forces. Consumer marketing areas include marketing collateral development, direct mail programs, media buys, referral programs development, community relations, trade show involvement and market trend analysis.

Currently a US-based Manager, others would typify you as the “lead generation guru” in a home improvement firm that knows how to get the most out of your staff. Open and forthright, you’re good at developing two-way communication channels throughout your company and managing by example. Home improvement company experience is essential.

Located in central Pennsylvania with Baltimore, Washington and Philadelphia all in relative proximity, Harrisburg is a family-friendly community that recently ranked as America’s #2 least-stressful city.

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Direct Marketing Manager-PA.

Wolf Gugler & Associates Limited, 1000 West Wilshire, Oklahoma City, OK 73116. (405) 848-3006 email: resumes@wolfgugler.com Web site: www.wolfgugler.com

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U.S. REGIONAL SALES DIRECTOR

A highly successful Canadian firm is taking advantage of their extensive product line and business success in an up economy by spearheading their new US efforts. To assist in this, a Regional Sales Director for the Northeastern US is sought. Reporting to the VP, Sales, the Director will communicate the company’s strategic direction, goals and values to sales staff in NY, NJ, NH, MA, PA and Ohio.

Currently a US-based Manager, you can demonstrate the proven ability to optimize retail Customer & market mixes, maximize sales returns (margins) within a region, and are able to get the most out of your staff through open, consistent communications, motivation and follow-up processes.

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Regional Sales Director-US.

Wolf Gugler & Associates Limited, 1000 West Wilshire, Oklahoma City, OK 73116. (405) 848-3006 email: resumes@wolfgugler.com

Web site: www.wolfgugler.com

**********************************************************************************
SERVICES OFFERED

EXPERIENCED REP AGENCY SEEKS ESTABLISHED LINES

For details, please contact Shawn Hamill, at Indusport Agencies, (519)239-3534, or indusport@primus.ca.

**********************************************************************************

WHETHER OR NOT IT GETS PAINFUL IS UP TO YOU.

**********************************************************************************

Your products deserve the best representation they can get. NORAL MARKETING knows the Canadian retail customer. Don’t settle for anything less!

Contact Dave Leslie at 905-702-9443, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com

**********************************************************************************

MAKE THE VERY BEST OF IMPRESSIONS!

I will help you express yourself perfectly, with handpicked custom gift arrangements. Expressions by Ty specializes in creating unique corporate and personal gift ideas. From baskets filled with European delights and table arrangements for weddings and special events, to anniversary gifts of custom designed jewellery and other luxurious treats. An Expressions by Ty gift stands above all others.

Any season, any occasion… It’s how you express yourself. ^©

For all your gifting needs contact myself, Ty Ottey:
by email at ty@howyouexpress.com or by telephone at 905.209.0079 ext. 2

www.HowYouExpress.com

Expressions by Ty is a division of Integrated OmniMedia.

**********************************************************************************

MARKETPLACE

NORTH AMERICA’S “PREMIER MANUFACTURER”
of Propane Cylinders

NOW available in Canada

(5 lb. through 420 lb.
propane cylinders available)

. Recognized Market Leader .
. Unsurpassed Quality .
. Reliable Delivery .
. Outstanding Customer Service .

ONLY $2.50 PER WORD FOR THREE WEEKS IN THE CLASSIFIEDS.
TO PLACE YOUR AD, CALL PHYLLIS NOWELL AT 416-489-3396 OR EMAIL: phyllis@hardlines.ca

Hardlines is published weekly (except monthly in December and August)
by McLARNEYCOM
542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7
ï¿½ 2004 by Michael McLarney.
HARDLINES™ the electronic newsletter hardlines.ca
Phone: 416.489.3396; Fax: 416.489.6154
Michael McLarney, Editor & Publisher: mike@hardlines.ca
Beverly Allen, Director of Sales & Marketing: bev@hardlines.ca
Nancy Wright, Circulation Manager: nancy@hardlines.ca
Phyllis Nowell, Sales Manager: phyllis@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: $229 (Canadian subscribers add $16.03 GST = $245.03 per year/ GST #13987 0398 RT). Secondary subscriptions at the same office are only $36 (Canadian subscribers add $2.52 GST = $38.52). Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to Hardlines/McLarneyCom.

Jan. 10, 2005

John Caulfield, Contributing Editor

vol. xi, #2, January 10, 2005

IN THIS ISSUE:
•Home Depot expands supply side in Canada
•Western Tool’s Canadian takeover goes smoothly
•Lowe’s opens new DC
•Wintermans gone from Sodisco-Howden
•New Canadian hardware show heavy on décor
•Vet gets leg up from True Value dealer
•Lowe’s targeted by crooks
•Sears acquires appliance buying group

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“It’s better to burn out, than it is to rust.”
— Neil Young (from “Rust Never Sleeps”)

HOME DEPOT ACQUISITION MAKES PLAY FOR CANADIAN C/I BUSINESS

MONTREAL — With the recently announced acquisition of a national commercial lighting distributor, Home Depot Canada is aggressively moving its sights to the huge commercial and institutional market in Canada, considered a natural extension of its growing business with contractors.Montreal-based Litemor, which has 11 distribution centers in Canada and two in the U.S. (Boston and New York), was acquired last week by Canada’s largest home improvement retailer, and will become part of Home Depot Supply Canada. The company expects the Litemor deal to be just one of many more to come, says Home Depot Canada prez Annette Verschuren. Leading the division here is a veteran of Home Depot Supply in the States, Ron Turk. In Quebec, the division is called Home Depot Commercial Direct.Commercial, institutional and property management customers can order from Home Depot by phone, fax or email, through a centralized call center located in the U.S. “But we’re looking into that up here in Canada,” says Turk.

“It’s the beginning of a strategy to expand Home Depot Supply in Canada,” says Verschuren. The potential is huge, she adds, for all sectors of C/I service. The commercial lighting side alone offers a $10 billion opportunity in the near term, she says

Home Depot Supply in the U.S. has been expanding aggressively through a series of acquisitions in recent years, and now it’s Canada’s turn. “We’re a little behind, frankly, and we want to catch up,” says Verschuren.

That catch-up should happen fast, suggests Turk. Thanks to the expertise acquired in the U.S., he says growth here will be accelerated.

Verschuren wouldn’t disclose how much the Litemor acquisition will add to Home Depot Canada’s sales, nor would she reveal Home Depot’s sales in Canada, but we estimate them to come in at least $5 billion in 2004.

HOUSE OF TOOLS FINDS TRANSITION SMOOTH FOLLOWING BUYOUT

CALGARY — Western Tool Supply’s plan for blending its corporate culture with that of House of Tools, which it acquired in May of 2004, is progressing well, according to Steve Hunter, CFO for House of Tools and Western Tools.Hunter is part of the transition team overseeing the consolidation between Western Tool and the nine-store chain House of Tools, which has enjoyed great success selling power tools through its on-line presence and in its retail locations in British Columbia, Alberta, and Saskatchewan.The transition so far, he says, has been very smooth. “I think that’s partly because we recognize that when you enter into a situation where there is a cultural change, the first thing you do is to build trust,” says Hunter, “We are spending time doing that.”

One of the changes that Hunter hopes will become apparent to customers is better pricing. With increased buying power from Western Tools, which has 51 stores stateside, customers should begin to notice even more competitive pricing, especially if the Canadian dollar remains strong.

LOWE’S OPENS CONNECTICUT DISTRIBUTION CENTER

PLAINFIELD, Conn. — Lowe’s Cos. opened its 1.36 million-sq.ft. distribution center here on January 3, with about 400 of the 700 employees who will eventually staff this facility when it’s fully operational in March.The $90 million DC, built to serve Lowe’s stores in New England and New York, will eventually receive product through 250 loading bays. The complex has parking for 732 18-wheel trucks, according to Eric Reed, the facility’s human resource manager, who was quoted in The Day of Greenwich, Conn.The construction of this DC embroiled Lowe’s in some controversy last year because the retailer received $20 million in tax abatements from the city to place the warehouse in Plainfield. To assuage local residents who opposed this project and have complained about noise from the construction and trucks, Lowe’s has pledged to help pay for a barrier to separate the DC from surrounding homes.

CANWEL CHANGES GUARD AT SODISCO-HOWDEN

MONTREAL — Changes are already afoot at Sodisco-Howden Group, following the purchase of 83% of its common shares in a friendly takeover by CanWel Building Materials. Tom Donaldson, president and CEO of CanWel Building Materials Ltd., is now president of Sodisco-Howden Group. Amar Doman, chairman of CanWel, is also chairman of Sodisco-Howden.Gone is former president and CEO Jos Wintermans, who cannily maintained Sodisco-Howden’s fortunes amidst a fiercely competitive business environment and an ever-narrowing customer base. Also gone is CFO James Shannon.While a purge was expected, the new organization is at odds with Donaldson’s previous assertion to Hardlines that the two businesses will be run separately. That separation is being watched carefully by many existing CanWel customers that are competitors to Sodisco-Howden. Both Home Hardware and Rona, which together account for at least $200 million of CanWel’s $540 million in sales, have said they will take a wait-and-see approach to the takeover before making any decisions about its LBM sourcing.

Calls to CanWel were not returned, but I’ll let you know more as details are forthcoming.

NEW CANADIAN HARDWARE SHOW COUNTS ON DÉCOR

ATLANTA — The newly reformed Canadian Hardware Show is getting closer to its “launch” date under a new name and owner. Now called H²X, it’s being held in conjunction with the Paint and Decorating Retailers Association’s own convention and show, now called D²X. It will be held February 19-22 at the Congress Centre, near the Toronto Airport.The combined event, owned and organized by Messe Frankfurt, the international trade show company with North American headquarters here in Atlanta, so far has 142 exhibitors representing more than 200 companies. About 125 of those exhibitors represent paint and décor related companies.Only two months ago, PDRA had only 26 exhibitors signed up. According to Kathy Witmeyer, director of membership, education and trade shows at the PDRA, the boost in exhibitors came within the past few weeks, with “lots of last-minute calling” and promotions.

Daniel McKinnon, director of North American trade shows for Messe Frankfurt, admits that getting this one off the ground has been “challenging.” But despite the exhibitor numbers, he remains optimistic. “A lot of bigger [companies] we were counting on to support the show are still in, including Rona and Home Hardware, which both have large booths,” says McKinnon.

Messe Frankfurt’s goal was to reach 200 exhibitors; McKinnon is confident the final tally will be close, estimating a total of 180-plus when the show doors open. In a separate interview, Roland Bleinroth, president of Messe Frankfurt North America, insisted his company is prepared to make an investment in the Canadian show, even if it means taking a loss on it in the first year.

The show will maintain a seminar program. Although they’re mainly certificate courses geared for the paint and décor delegates within the PDRA, eight seminars will be offered that have wider appeal for hardlines delegates. Topics include competing against big boxes, succession planning, and effective PR.

The show will feature two keynote speakers. On Monday, Robert Dutton, president and CEO of Rona inc., will speak, and on Tuesday, Bill Morrison, president and CEO of TruServ Canada, will take the podium.

VET GETS HOME MAKEOVER COURTESY OF TRUE VALUE

KEYSTONE HEIGHTS, Fla. — Keystone Building Center, a member of the True Value hardware co-op (formerly TruServ), joined forces with A&E’s “At Home With the Brave” program to give a surprise home makeover to local hero, Sergeant First Class Scott Hall. “At Home With the Brave” is a one-hour special on A&E that aired last month, celebrating small-town heroes returning from Iraq and reuniting with their families for the holidays.Sergeant Hall has served in the military for 14 years including operations Just Cause (Panama), Desert Storm, and now Operation Iraqi Freedom. He also plans on serving in Afghanistan next year. His wife Pam volunteers at Camp Blanding for Family Readiness, which helps military families prepare for separation. She also home schools their son, who suffers from Tourette Syndrome, while also documenting missed moments for her husband of their two-year-old daughter’s “firsts.” The Hall family was struck with devastation when Scott was hit with shrapnel from a bomb that struck his face in Iraq. While back in Florida, the Hall’s home was ravaged by Hurricanes Frances and Jeanne.A&E’s “At Home With the Brave” selected the Hall family and requested assistance from local merchants. Keystone Building Center donated approximately $10,000 in product donations such as wood, concrete and tools.

SEARS CANADA ACQUIRES FURNITURE, APPLIANCES GROUP

TORONTO — Sears Canada Inc. has agreed to acquire Cantrex Group Inc. from a Canadian subsidiary of General Electric Capital Corp. Cantrex is Canada’s largest buying group representing independent merchants of furniture, appliances, electronics, photography equipment and floor coverings. The acquisition also includes Corbeil Electrique, a wholly owned Cantrex subsidiary based in Montreal with 27 appliance stores mainly in Quebec.Cantrex has 1,300 independent retailers, with names like Mattress World and Furniture Plus, that sell furniture, electronics and appliances. The deal will give Sears Canada more points of sale throughout the country, and allow it to beef up its volumes through the Sears distribution and logistics system, which is already adept at shipping products to just about anywhere in the country. Cantrex will operate as a wholly owned subsidiary of Sears.Sears Canada already works with more than 200 independent retailers, including Sears Dealer stores and Floor Covering Centres, plus more than 2,200 catalogue agents. “Our experience in these businesses has helped us to understand the unique and important role that local owner/managers bring to their customers, said Brent Hollister, president and CEO of Sears Canada, in a prepared statement. “Acquiring Cantrex provides these merchants with the advantages of a major retailer.”

FROM THE HARDLINES POLICE BLOTTER: CRIME INVADES LOWE’S

SPECIAL REPORT — Home improvement and hardlines dealers unfortunately fall victim to shoplifters and scam artists every day. But over the past few weeks, Lowe’s Cos., the industry’s second-largest retailer, has been mentioned prominently in news reports about criminal activities that involved several of its stores:• In Jackson County, Mich., investigators for Lowe’s and Blackmun Township in Michigan nabbed a suspect who allegedly ran up over $50,000 in fraudulent credit card purchases in four counties. The Jackson County Citizen-Patriot reported that the suspect was detained when he arrived at a Lowe’s store to pick up a refrigerator/freezer and range valued at $1,500.• A U.S. district judge in Charlotte, N.C., sentenced one of three Michigan men who tried to hack into Lowe’s information technology system to a nine-year prison sentence. This term is reportedly the longest sentence ever handed out for a hacking offence in U.S. history. Another co-conspirator was sentenced to 26 months in federal prison. The accused had pleaded guilty to the crimes in August.

• A man sitting in his car near the loading dock of Lowe’s store in Winchester, Ky., was fatally shot on Dec. 27. The police have no suspects, and the victim had not been identified by authorities at press time.

COMPANIES IN THE NEWS

TOANO, Va. — Lumber Liquidators, the largest hardware flooring specialty dealer in the U.S., has negotiated $35 million in new financing through an investment made in the company by TA Associates, one of the country’s largest private equity and buyout firms. The company says the financing will be used to expand the company, which currently operates 60 stores. As for Boston-based TA, it is investing in what its managing director, Richard Tadler, called “the stand-alone leader in hardwood flooring,” a market that grew by 6% to $2 billion in 2003. Lumber Liquidators operates a 360,000-sq.ft. distribution center in Virginia, and operates stores in 34 states and the District of Columbia.BOLTON, Ont. — TORBSA Ltd., the LBM buying group serving specialty dealers in Ontario, has added two new members: Hewson Brothers Supply Ltd. and Pro Con Building Supplies Ltd., both of Brampton, Ont. Both companies have been supplying the GSD trade for more than two decades, serving primarily new residential construction. Along with the addition of Ottawa-based Morin Bros. Building Supplies, which joined TORBSA in September 2004, total membership in the group is now 28.ST. JACOBS, Ont. — Home Hardware Stores presented a cheque for a whopping $250,000 to the relief efforts coordinated by the Red Cross for areas severely hit by the earthquake and tsunami in South East Asia. Funds were raised from donations that poured in from Home hardware dealers across Canada to provide immediate relief and basic assistance to the people affected by the tropical disaster. Home Hardware’s corporate goal is to raise a total of $500,000.

MONTREAL — Sodisco-Howden Group refinanced its line of credit last week, in its new status as a subsidiary of CanWel Building Materials Ltd. It renewed and increased its stand-alone credit facilities to a maximum of $75,000,000, with Congress Financial Corp. (Canada). The facilities’ rates are floating based on prime, and are for a term ending September 30, 2007. Congress is the lead bank of Sodisco-Howden’s parent, CanWel. CanWel owns 83% of Sodisco-Howden’s common shares.

TORONTO — Just in case you missed this, Home Depot Canada has moved its head office from the Ellesmere store in Scarborough to: 1 Concorde Gate, Suite 900, Toronto, Ont. M3C 4H9. Easy to find — it’s only about 10 minutes east of the World Headquarters of Hardlines. Phone numbers stay the same.

FORT WAYNE, Ind. — Do it Best Corp. recently expanded its online order fulfillment capabilities so that products are now shipped from six of its retail service centers across the U.S. The co-op expects that this change will result in faster delivery to online customers, as well as overall improved efficiencies. Prior to September 2004, all online orders originated from the co-op’s RSC in Cape Girardeau, Mo. Now, online orders wil also be shipped from its RSCs in Montgomery, N.Y., Dixon, Ill., Woodburn, Ore., Lexington, S.C. and Waco, Tex. Two more RSCs will be added by the first quarter of 2006.

NEW YORK — Rayovac Corp. is going to buy United Industries Corp., a St. Louis, Mo.-based maker of lawn and garden products. The number-three battery maker is looking to diversify beyond its core business, and will pay about $476 million in cash and stock, and assume about $880 million in debt for a cash tax benefit of about $140 million. United’s brand names include Spectracide and Cutter.

NORWALK, Conn. — City of Hope, a world-renowned cancer center and popular home improvement industry charity, will host its annual Spirit of Life Award event this year in conjunction with the 2005 National Hardware Show in Las Vegas. City of Hope is an innovative biomedical research, treatment and educational institution. Located near Los Angeles, City of Hope is dedicated to the prevention and cure of cancer, HIV/AIDS, diabetes, and other life-threatening diseases. Each year, it honors industry leaders for notable contributions to both their community and profession. The 2005 award dinner will take place May 18, 2005. This year, Paul Hylbert, president and CEO of Lanoga Corp., will be honored for his outstanding business and philanthropic leadership.

HONG KONG — Techtronic Industries Co. Ltd. was ranked among the top three best-managed companies in Asia, and came in second as best-managed company in Hong Kong. The list was compiled by Asiamoney, a financial magazine covering corporate Asia, based on votes submitted by fund-management firms and brokerages in the Asia-Pacific region. Founded in 1985, TTI employs more than 20,000 worldwide and represents a global brand portfolio that includes Ryobi, Milwaukee and AEG.

CHICAGO — As baby boomers get older, they are less inclined to do it themselves. That’s why big boxes are counting on installed sales for big growth. Lowe’s expects installed sales to reach $2 billion at the end of the current year, up from $1.5 billion, accounting for about 5% of revenue.

MISSISSAUGA, Ont. — Wal-Mart Canada has been ranked the country’s best retailer to work for in Canada. This according to the annual “50 Best Employers in Canada” list just published by Report on Business magazine. It’s the third time in four years that Wal-Mart has been named the best place to work in the Canadian retail industry. It was also ranked the eighth-best company overall to work for in Canada, up from its ranking last year as number 14 overall.

PEOPLE ON THE MOVE

Jay Gregg has joined Supplierpipeline Inc. as Director of Sales for Supplierpipeline Inc., a company that owns LITE ladder, and sells Jackall jacks and Jacmorr brackets and work stands. He was formerly with Loglac Industries as director of sales and marketing. (1-800-567-0864)

NOTED…

TORONTO — Canadians are turning to internet shopping in a big way and retailers such as Canadian Tire are making big gains, says the latest comScore survey. Traffic at Canadian Tire’s website was up 37% over the previous year and Chapters-Indigo was up 52%. In addition, Ikea was up 56%; Rona, up 43%; Sears, up 6%; and Hudson’s Bay Co. had a 17% increase.

We are currently looking for a Chief Financial Officer at our Corporate Office in London, Ontario.

We offer a competitive salary and benefit package. Please apply by January 17th to:

TSC Stores Ltd.
1950 Oxford Street E.
London, Ontario
N5V 2Z8
Fax: 519-451-1235
e-mail: humanresources@tscstores.com
(01.10.17.24/05)

**********************************************************************************

DIRECT MARKETING MANAGER-Harrisburg, PA

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Direct Marketing Manager-PA.

Wolf Gugler & Associates Limited, 1000 West Wilshire, Oklahoma City, OK 73116. (405) 848-3006 email: resumes@wolfgugler.com Web site: www.wolfgugler.com

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NATIONAL ACCOUNT MANAGER

Our client a tier one supplier to the “Big Box Stores” is expanding again. Working from the client’s Toronto GTA office the National Account Manager will be responsible for consumer hardware head office accounts. The idea candidate will have a proven record a proven record of sales to head offices like Home Depot and Rona. You will be computer literate and have a record of achievement. Please apply in confidence to Rick Harrison at A.E. Harrison & Partners Inc. (www.aeharrison.com) by email address resumes@aeharrison.com

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NATIONAL ACCOUNTS MANAGER

Reporting to the GM, a leading manufacturer is seeking a National Account Manager in Mississauga. You will be responsible for major accounts in Ontario and eastern Canada (Wal-Mart experience essential).

A hands-on and innovative professional who interacts at all levels; you will prepare proposals, quotations, promotional offerings, plan, budget, and organize promotional advertising, participate in trade shows, demos, and forecast sales volumes.

Customer focused and an excellent communicator, you have 5 years’ related experience and a Business/Economics degree. You are computer literate and bilingual (French & English) and are able to travel as required.

The Company offers a competitive salary and benefits program along with a good working environment. Please submit your confidential resume outlining accomplishments, objectives, and salary expectations along with a cover letter describing how your background fits the position to buzz@hardlines.ca P.O. Box 335.

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AGENTS AND FULL TIME SALES REPS

ARE YOU A TOOL FOOL? We are looking for agents in BC, Alberta, and the Maritimes to sell a line of quality tools. Experience in tools an absolute necessity. Also seeking a full time sales rep to do the same in Ontario. Company is a mid-sized tool importer selling to the retail, industrial and electrical markets. Send resume and/or line card to buzz@hardlines.ca, P.O. Box 435.

**********************************************************************************
SERVICES OFFERED

EXPERIENCED REP AGENCY SEEKS ESTABLISHED LINES

For details, please contact Shawn Hamill, at Indusport Agencies, (519)239-3534, or indusport@primus.ca.
(01.10.17.24/05)
**********************************************************************************

WHETHER OR NOT IT GETS PAINFUL IS UP TO YOU.

**********************************************************************************

Your products deserve the best representation they can get. NORAL MARKETING knows the Canadian retail customer. Don’t settle for anything less!

Contact Dave Leslie at 905-702-9443, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com

**********************************************************************************

MAKE THE VERY BEST OF IMPRESSIONS!

Any season, any occasion… It’s how you express yourself. ^©

For all your gifting needs contact myself, Ty Ottey:
by email at ty@howyouexpress.com or by telephone at 905.209.0079 ext. 2

www.HowYouExpress.com

Expressions by Ty is a division of Integrated OmniMedia.

**********************************************************************************

MARKETPLACE

NORTH AMERICA’S “PREMIER MANUFACTURER”
of Propane Cylinders

NOW available in Canada

(5 lb. through 420 lb.
propane cylinders available)

. Recognized Market Leader .
. Unsurpassed Quality .
. Reliable Delivery .
. Outstanding Customer Service .

ONLY $2.50 PER WORD FOR THREE WEEKS IN THE CLASSIFIEDS.
TO PLACE YOUR AD, CALL PHYLLIS NOWELL AT 416-489-3396 OR EMAIL: phyllis@hardlines.ca

Hardlines is published weekly (except monthly in December and August)
by McLARNEYCOM
542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7
ï¿½ 2004 by Michael McLarney.
HARDLINES™ the electronic newsletter hardlines.ca
Phone: 416.489.3396; Fax: 416.489.6154
Michael McLarney, Editor & Publisher: mike@hardlines.ca
Beverly Allen, Director of Sales & Marketing: bev@hardlines.ca
Nancy Wright, Circulation Manager: nancy@hardlines.ca
Phyllis Nowell, Sales Manager: phyllis@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!
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Subscription: $229 (Canadian subscribers add $16.03 GST = $245.03 per year/ GST #13987 0398 RT). Secondary subscriptions at the same office are only $36 (Canadian subscribers add $2.52 GST = $38.52). Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to Hardlines/McLarneyCom.

Jan. 3, 2005

John Caulfield, Contributing Editor

vol. xi, #1, January 3, 2005

IN THIS ISSUE:
• Why Totem sold to Rona
• Premdor sold to U.S. investor
• CanWel closes Sodisco-Howden purchase
• Retailers help tsunami relief
• Ace CEO Hodnik to retire April 1
• Home Depot boosts expansion for 2005
• Tim-BR-Marts gets serious with latest hire

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“The universe is transformation; our life is what our thoughts make it.”
— Marcus Aurelius, (121-180 AD)“But I am just a pilgrim on this road, boys/ Until I see you, fare thee well.”
— Steve Earle (American musician, 1955-)

FACING TOUGH COMPETITION, TOTEM SELLS TO RONA

CALGARY — Rona’s done it again. This time it’s added Alberta’s top home improvement retailer, Totem Building Supplies, to its growing list of acquisitions.Totem president and major owner Jim Thorogood sold the 16-outlet chain, which dominates the Alberta market, for $100 million. Although the financial aspects of the deal are very favourable for Thorogood, he admits that from an emotional standpoint, “This was a very, very tough deal for me.” He refers to the well-run operation he leaves behind — and the 900 people behind that operation.Nonetheless, he found the task of remaining competitive into the future just too daunting. “In this business, you need every cent out of the business just to half keep up with the big guys,” Thorogood says. He adds that his company’s size, big as it is, makes it even more vulnerable. “We’re somewhere between being the little guy that’s going to be okay, and a big guy that’s not big enough.

“It’s really the issue of, long-term, how do you compete?”

Thorogood will remain in charge of the operation until the Competition Bureau approves the deal, which expected to happen by March, 2005.

SALE OF THE CENTURY: WHY TOTEM SOLD TO RONA

SPECIAL REPORT — When Rona announced right before Christmas the acquisition of Calgary-based Totem Building Supplies, it marked the conclusion of a legacy begun with a single store in Calgary in 1970. Now, after Totem president Jim Thorogood carefully rounded up control of the company, and as he approaches retirement age (he’s 59), this deal makes good sense for both sides. The $100-million cash deal provides a great succession strategy for Thorogood, who owns 80% of the company, and his son Ryan, who owns 20%.It also adds serious weight to Rona’s focus on growing its presence in Western Canada. That mandate has seen it establish a distribution centre in Calgary last spring, tied with active recruitment of independent dealers in the West.The deal also plays well to Bay Street, which is watching Rona’s growth with keen interest. (Rona’s share price jumped $1.15 on the news of the deal.) The Totem takeover will give Rona added presence in Alberta, where it previously had only 18 stores. With one fell swoop, that number will almost double, and revenue from Totem, which Thorogood says will top $260 million in 2004, will be added to Rona’s ledger for that year. In addition, Totem has two other locations under development, one being built in Lloydminister, Alta., and another that’s been secured in Okotoks.

As with the acquisition of Réno-Dépôt in 2003, the new stores will help Rona boost its presence — and credibility — with contractors. Although pros account for only 25-30% of Totem’s sales currently, these sales are an important competitive edge over Home Depot. Like Réno-Dépôt, the Totem stores are expected to operate under their own banner — for now.

U.S. INVESTOR TO ACQUIRE MASONITE

TORONTO — Masonite International, one of the largest door suppliers in North America, has agreed to be acquired by the New York-based investment firm Kohlberg Kravis & Roberts, which specializes in leveraged management buyouts. The selling price is $40.20 per share, or around US$3.1 billion.Masonite, which operated under the Premdor name before taking over Masonite in July 2001 from International Paper Co., makes and sells steel and wood doors and windows. It has 75 factories in 16 countries. It employs about 14,000 people and sells its products to customers in over 50 countries. Through nine months ended Sept. 30, 2004, Masonite’s sales were up 23.3% to C1.63 billion dollars, and its net income rose 28.2% to C$100.6 million.The company’s current management will stay on to run Masonite, and will be required to acquire a 5% stake in the company at the completion of this deal.

Masonite reportedly agreed to be acquired to help fund its international expansion, which has been quite active in recent months. Last March, Masonite acquired Stanley Works’ door business for $160 million. In May, it announced a deal for Kronodoor, which distributes into Central and Eastern Europe through manufacturing facilities in the Czech Republic and Poland. It also recently paid $25 million to acquire a 50% stake in a subsidiary of Samling Strategic Corp., which makes molded door facings at a factory in Malaysia.

Masonite expected to mail a proxy statement relating to this deal to its shareholders of record as of Jan. 17, 2005 by the third week of January, for a meeting that will be held on Feb. 18.

CANWEL COMPLETES PURCHASE OF SODISCO-HOWDEN

VANCOUVER — Just two days before Christmas, CanWel Building Materials Ltd. confirmed the takeover of all outstanding common shares of Montreal-based Sodisco-Howden Group Inc. CanWel, one of Canada’s leading building materials distributors, tendered the takeover bid through its subsidiary, CanWel Acquisition Inc., to buy what amounted to approximately 17.3 million, or 83%, of Sodisco-Howden’s total common shares.The deal went through on December 31, when CanWel Acquisition purchased the shares for $3.25 cash per share, which represents a 25% premium over the stock’s trading price at the time the deal was announced in early November. CanWel has also extended its bid to 12:00 midnight (EST) on Jan. 11, 2005 to allow any Sodisco-Howden shareholders who have not yet tendered their shares sufficient time to do so.With sales of approximately $542 million in 2003, and 13 distribution centres across Canada, CanWel hopes to broaden its role as a distributor to offer not just building materials and related products, but a full range of hardware. The new acquisition will create a $1 billion company. While Sodisco-Howden has significant LBM distribution in Quebec, for most of the rest of Canada, it supplies hardware. In fact, Sodisco-Howden is the only remaining full-line general hardware wholesaler left in the country that’s not owned primarily by its dealers.

“This is a significant milestone for this transaction, and for CanWel,” said Tom Donaldson, president of CanWel, in a prepared release. “We are excited about closing this transaction on Dec. 31, and look forward to having Sodisco-Howden join the CanWel organization.”

What’s not clear is how CanWel will position Sodisco-Howden alongside its existing business, which already sells LBM to many of Sodisco’s top competitors, primarily Rona and Home Hardware, both which are estimated to do at least $100 million apiece with CanWel. Donaldson told Hardlines in an earlier interview that both companies will be run separately, but he couldn’t be reached as of press time for further clarification. Watch in future issues as we track how this new distribution powerhouse will sort out its role in the industry.

RETAIL RALLIES TO HELP TSUNAMI VICTIMS

SPECIAL REPORT — As news of mounting casualties continues to flood the airwaves, retailers across the country are rallying to raise money for relief for victims of the devastating earthquakes and floods in Indonesia last week.St. Jacobs, Ont.-based Home Hardware Stores Limited will donate $250,000 to the relief efforts coordinated by the Red Cross. Dealers across Canada are sending in funds raised at their stores. Sears Canada has pledged $75,000 and is accepting donations, also on behalf of the Canadian Red Cross’s Asia Earthquake and Tsunami Relief Fund.Canadian Tire Corp., through its Canadian Tire Foundation for Families, donated $125,000 to the Relief Fund. It’s also launched a nation-wide campaign to collect additional relief funds. This is very cool: Martha Billes, controlling shareholder of Canadian Tire Corporation and chair of the Canadian Tire Foundation for Families, and her son Owen Billes, are matching the Foundation’s contribution, directing their donation to a variety of agencies providing relief in the region.

Wal-Mart Canada announced the launch of Project Tsunami Relief, a nationwide campaign accepting donations through all 242 Wal-Mart stores across Canada. A portion of the money raised will be matched through the company’s Local Matching Grant Program.

HOME DEPOT DOUBLES 2005 EXPANSION PLANS

TORONTO — Home Depot Canada will open 25 stores over the next 14 months, a big jump from the 13-15 outlets it has erected annually over the past three years.The stores, however, will include a number of smaller sized units, and even perhaps another “urban” neighborhood store like the ones that opened in North Vancouver in September 2004 and in Toronto’s east end in mid-December. The net increase, in terms of retail square footage, will be about 50% greater than in 2004.The next openings will be an 80,000-sq.ft.-plus store in Calgary North Hills in January, followed by three smaller, 60,000-sq.ft. stores: in Spruce Grove, a community near Edmonton; Chatham, Ont.; and Squamish, B.C.

CONSOLIDATION IN U.K. ATTRACTS HOME DEPOT’S INTEREST

LONDON — Did Home Depot try and buy the Wickes chain? Focus Wickes, the second-largest DIY retailer in the U.K., was recently split up and the Wickes business was sold to Travis Perkins, a British building materials supplier, for £950 million. The 250-store Focus chain, which is more DIY friendly than the pro-oriented Wickes banner, the country’s number-four chain, will remain in the hands of management and a private equity firm.But Home Depot was reportedly on the short list for the auction sale. The world’s largest home improvement retailer may have taken a pass at the number-two player in order to leave its options open for Europe’s largest DIY retailer, Kingfisher, which operates B&Q and Castorama. However, any past expressions of interest — expressed by Home Depot boss Bob Nardelli himself — have been obviated by the weak U.S. dollar versus the euro.The sale of Wickes to Travis Perkins will add 172 more outlets to TP’s own 740-store operation, which, like Wickes, primarily serves trade customers. The sale is conditional upon shareholder approval and government approvals. The deal will give TP a 10% share in the U.K. building materials market.

Meanwhile, consolidation continues apace on the world scene. Even as Home Depot keeps busy in North and Central America, it has opened offices in China, in anticipation of announced expansion there. And rumours have been percolating that it might be interested in Australia’s largest home improvement retailer, Bunnings.

ACE’S HODNIK TO DEPART APRIL 1

OAK BROOK, Ill. — Ace Hardware president and CEO David Hodnik has announced his plans to retire from the hardware co-op on April 1, 2005, ending a 33-year career with Ace.Ten of those years were spent as the head of Ace. During that time, the company realized a $1.3 billion increase in its wholesale hardlines sales, to a projected $3.3 billion in 2004. Ace also launched a number of key retail initiatives during that time, including the Helpful Hardware Club customer loyalty program and Discovery category management; the construction of five new state-of-the-art retail support distribution centers totaling some 3.5 million sq.ft.; and implementation of the Vision 21 strategic plan for Ace retailers.Ace’s board of directors has selected Ray Griffith, executive vice-president and COO, to replace Hodnik. Griffith, 51, joined Ace in 1994 as director of retail operations for Ace’s Western Division. He was named vice-president of retail development and marketing in 1997, vice-president of merchandising in 1998 and executive vice-president, retail in 2000. In April 2004, he was promoted to his current position of executive vp and COO.

Prior to joining Ace, Griffith was president of the former hardware cooperative Coast-to-Coast and held managerial positions with Osco Drug.

COMPANIES IN THE NEWS

HALIFAX — AWARD/TIM-BR Mart Atlantic, the LBM buying co-operative serving independent dealers in Atlantic Canada under the TIM-BR Mart banner, has received the CIBC “Spirit of Leadership” Community Award. This prestigious award recognized TIM-BR Mart’s community spirit and corporate giving programs through their timbrkids Children’s Foundation Inc. As part of the recognition, CIBC Commercial Banking donated $5,000 to the Pregnancy Care Centre in Yarmouth, on behalf of AWARD/TIM-BR Mart.ATLANTA — Home Depot has added heavy appliances to its online shopping catalogue. About 1,800 items will be added on its website to complement the appliance showrooms that first appeared in its stores in 2001. In the third quarter, Home Depot’s share of the major appliance market reportedly rose to 8.6%, from 6.2% a year earlier, based on units sold.LONDON — Europe’s largest DIY retailer, Kingfisher, had 3Q sales of £1.94 billion, up 8.2% from £1.79 billion from the same period a year earlier. Retail profit increased 6.7% to £190.0 million from £178.1 million. Year-to-date sales were up 9.2% to £5.89 billion, from £5.39 billion in 2003.

MISSISSAUGA, Ont. — Torlys Inc., a Canadian manufacturer of hardwood, cork, laminate and linoleum flooring, has signed an agreement with Big Coat Productions of Toronto to be the preferred flooring supplier for “My Parents’ House,” a new makeover program being produced for HGTV Canada. The focus of My Parents’ House is room makeovers for empty-nester parents done with professional design help by adult children who have moved away. The program is hosted by two designers, New Brunswick-born Emmanuel Belliveau and Andrika Lawren of Toronto.

OSHAWA, Ont. — Just before Christmas, Sears Canada Inc. opened Sears Appliances & Mattresses stores in Oshawa and Burlington, Ont., followed by the opening of a Sears Home store in Red Deer, Alta.

ATLANTA — Home Depot is reorganizing its store divisions, following similar moves last year. While the Western Division will remain intact, both the Central and East Divisions are being divided into North and South, in an effort to create further efficiencies, says the company. Last year, Home Depot rolled its Northwest Division into its West division.

VANCOUVER — West Fraser Timber Co. Ltd. received the go-ahead from the Canadian Competition Bureau on Dec. 17, 2004 to complete its acquisition of Weldwood of Canada from International Paper Co. The deal closed on December 31, 2004. One of the outstanding issues related to the sale was the price, which ended up being lowered by $30 million.

PEOPLE ON THE MOVE

Calgary-based Tim-BR-Marts Ltd. has hired Steve Stremecki as director of business development for Ontario and Western Canada. Steve comes over from BPB Westroc, where he served for many years, including as vice-president of marketing — North America. Most recently he managed the U.S. Division for Kenroc in Minneapolis. Stremecki will move to Calgary and he commences his duties on Jan. 10.Malcolm Orr has joined IKO Industries as Ontario sales manager. A 20-year veteran of Duchesne et Fils ltée, he is now be responsible for all of IKO’s Ontario sales representatives, and is involved in the customer service department. He reports directly to Art Stanfield, director of sales — Eastern Canada.Tom Taylor, 38, has been appointed to the newly-created position of executive vice-president — Home Depot Stores. The post gives him responsibility for execution across all of the company’s U.S. and Mexico stores. Taylor has been with Home Depot for 21 years, and since February 2003, he has been division president of the Eastern Division.

At Do it Best Corp., Timothy Miller has been promoted to the position of retail marketing manager, where he’s responsible for the group’s retail marketing division, which includes all advertising programs. Miller also oversees the co-op’s advertising and graphics management teams and manages the overall branding strategies for 6,000 private label products. Miller joined Do it Best in 1993, and served most recently as retail logistics manager.

Sears Canada Inc. has appointed David Merkley as interim CFO, effective Jan. 1, until a permanent CFO is appointed. In his current role as vice-president and corporate comptroller, Merkley has worked for a number of years with retiring CFO John Butcher.

U.S. MARKET INDICATORS

Housing starts in the U.S. suffered a whopping drop in November, says the Commerce Department, the biggest since January 2004. Starts on new homes and apartments were down 13.2% to a seasonally adjusted annual rate of 1.77 million from a 2.04 million pace in October. Construction intentions, as measured by building permits, were down 1.5% in November to an annual rate of 1.99 million.

CANADIAN MARKET INDICATORS

Wholesale sales rose by 0.2% in October, after tumbling 1.8% in September, reports Stats Canada. Wholesalers sold goods and services worth $37.7 billion in October. The weakness in wholesale sales in the past two months coincided with the slowing down of international trade and the manufacturing sector. The wholesale building materials category’s sales were up 2.7%, one of only two sectors to show an increase.

OVERHEARD…

“There’s nothing wrong with retirement, as long as it doesn’t interfere with one’s work.” — Les Groves, aka “Mr. Hardware,” former vice-president of sales and marketing for Stanley Canada, Fellow of the Door and Hardware Institute, and former columnist for Hardware Merchandising, enters 2005 celebrating his 70th year in the hardware industry. Congratulations, Les!

DIRECT MARKETING MANAGER-Harrisburg, PA

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Direct Marketing Manager-PA.

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We seek a dynamic support person to work in a small, mid-town publishing company. A dedicated self-starter, you’re not afraid to wrestle our new database to the ground one minute, and pick up the phone to deal with an ad customer the next.

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Reply in confidence to Beverly Allen at 416-489-3396 or email bev@hardlines.ca

We thank all applicants for their interest; however, only those under consideration will be contacted.

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To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Regional Sales Director-US.

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Hardlines is published weekly (except monthly in December and August)
by McLARNEYCOM
542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7
ï¿½ 2004 by Michael McLarney.
HARDLINES™ the electronic newsletter hardlines.ca
Phone: 416.489.3396; Fax: 416.489.6154
Michael McLarney, Editor & Publisher: mike@hardlines.ca
Beverly Allen, Director of Sales & Marketing: bev@hardlines.ca
Nancy Wright, Circulation Manager: nancy@hardlines.ca
Phyllis Nowell, Sales Manager: phyllis@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: $229 (Canadian subscribers add $16.03 GST = $245.03 per year/ GST #13987 0398 RT). Secondary subscriptions at the same office are only $36 (Canadian subscribers add $2.52 GST = $38.52). Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to Hardlines/McLarneyCom.

Dec. 13, 2004

John Caulfield, Contributing Editor

vol. x, #50, December 13, 2004

IN THIS ISSUE:
• BMR anticipates big growth in Atlantic Canada
• Totem veteran will retire at year’s end
• Quebec consumer renovation habits revealed
• Forest City pays dividend on forestry sale
• Bosch faces product recall
• Cologne’s newest show gains support
• Quebec co-op anticipates strong 2005

* * * * * *
HAVE A SAFE AND HAPPY — AND RESTFUL — HOLIDAY! This is our last issue until Jan. 3, but the World Headquarters remains open until Dec. 22. We will be closed Dec. 23-28. — Michael

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“You may say I’m a dreamer, but I’m not the only one.”
— John Lennon (who was murdered, at the age of 40, exactly 23 years ago last week)

BMR ANTICIPATES STRONG FUTURE FOR MATRECO SUPPLY DEAL

QUEBEC CITY — Sales of hardware products by Le Groupe BMR reached new heights this fall, as the provincial wholesaler and LBM buying group took record levels of hardlines orders at its recent dealer market here.During the market, held here at the end of November, BMR dealers placed orders for $30 million worth of hardlines, up from $21 million in 2003. BMR president Yves Gagnon sees these sales to his own members as only one part of the overall picture for BMR. The company has also been selling hardlines to fellow Matreco members TIM-BR Mart Ontario (now part of Tim-BR-Marts Ltd.) and AWARD in Atlantic Canada, under a partnership arrangement called Quincaillerie Matreco Hardware. Gagnon expects big growth from QMH.In fact, he anticipates upwards of $190 million in sales through the fledgling hardware distribution business for 2004. And over the next three years, he expects that to grow to between $210 million and $240 million in annual shipments.

“Honestly, I think we can go to $300 million, but my personal goals are very high,” says Gagnon. “We’ve budgeted for $250 million.”

Given the success of hardware sales among BMR’s own dealers in francophone Canada, Gagnon anticipates strong potential for QMH in Atlantic Canada, where AWARD has installed a distribution centre of its own (ADL). “I think Atlantic Canada will grow, but it’s hard to tell you how much, because it’s just started. But it will grow,” he adds confidently.

RECALLS HIT GARDEN CART AND SAW CATEGORIES

WASHINGTON — Leading suppliers of garden carts and table saws have agreed to voluntarily recall products that were sold in stores operated by the three largest dealers in the U.S.The Consumer Product Safety Commission, based here, disclosed last week that Robert Bosch Tool Corp. would recall about 120,000 table saws because of potential problems that could expose users to injury or electric shock. CPSC also reported that LG Sourcing Inc. and Lowe’s are jointly recalling about 200,000 garden carts because metal tire rims could break when tires are over-inflated, causing metal pieces to strike their users.There have been four reported incidents of the tire over-inflating and causing the metal rim of the GardenPlus Industrial Garden Cart to break. Three injuries were reported, including a fractured wrist, fractured fingers, and bruised hands.

The commission has received 11 reports of loose or broken motors from Bosch’s Skil Table Saw Model 3400 saws, and while no injuries or property damaged have been reported, CPSC said the drive mechanism on the table saw may loosen, possibly causing laceration, or the motor could separate from the tool, potentially striking the user or posing a hazard of electric shock.

The table saws, made in Taiwan, were sold at Home Depot, Lowe’s, Menards and other independent hardware retailers nationwide from July 2002 through October 2004 for $149-$199. The Garden Carts are made in China and sold for about $70.

TOTEM VETERAN RETIRES AT YEAR END

CALGARY — After more than 30 years with the company, Colin Robertson will leave his post as vice-president marketing at Totem Building Supplies for retirement.Robertson started out working in the yard at Totem’s flagship store in Calgary, where he did everything from cut boards to build trusses. He was later moved to sales, which led to the manager’s job at Totem’s Edmonton store. He returned to head office in 1981.From that time, Robertson has seen Totem grow from a $12-million operation with five stores to one of the country’s top 10 retailers, with sales in 2004 of $233 million. The company added its 14th store back in the spring.

“The most satisfying part of the job for me was the last 10 or so years, when we took on the big boxes,” says Robertson. “And we’re still thriving. We’re still doing well. They’re still thriving,” he adds, “but we’re co-existing very well.”

In recent years, besides the marketing function, Robertson had been charged with overseeing the flyer programs for Totem, as well as its growing range of package sales, which include garages, fences, decks and sheds. He intends to spend the initial months of his retirement relocating personally to Canmore, Alta.

QUEBEC ASSOCIATION LAUNCHES CONSUMER SPENDING REPORT

MONTREAL — The Quebec association for building materials dealers, ADMACQ, has unveiled a very cool research report that tracks the home improvement spending habits of Quebecers. And the results show that they’re hard-line DIYers.In fact, 51% of households surveyed admitted to having done some kind of renovation work in their homes during 2004 — and 89% of those respondents said they did the work themselves. Surprisingly, work done actually exceeded reno intentions, the survey revealed. Over half the renovations undertaken were the result of emergency situations, and therefore not planned.The report, “Les Quebecois et la renovation,” features the results of a poll of 3,700 Quebec households that queries them on their renovation spending intentions for building materials. The ongoing study is done in conjunction with the marketing research firm L’Observateur. The project was unveiled at a special lunch reception here last week, hosted by ADMACQ president and general manager Donald O’Hara, who also conceived the project.

For more info on purchasing the full report, Contact Donald at info@admacq.qc.ca; or 450-646-5842.

FOREST CITY PAYS DIVIDEND ON SALE OF FORESTRY DIVISION

CLEVELAND — Forest City Enterprises, the real estate conglomerate based here, last week declared a special cash dividend of 20 cents per share in recognition of its sale last month of its lumber distribution division. That unit, the Portland-Ore.-based Forest City Trading Group, was sold to its employees for an estimated $39 million. Of that total, $35 million was paid in cash, and Forest City expected to report a $22 million pre-tax gain from that transaction.Forest City Trading, the largest lumber wholesaler in North America, is an umbrella organization consisting of 11 different businesses that operate under several names, including American International Forest Products, Buckeye Pacific, Chesapeake Trading Group, Vancouver-based Olympia Industries, and Seaboard International Forest Products. The wholesaler has customers in all 50 states and in Canada. Annually, Forest City’s trading companies are responsible for just over $3 billion in sales, representing shipments of 115,000 trucks and 56,000 railcars of lumber.Forest City Enterprises said it sold the forestry company because it is no longer a strategic fit with its business model, which focuses on real estate development.

SUPPORT GROWS FOR NEW ASIAN SOURCING SHOW

COLOGNE, Germany — Registrations are on the rise for the first-ever Asia-Pacific Sourcing show, with more than 500 manufacturers distributors from the Far East booked to showcase their wares here February 27 to March 1, 2005.Asia-Pacific Sourcing is an alternative to two of its shows, Practical World — the International Hardware Fair — and Gafa, the lawn and garden show. These shows are now biennial, and in the off-years (commencing 2005), Asia-Pacific Sourcing will feature products, innovations and trends from the home improvement, garden and leisure sectors.About 20 groups will be part of the show, including exhibits from growth markets such as China, Hong Kong, Taiwan, Singapore, and Thailand. A number of visitors and buyers from North America and Europe have already registered for the fair, as well, including representatives of Hornbach and Wal-Mart USA.

Information on the show can be found at www.asiapacificsourcing.de, where you can avoid the 50-euros entrance fee if you register by February 25, 2005.

SALES UP 15% AT COOP FÉDÉRÉE’S LATEST MARKET

Trois-Rivières, Que. — La Coop fédérée held its annual trade fair for its Hardware and Building Materials Department. Hardware outlets affiliated with the provincial co-op, operating under the CO-OP and Unimat banners, have the opportunity to hook up with suppliers. Orders signed at the show reflect the health of the stores in this sector: sales were up more than 15%, indicating optimism for the year ahead. Sales have, on the whole, increased by nearly 60% over the past six years for La Coop fédérée’s hardware and home improvement dealers.Throughout both days of the “Coopérama,” representatives of 155 CO-OP, eight Unimat and 26 independent stores took advantage of the event to place their orders for the upcoming year.Exhibitors filled 220 booths at this year’s show, which was held under the theme, “The meeting of champions.” A big push was made on décor, including a large vignette (27 ft. by 43 ft.) allowed buyers to view and experience the sales potential provided by interior design items.

La Coop fédérée, with its network of affiliated cooperatives, is the fourth largest enterprise in Quebec with sales of $4.2 billion and is ranked eighth among Quebec’s employers, with more than 13,000 employees.

COMPANIES IN THE NEWS

SANTIAGO, Chile — The Worldwide DIY Council, an association of active U.S. and Canadian exporters, held its annual meeting here recently (see also People on the Move). Several dozen Council members exhibited their products at a table-top show in conjunction with the meeting. Buyers from throughout Chile attended the show and buyer reception, including multiple representatives from the three largest buying groups in that country. Council members also participated in a store tour during one afternoon of the program. Information about the Council can be found at: www.wdiyc.org.ISSAQUAH, Wash. — Costco Wholesale posted a 21% increase in profits in the first quarter ended Nov. 21, rising to $193.2 million, from $160.2 million a year earlier. Quarterly sales increased 10% to $11.34 billion. Same-store sales rose 7%.OAK BROOK, Ill. — Ace Hardware Corp. has sold its headquarters located here to a real estate investment trust in a $40 million sale/leaseback deal. The hardware co-op will use the money from the sale to grow its business. The deal involves a 10-year lease with a first-year net rent of $2.9 million, excluding taxes, on the 206,000-sq.ft. facility. The deal was brokered by CB Richard Ellis Inc., which also represented another company, Zurich Financial Services AG.

VANCOUVER — West Fraser Timber Co. has made some concessions with Canada’s Competition Commissioner concerning its planned purchase of Weldwood of Canada from International Paper Co. Under the agreement, West Fraser has agreed to unload a 90% interest in sawmills located in Burns Lake and Decker Lake, B.C. West Fraser will also agree to a temporary reduction of its annual allowable cut in the Williams Lake area by 75,000 cubic metres for a 10-year period. The acquisition is expected to close on or before Dec. 31, 2004.

FORT WORTH, Tex. — Wal-Mart used newspaper advertising for the first time in November, in an effort to shore up disappointing sales. (Same-store sales were up only 0.7%, versus an anticipated 2-4%.) Full-page ads ran in major U.S. markets and in 35 secondary markets.

TORONTO — A gingerbread house sponsored by Home Hardware Stores and created by Oshawa Central Collegiate culinary arts students was presented to the Hospital for Sick Children last week. An oversized gingerbread cheque for $120,000, raised through fundraising efforts at Home Hardware stores, was also part of the contribution. The gingerbread structure was actually an entire city, measuring nine metres (30 ft.) by one metre (4 ft.) and weighing 300 kilograms (675 lb.), in recognition of Home Hardware’s 40^th anniversary.

PEOPLE ON THE MOVE

Canadian Tire Corp. has renewed the employment agreement with its president and CEO, Wayne Sales. The agreement extends his contract to June 30, 2007 and replaces a previous contract that would have expired in August, 2005. According to a prepared release, the terms and conditions of the new agreement are substantially the same as his former contract.The Worldwide DIY Council appointed its new board at its recent AGM: Jim Ness, vice-president of Meter-Man in Winnebago, Minn., is the new chairperson … He succeeds Betty Perez-Koukounaras, sales and marketing manager—international, for H.D. Hudson Manufacturing Co. of Chicago. She becomes ex-officio director for one year … Vice-chair is Ken Wallace, Latin American sales manager for Fluidmaster, based in Miami … Ian Wallace of Better Living Products, former chairman and ex officio director, also retired from the board.Tom Coughlin will retire as vice-chairman of Wal-Mart Stores Inc. after 25 years with the world’s largest retailer. His retirement will be effective Monday, Jan. 24, 2005, but he’ll continue as a director of the company until June 3, 2005, when Wal-Mart holds its AGM.

U.S. MARKET INDICATORS

Wholesale inventories in October 2004 were $323.1 billion, up 1.1% from September and up 10.6% from one year ago. Sales were $282 billion, up 1.6% from September and up 14.3% from one year ago.

CANADIAN MARKET INDICATORS

Housing starts remained strong in November, rising to a seasonally adjusted annual rate of 238,200. That’s up from 225,000 in October, according to CMHC, and the 18^th consecutive month that housing starts came in above the 200,000 level. Starts in urban centres increased 6.7% to a seasonally adjusted annual rate of 209,700 units. Urban single detached starts fell by 2.8% to 99,300 units in November while urban multiple starts increased 17.1% to 110,400. The estimated number of seasonally adjusted annualized starts in Canada’s rural areas was 28,500 units.The price of new homes increased by 5.6% over the same month last year, according to the New Housing Price Index, which measures the change in contractors’ selling prices. This was down slightly from the 5.8% annual increase registered in September. The annual rate of increase has been slowing since the 6.2% peak in June 2004, which was the biggest 12-month gain since February 1990.Construction intentions increased for the first time in four months in October, says Stats Canada. Municipalities issued $4.6 billion in building permits, up 2.0% from September. Last year’s November average was $4.2 billion.

DIRECT MARKETING MANAGER-Harrisburg, PA

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Direct Marketing Manager-PA.

Wolf Gugler & Associates Limited, 1000 West Wilshire, Oklahoma City, OK 73116. (405) 848-3006 email: resumes@wolfgugler.com Web site: www.wolfgugler.com

**********************************************************************************

NATIONAL ACCOUNT MANAGER

**********************************************************************************

WANTED: ADMINISTRATION ASSISTANT

Your skills:
detail oriented, deadline driven, flexible
software proficiency: Word, Excel, Outlook
Functionality: Dreamweaver preferred,but not essential
Bilingual English/French a plus!

Reply in confidence to Beverly Allen at 416-489-3396 or email bev@hardlines.ca

We thank all applicants for their interest; however, only those under consideration will be contacted.

**********************************************************************************

NORTHERN ONTARIO

Well established sales agent sourcing major line to represent to building supply retailers, Northern Ontario.

Must have brand recognition and existing sales with opportunity to grow. Reliable support including distribution, product knowledge and customer priority are essential.

Reply in confidence to Dale Harvey,
Harvey Northern Sales
866 200 1560
harveynorthernsales@sympatico.ca

**********************************************************************************

MARKETING MANAGER

With over 150 years in business, Stanley is one of the world’s most recognized and trusted brand names for tools, hardware, and security systems. The Stanley Works is currently hiring a Marketing Manager for our Canadian Headquarters, located in Oakville.

Responsibilities:
-Develop and execute growth strategies
-Ensure fill rate targets are achieved
-Actively participate in product development process
-Line reviews and competitive analysis
-Manager P&L
-Maintain competitive price comparisons
-Conduct field research
-Customer presentations
-Provide product knowledge, training and technical support
-Travel regularly within Canada and the U.S. Occasional travel to Asia and Europe may
be necessary.

Requirements:
-Bachelor’s Degree (prefer marketing or business)
-5+ years relevant experience
-Solid knowledge of: Big Box, Mass Merchants, 2Step, and Independents
-High customer orientation
-High Financial Aptitude
-Project development and Management, planning and organizational skills
-Previous experience in a matrix environment strongly preferred
-Solid knowledge of PowerPoint, Excel, and Outlook
-Knowledge of SAP and J.D. Edwards an asset

At Stanley, we offer an outstanding array of benefits and a competitive salary that upholds our commitment to excellent employee care. Forward your resume to: dsutlovic@stanleyworks.com

**********************************************************************************

U.S. REGIONAL SALES DIRECTOR

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Regional Sales Director-US.

Wolf Gugler & Associates Limited, 1000 West Wilshire, Oklahoma City, OK 73116. (405) 848-3006 email: resumes@wolfgugler.com

Web site: www.wolfgugler.com

**********************************************************************************
NATIONAL ACCOUNTS MANAGER

**********************************************************************************
AGENTS AND FULL TIME SALES REPS

**********************************************************************************
SERVICES OFFERED

WHETHER OR NOT IT GETS PAINFUL IS UP TO YOU.

**********************************************************************************

Your products deserve the best representation they can get. NORAL MARKETING knows the Canadian retail customer. Don’t settle for anything less!

Contact Dave Leslie at 905-702-9443, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com

**********************************************************************************
MARKETPLACE



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www.zircon.com

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ONLY $2.50 PER WORD FOR THREE WEEKS IN THE CLASSIFIEDS.
TO PLACE YOUR AD, CALL PHYLLIS NOWELL AT 416-489-3396 OR EMAIL: phyllis@hardlines.caHardlines is published weekly (except monthly in December and August)
by McLARNEYCOM
542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7
ï¿½ 2004 by Michael McLarney.
HARDLINES™ the electronic newsletter hardlines.ca
Phone: 416.489.3396; Fax: 416.489.6154
Michael McLarney, Editor & Publisher: mike@hardlines.ca
Beverly Allen, Director of Sales & Marketing: bev@hardlines.ca
Nancy Wright, Circulation Manager: nancy@hardlines.ca
Phyllis Nowell, Sales Manager: phyllis@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!
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Subscription: $229 (Canadian subscribers add $16.03 GST = $245.03 per year/ GST #13987 0398 RT). Secondary subscriptions at the same office are only $36 (Canadian subscribers add $2.52 GST = $38.52). Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to Hardlines/McLarneyCom.

Dec. 6, 2004

John Caulfield, Contributing Editor

vol. x, #49, December 6, 2004

IN THIS ISSUE:
• Castle launches store merchandising programs
• Why Rona left the Alliance
• Home Depot partners with Seniors
• Kingfisher announces Chinese acquisitions
• How-to website features “celebrity” columnists
• Briggs & Stratton eyes parts of Murray
• Home Depot, Lowe’s settle credit card dispute

* * * * * *
HOLIDAY PUBLISHING DATES: We’ll publish on December 13, then back again on January 3. The World Headquarters will be closed December 20-28. — Michael

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“Zest is the secret of all beauty. There is no beauty that is attractive without zest.”
— Christian Dior (French couturier)

CASTLE INTRODUCES FULL-SERVICE MERCHANDISING PROGRAMS

MISSISSAUGA, Ont. — Castle Building Centres Group, the national LBM buying group, has introduced a full-service merchandising and store enhancement program for its dealers.“The goal of the new program is to provide members with the tools and support to clean up and upgrade their stores, and to strengthen their competitive positioning in secondary markets in anticipation of big box expansion,” says Mike Frame, business development manager for Castle’s central region.It’s a turnkey proposition, he adds, suitable for both new and existing dealers. The comprehensive store branding program is backed by a marketing and communications program. Everything from yard layouts, store layouts and traffic flow studies to in-store development such as lighting, signage, fixturing and floor and wall treatments are included in the package. At the merchandising level, attention is given to assortments, planogramming, traffic flow, and POS. The program even extends to details such as truck identification, staff uniforms and in-store announcements.

The initiative has been designed by BMF Marketing & Design, a Burlington, Ont.-based group that comprises a team of store-planning veterans, including Rob Wilbrink and Phil Dwyer (both of Rona Lansing) and Leon Penchuk (former Ace Hardware and Watt Group). The newest addition to the team is former Home Depot store planner Mike Serecin.

The program offers three levels of participation: generic, which includes yard cleanup and basic signage needs; entry, which also includes uniforms, faade, and some feature displays; and finally, enhanced which adds exterior faade/pylon, full yard reset, and full inline merchandising.

“We had to recognize that our full membership could participate in the program,” says Frame. “That includes stores that don’t fly the Castle banner.” However, he hopes the enhanced store design and merchandising features available to bannered dealers will serve as an inducement for some independent banners to take the next step and adopt the Castle name, as well.

The program has already received strong support from member dealers. Stores across the country, including Halifax, N.S., Timmins and Windsor, Ont., and a number in Western Canada, have already signed on for some version of the store makeover.

Besides building Castle as a retail brand and giving its member dealers the tools for staying competitive in the midst of other powerful retail brands, such as Home Depot and Rona, the new program is seen as an incentive for attracting new members, with not just stronger program offerings, but a better class of store overall within the Castle membership.

HOME DEPOT PARTNERS WITH SENIORS

ATLANTA — Home Depot will expand its strategic partnership with AARP, the largest senior-citizens’ group in the United States, when it launches a test next year to mark certain products sold in its stores with AARP’s seal of approval.The Associated Press reports that Home Depot will begin carrying bath and electrical fixtures bearing the seal in an as-yet-unspecified number of its stores sometime in 2005, according to John Costello, the retailer’s chief merchandising officer. Certain hardware items may also be included in this mix.AARP is forming a panel within its organization to establish the standards for its labeling program, with an eye towards expanding that program to other retail companies.

Home Depot is hoping to tap into what has become a critical market segment for builders, contractors and home improvement dealers. Seniors account for an estimated 25% of all homebuyers in the U.S. currently, and some housing experts believe that number could rise to 40% eventually, given current demographic trends.

Last February, AARP and Home Depot formed a partnership through which the organization is helping the retailer locate recruits, aged 50 or older, to fill some of the 35,000 or more jobs that open each year, as Home Depot stays on track to open 185 new stores this year, and probably the same number in 2005.

RONA STRENGTHENS OVERSEAS BUYING TIES

MONTREAL — Rona inc. may have pulled out of one buying group, but it is still strongly allied with another — this one based in Europe.Rona made news last month when Hardlines announced that the Quebec-based retailer/distributor had quit its membership in Alliance International LLC, which still comprises Fort Wayne, Ind.-based Do it Best Corp. and Home Hardware Stores Ltd. of St. Jacobs, Ont. (see November 8/04 issue—Editor)According to Rona president and CEO Robert Dutton, membership in A.R.E.N.A. has provided more cohesive buying than he found inside the Alliance. “What I like about A.R.E.N.A. is that it’s a real alliance,” he told Hardlines in an exclusive interview recently. “When we make a deal, we put all our volumes behind it.”

Dutton comments suggest a less rigorous mandate at the Alliance. After a deal is made with a vendor, members “…do that, they go do that,” referring to side deals that can undermine the efficacy of the Alliance arrangement. “At the end, we don’t have a good price.”

Headquartered in Tréville, France, A.R.E.N.A. has DIY and building materials members in 12 countries, including Germany’s Hagebau, ITM in France (which includes Bricomarché), and Australia’s Mitre 10. Rona is the sole representative of A.R.E.N.A. in North America. The buying group has a total of 6,000 stores in 12 countries that represent total sales of 17.4 billion euros (C$27.2 billion). By comparison, the Alliance International represented C$19.2 billion at retail, more than half of that coming from Do it Best. Rona’s 2003 sales were C$3.9 billion, second only to Home Depot Canada.

CONSUMER SITE WILL FEATURE HOW-TO TIPS FROM “PROS”

TORONTO — A new consumer how-to website has been launched with some of some of Canada’s most familiar DIY personalities behind it. HomeEnvy.com features a wide range of help columns, décor advice and problem solving articles, with content from Kimberly Seldon, host of “Design for Living;” Kathy Renwald of “Gardener’s Journal” and woodworking expert Steve Maxwell, editor of Canadian Home Workshop magazine, whose columns also appear in the Toronto Star.

Celebrity columnists include Steve Smith, writing under his alter ego Red Green, and our favorite handyperson, “ToolGirl” Mag Ruffman.The site is content driven, with lots of articles and photos, plus a Q&A section where Maxwell fields visitors’ queries about their home improvement problems. The site can be searched by columnist, by room, or by theme (e.g., “Fix It,” “Grow It,” “Decorate it”).

The site’s biggest coup is the establishment of Home Depot Canada as a primary sponsor, along with RBC Financial Group. In addition, it has affiliated itself with Habitat for Humanity. The HomeEnvy website will raise awareness of the charitable organization’s fundraising projects. The site’s celebrity columnists and the sponsors, Home Depot and RBC, will join volunteers at Habitat building sites to help generate publicity, find additional sponsorships, and help build homes.

BRIGGS & STRATTON EYES TROUBLED MOWER SUPPLIER

WAUWATOSA, Wis. & BRENTWOOD, Tenn. — Briggs & Stratton, the gas engine and lawn and garden equipment manufacturer, says it’s evaluating the acquisition of some of the assets of Murray Co., the lawn mower supplier that on November 8 filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.B&S is one of Murray’s three largest creditors and is owed an estimated $40 million by that company. If it is able to reach a deal with Murray, B&S says it would write down $30 million in fiscal 2005, and could wind up writing off more of Murray’s indebtedness on its books, depending on how Murray’s Chapter 11 reorganization fares. This transaction would result in the impairment of substantially all of its remaining trade receivable from Murray. Briggs would recognize an additional loss of about $30 million in the second quarter of fiscal 2005.However, B&S is not interested in buying Murray outright, says CFO James Brenn, quoted in the Nashville Business Journal. In fact, Briggs & Stratton only became interested in this asset purchase after it became clear that Murray was attracting no other suitors. B&S continues to supply Murray with engines, but on a collect-on-delivery basis. In a prepared statement, Murray said that one of the reasons it filed Chapter 11 was that its tenuous financial condition had caused it to lose the confidence of its vendors and business partners.

Murray cited several factors that precipitated its bankruptcy —from limited access to credit, product recalls and rising commodities costs — but it has also suffered from its loss of sales from Home Depot. The giant retailer has effectively handed over the lion’s share of its lawn mower business to John Deere.

KINGFISHER STEPS UP CHINESE EXPANSION

LONDON — Kingfisher plc, Europe’s leading home improvement retailer, is stepping up expansion of its B&Q chain in China with the acquisition of five vacant big box stores (8,000-9,000 sq.m.) from PriceSmart, a privately-owned Chinese company. The stores are expected to be converted to the B&Q format during 2005, strengthening B&Q’s position in the burgeoning home improvement market in China.The total cost of the cash deal will be in the neighborhood of £6.95 million. The deal is conditional on completion of the transfer of each store.The new stores will extend B&Q’s reach into cities in the West and Northeast of China, which had already been targeted for new openings. The new sites are in addition to the planned openings of up to nine new B&Q stores in China during 2005-2006.

Kingfisher claims it is the market leader in China, with 20 stores already. The first one went in back in 1999. Since then, the China operations have been growing at a rapid rate. In its last fiscal year, B&Q China had sales of £131 million, up a whopping 64% on a constant currency basis. The business also went into the black for the first time with profit of £0.4 million, after all store opening costs.

BIG BOXES SETTLE CREDIT CARD DISPUTE

LOS ANGELES — The industry’s two largest home improvement dealers, Home Depot and Lowe’s, have settled a lawsuit over their popular and sales-driving credit card promotions that could make more than two million people holding those cards eligible for $5 rebates.More than half of the $4 million settlement — $2.5 million — is earmarked for these rebates, with the rest going to pay attorneys’ fees. Home Depot and Lowe’s, along with Monogram Credit Card Bank of Georgia, which issued the cards, had been named in the class-action lawsuit accusing them of misleading customers participating in the chains’ promotions over the past four years that offered interest-deferred credit card purchases. Shoppers were told they could defer interest charges for six months on certain store credit card purchases over $200. But they discovered that their credit card payments were being applied toward their interest-free balances, while their regular purchases continued to accrue interest, said Styant-Browne.A superior court judge has instructed the companies to begin notifying their customers of the terms of the settlement, which includes an agreement by the two retailers to give every class member who lost money as a result of the wrongful payment allocations a $5 rebate on a purchase of $15 or more. Home Depot and Lowe’s also agreed to explain to their customers exactly how their credit card payments are applied and to automatically apply payments against the interest-bearing balances first, unless customers chose otherwise.

COMPANIES IN THE NEWS

VANCOUVER — For the third time, the NAFTA panel on countervailing duties on Canadian softwood lumber to the U.S. has determined unanimously in Canada’s favor. This time, the panel was made up of three U.S. panelists and two Canadians. Nevertheless, they decided the U.S. Commerce Department acted arbitrarily in determining that Canadian softwood producers received federal subsidies, and that a 27% countervailing duty on the imported Canadian wood was unfair. The U.S. government has formally requested that a NAFTA “extraordinary challenge committee” review the NAFTA decision, insisting that the U.S. market has suffered injury from the pricing on Canadian softwood. This kind of appeal has not worked in the past, however.TORONTO — For the three months ended October 31, sales and revenue for Hudson’s Bay Corp. were $1.684 billion, down slightly from $1.688 billion in the same period last year. Same-store sales were up 0.6%, however, the company’s home décor and accessories chain, Home Outfitters, had a substantial increase of 12.5%. For the first nine months of 2004, EBIT clocked in at a loss of $27 million, deepening a loss of $13 million in the corresponding period of 2003. EBIT in the first nine months was a loss of $27 million, from a loss of $3.4 million. The company is “adopting a cautious approach to the fourth quarter.”RIVIÈRE-DU-LOUP, Que. — Last week, this city’s Chamber of Commerce held its Prestige award ceremony to honor companies that had outstanding performances during the year. The big winner of the evening was Bargain Building Materials, which collected the Prestige for Innovation along with the Prestige as Enterprise of the year. Bargain Building Materials’s president, Christian Richer, and Jacques Déry, general manager, received the Prestige for Innovation from Investment Quebec and the Prestige for Enterprise of the year from the Business Development Bank of Canada.

ISSAQUAH, Wash. — Total sales for the four weeks ended November 28 rose 7% for warehouse retailer Costco Wholesale Corp., to $4.08 billion. That’s up from $3.80 billion in November 2003. Same-store sales grew by 5%. For the first 13 weeks of its 2005 fiscal year, sales were $12.40 billion, up 10% from $11.29 billion a year ago. Same-store sales increased 7% in both U.S. and international stores for the period.

LONDON — Focus Wickes, the number-two home improvement retailer in the U.K., has turned to investment bank Goldman Sachs to examine options for the 420-store chain. Options may include sale to a competitor. Analysts estimate that Focus Wickes may be worth more than £1.5 billion to a prospective buyer.

TORONTO — PartSource, the national chain of auto parts specialty stores owned by Canadian Tire, has announced the acquisition of Diamond Auto Parts, an Etobicoke, Ont.-based auto parts business. Diamond’s operations will be incorporated into the new PartSource store located in the Queensway area of Toronto’s west end. PartSource now has eight stores throughout the Greater Toronto Area, with 47 stores in total. PartSource is a chain serving do-it-yourself automotive enthusiasts and the commercial auto parts market.

HONG KONG — Wal-Mart says it hopes to open at least 11 new stores in China next year, as domestic restrictions on foreign retail are lifted under terms of World Trade Organization requirements. Wal-Mart currently has 42 stores in 20 Chinese cities, but Chinese government regulations limit foreign retailers to setting up shop in only certain cities — and even then they can only put in three stores per city. However, these restrictions will be removed on December 11.

PEOPLE ON THE MOVE

At Burlington Manufacturing & Fixtures, the executional arm of BMF Marketing & Design, Mike Serecin has joined as senior store planner. He worked most recently at Home Depot’s store planning department and brings with him more than 30 years experience in store design for the home improvement industry, including Lansing Buildall, Beaver Lumber, Howden and the Watt Group. (905-332-6652)

U.S. MARKET INDICATORS

Construction spending in October 2004 was $1,009.4 billion, virtually unchanged from September but up 7.1% from October 2003. Total non-residential construction was $451.7 billion, up 0.4% from September and up 2.7% from one year ago.Consumer spending rose 0.7% in October, reports the Commerce Department, exceeding expectations and offering a positive sign for the economy going into the fourth quarter. For the third quarter, consumer spending advanced at a 5.1% annual rate.Real Gross Domestic Product grew at an annual rate of 3.9% in the third quarter of 2004, according to the Commerce Department. This beats the growth rate of 3.3% in the previous quarter. Corporate profits decreased $27.6 billion in the third quarter, following an $8.3 billion second-quarter increase.

CANADIAN MARKET INDICATORS

Residential construction in the third quarter of 2004, says Stats Canada was valued at $20.2 billion, up 14.5% from $17.7 billion in the third quarter of 2003. Total residential construction investment since the beginning of 2004 was $52.2 billion, up 14.7% from the nine-month period in 2003. Investment expenditures for new housing units totalled $10.3 billion in the third quarter, up 14.3% from the third quarter of 2003. New single-family homes accounted for the largest increase in dollar terms, up12.3% to $6.9 billion. Investment in new multi-unit construction also posted a large gain, up 28.0% to $1.9 billion.Expenditures on renovations to the existing housing stock totalled $8.1 billion in the third quarter, up 14.5% from the $7.1 billion invested in the third quarter of 2004. Acquisition costs rose 16.1% to $1.8 billion.Real gross domestic product advanced 0.8% in the third quarter, bolstered by robust manufacturing, wholesale and retail sectors. This was slightly higher than the average 0.7% growth in the previous four quarters. The economy ended the quarter on a weak note, with no growth in September, following 0.4% growth in August and 0.3% in July. Overall, the Canadian economy grew at an annualized rate of 3.2% in the third quarter.

NOTED…

Confidence in the economy took a hit with luxury consumers in the third quarter, according to the Luxury Consumption Index, which dropped 6.7 points to 96.0, from the second quarter, according to Unity Marketing. Its latest tracking study of the luxury market (www.unitymarketingonline.com) reveals that the feelings of uncertainty, even among luxury consumers, are being played out in stores, in the travel sector and at service businesses that cater to the affluent. The average amount luxury consumers spent on luxuries in the third quarter dropped 35%, from an average of $4,275 in the second quarter to $2,779 in the third.

OVERHEARD…

“It is evident that our strategy is working, and the realignment of our organization, announced earlier in the month, reflecting this strategic direction, ensures that our established growth targets will be executed with greater speed and impact. We remain confident in our ability to create substantial value…” — Whew! George Heller, president and CEO of Hudson’s Bay Co., tries to explain how well the company is doing after sales stayed flat and losses doubled in the third quarter.“Most of my fans either live in a home — or are in a home.” — Steve Smith (aka Red Green), speaking at the launch party of HomeEnvy.com, explains his involvement in the new DIY how-to website sponsored by Home Depot and RBC Financial.

Wanted: Administration Assistant

Your skills:
detail oriented, deadline driven, flexible
software proficiency: Word, Excel, Outlook
Functionality: Dreamweaver preferred,but not essential
Bilingual English/French a plus!

Reply in confidence to Beverly Allen at 416-489-3396 or email bev@hardlines.ca

We thank all applicants for their interest; however, only those under consideration will be contacted.

**********************************************************************************

VENDOR REQUIRED

Well established sales agent sourcing major line to represent to building supply retailers, Northern Ontario.

Must have brand recognition and existing sales with opportunity to grow. Reliable support including distribution, product knowledge and customer priority are essential.

Reply in confidence to Dale Harvey,
Harvey Northern Sales
866 200 1560
harveynorthernsales@sympatico.ca

**********************************************************************************

MARKETING MANAGER

At Stanley, we offer an outstanding array of benefits and a competitive salary that upholds our commitment to excellent employee care. Forward your resume to: dsutlovic@stanleyworks.com

**********************************************************************************

U.S. REGIONAL SALES DIRECTOR

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Regional Sales Director-US.

Wolf Gugler & Associates Limited, 1000 West Wilshire, Oklahoma City, OK 73116. (405) 848-3006 email: resumes@wolfgugler.com

Web site: www.wolfgugler.com

**********************************************************************************
NATIONAL ACCOUNTS MANAGER

**********************************************************************************
AGENTS AND FULL TIME SALES REPS

**********************************************************************************
SERVICES OFFERED

WHETHER OR NOT IT GETS PAINFUL IS UP TO YOU.

**********************************************************************************

Your products deserve the best representation they can get. NORAL MARKETING knows the Canadian retail customer. Don’t settle for anything less!

Contact Dave Leslie at 905-702-9443, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com

**********************************************************************************
MARKETPLACE



	No guesswork backlit LCD shows the centre of studs in just one pass. • Finds stud edges too

• Patented, exclusive SpotLite® Pointing System

• Patented DeepScan® for built-up, textured,
or paneled walls

• Also traces AC wires, finds pipes
and other metals

Your Window-In-The-Wall™

800.245.9265

www.zircon.com

NORTH AMERICA’S “PREMIER MANUFACTURER”
of Propane Cylinders

NOW available in Canada

(5 lb. through 420 lb.
propane cylinders available)

. Recognized Market Leader .
. Unsurpassed Quality .
. Reliable Delivery .
. Outstanding Customer Service .

Nov. 29, 2004

John Caulfield, Contributing Editor

vol. x, #48, November 29, 2004

IN THIS ISSUE:
• TruServ has big plans for Country Depot
• Rona steps up expansion plans
• U.S. housing market stays hot
• We talk with Sodisco’s new head merchant
• U.S. vendors increase participation in London show
• Green products take off

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

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“We blame in others only the faults by which we do not profit!”
— Alexander Dumas

TRUSERV CANADA IDENTIFIES GROWTH OF RURAL “WANNABIES”

WINNIPEG — When TruServ Canada bought up the retail business of Growmark Canada in January 2003, it inherited a unique retail format designed a decade earlier called Country Depot. This concept took the basic farm co-op product mix, fine-tuned it under the categories of hardware, work wear, lawn and garden, and pet supplies. Now that concept is being exported outside of Ontario.Not simply aimed at the traditional rural marketplace, Country Depot is designed to offer a sophisticated retail package that will appeal to a growing populace of urban workers living in the country who seek, says Bill Morrison, president and CEO of TruServ Canada, “a rural quality of life and space.” Now TruServ is ready to go beyond the 45 Country Depots already in place in Ontario to roll the format out nation-wide.The first store in the West will open in spring, Okotoks, Alta., but that’s just the start. According to Morrison, there are about 130 possible markets for Country Depot, and he expects 10 more to be put in place next year (eight of them in Ontario), with 20-25 per year after that.

“Country Depot will move away from its rural roots to appeal to people who work in the cities,” says Morrison. He offered some insights into TruServ’s strategy at a recent breakfast seminar hosted by the Canadian Hardware and Housewares Manufacturers Association.

The Okotoks store is situated beside a Wal-Mart store. Morrison says he’ll use a cluster expansion strategy, with aggressive expansion within certain regions, and he says the co-habitation with Wal-Mart is an effective strategy.

The original format, typically a store in a smaller, secondary market, is being enlarged, to provide a wider range of products, and being situated, wherever possible, in the same parking lot as a Wal-Mart.

(Note: The CHHMA has a good program this season, with Rona CEO Robert Dutton lined up to speak to the Quebec chapter November 30. For more info, click here or call: 416-282-0022)

RONA ACCELERATES GREENFIELDS EXPANSION FOR 2005

BOUCHERVILLE, Que. — The number-two home improvement retailer in Canada has stepped up its expansion plans for next year. Rona inc. expects to open 10-15 stores each year through to 2007.That’s up from the 3-5 per year originally planned over the next three years. Half will be Rona Home & Garden big boxes, with an equal number of traditional stores, flying either the Rona Home Centre or Rona Building Centre banner. It’s all part of the company’s plan to double market share by 2007.Those plans still include the search for further acquisitions, though on a smaller scale than have marked the company’s rapid growth since 2000, when it began a buying spree with the purchase of the Ontario-based chain Cashway. And while a merger of the scale of Rona and, say, Home Hardware Stores Ltd., would establish Rona as the industry leader, the two companies are too different to ever realize such a union. Robert Dutton, president and CEO of Rona, admits, “they don’t like our financial structure [Rona is publicly traded]. Home Hardware prefers to remain a co-op. I respect that.”

Nonetheless, such a union, he adds, would have given one company more than one-quarter of the retail home improvement marketplace in Canada. “You could own the business,” Dutton says.

Now Rona is setting its sights on strong regional players. “The market has a lot of smaller regional retail groups, in the $25-$100 million range. I have a lot of interest in that.”

He also wants to ensure the company reaches its goals through greenfields expansion, hence the increased rate of openings over the next three years. Five stores are already under construction. These include two big boxes, one in Richmond, B.C., and another in Gatineau/Hull, across the river from the nation’s capitol. Sites already confirmed for traditional stores include Fort McMurray, Alta., and Vernon, B.C.

The company has also hinted at possible further expansion at the distributor level. The recently announced takeover of Sodisco-Howden Group by CanWel has opened up “some opportunities for Rona to increase both its distribution and its retail businesses,” says Sylvain Morissette, communications director for Rona. However, he would not add any further details.

LONDON DIY SHOW FEATURES EXPANDED U.S. PRESENCE IN 2005

LONDON, U.K. — Next January’s DIY & Garden Show at Earls Court 2 in London is already bigger than this year’s event and will be the biggest show for four years.“We’re seeing an increase in the number of U.K. suppliers wanting to take the initiative and meet buyers face-to-face at the show, and also from overseas companies targeting the U.K. market in the first non-Cologne year,” says sales director Paul Grinsell.The exhibition consistently attracts visitors from more than 30 countries. Watch for suppliers from Austria, Belgium, Canada, Denmark, France, Germany, Holland, India, Slovenia, Switzerland and Taiwan. Overseas exhibitors include a record 22 American companies on a U.S. group stand organized by the Worldwide DIY Council. Members include the world’s two biggest dealer-owned wholesalers, Ace Hardware and TruServ Corp.

The DIY & Garden Show and Totally Tools take place at Earls Court 2 in London from January 16-18, 2005. For more information, or to register at no charge online, visit www.diyandgardenshow.com or call First Events: +44 (0)20 8462 0721.

LEADING ECO-FRIENDLY BUILDING PRODUCTS CHOSEN

PORTLAND, Ore. — A pressure-assist toilet that uses less water and certified framing lumber were among the items that made the list of 10 leading environmentally friendly products selected by BuildingGreen Inc., which publishes Environmental Building News.This is the third year that the publisher has identified products that primarily help conserve energy or natural resources. The newest additions to the list are included in BuildingGreen’s GreenSpec directory.This year’s list includes two products that convert sunlight into usable energy; a toilet-flushing mechanism that uses one gallon per flush, or 40% less the 1.6-gallon federal standard; and a new, non-toxic pressure-treated wood product that relies on a mineralization process within the wood to protect it from insects and decay without making the wood more corrosive.

GreenSpec’s co-editor Alex Wilson said that that his staff can barely keep up with the number of new eco-friendly products that have come onto the market in recent years. What’s driving that development, he explained, is the U.S. Green Building Council’s LEED Rating System (Leadership in Energy and Environmental Design), which awards points for certain product characteristics or the energy or water savings they can achieve. “Designers of LEED buildings are looking for green products, and manufacturers are responding,” said Wilson, in a prepared statement. Versions of those standards have already started to make their way into Canada’s building industry.

The 2004 BuildingGreen Top-10 products are: ECO I Paver from E. P. Henry, TimberSIL a non-toxic pressure-treated wood from Timber Treatment Technologies, LLC, FSC-Certified Framing Lumber and Plywood from Potlatch, Ethos Carpet-Cushion Backing from Tandus-C&A Floorcoverings, EcoVeil TPO Interior Shade Screening from MechoShade Systems, Photovol Glass PV Glazing Panels from MSK Corp., Winston Series CPC Solar Water Heating Collector from Solargenix, EcoSpace Elevator from KONE, FlushMate IV Pressure-Assist Toilet Flush Mechanism from Sloan Valve, and the Cold Climate Heat Pump from Nyle Special Products, LLC.

SODISCO’S HEAD MERCHANT HAS GROCERY IN HIS VEINS

MONTREAL — As senior director of merchandising at Sodisco-Howden Group, Claude Chalifour heads up the national hardware wholesaler’s merchandising department, including an expanded team of category managers and support staff.Chalifour spent 15 years at Rona, most recently as purchasing director, and had additional experience at Loblaws, all of which he is bringing to bear to Sodisco’s buying offices. “My role will be to put in place category management,” he told Hardlines recently. But, he notes, everything that’s done has to be effective from the standpoint of Sodisco-Howden’s retail customers. “Everything starts from the retail side.”Developing Sodisco-Howden’s private-label programs will be one of his challenges, but he says he’s not ready to talk about his plans there just yet, but adds enthusiastically, “I see a lot of opportunity there.” However, his mandate also includes harmonizing assortments among Sodisco-Howden’s three hardware warehouses — in Victoriaville, Que., London, Ont., and Langley, B.C. The result will be one price across the country for dealers to benefit from — something he draws on his experience in grocery to emulate. “Wal-Mart is doing it, Loblaws is doing it. Why can’t we do it?”

SURPRISING GAIN IN OCTOBER NEW-HOME SALES

WASHINGTON — The U.S. Commerce Department reported that the sale of new homes in the country rose 0.2% to an annualized rate of 1.226 million units, which would represent the third-highest level ever recorded. Analysts had predicted that sales would be flat that month.The increase occurs in a month when the U.S. gained 337,000 new jobs (the most in seven months, and when mortgage rates have continued to hover near all-time lows. Even the increases in interest rates imposed by the Federal Reserve over the past several months, and comments made by the Fed’s chairman Alan Greenspan that the country’s escalating debt and deficit were potentially calamitous to the economy, did little to tamp down what continues to be one of the strongest housing cycles in recent memory.An indicator of future sales found housing starts increasing in October by 6.4% to an annualized rate of 2.077 million units. The National Association of Realtors estimates that the sale of new and existing homes would hit an all-time high in 2004. (The sale of existing homes was off 0.1% in October.)

However, the vitality of new-home sales varied by market last month. The Northeast saw the strongest gains, with a 19.7% increase to 85,000 units, followed by western states whose sales rose 12.7% to 417,000. But the South and the Midwest experienced declines of 9.1% and 3.6%, respectively, to 508,000 and 216,000 units.

In October alone, 412,000 new homes were sold nationwide, vs. 408,000 in September.

The sale of existing homes, while down in October by 0.1% to an annualized rate of 6.75 million units, was still good news because the general consensus among analysts was that the falloff would have been steeper, according to a poll of economists conducted by CBS MarketWatch. In the past year, existing home sales have risen 5.6%. The national median home sale price was $187,000 in October, up 8.8% from a year earlier.

Existing home sales in the South rose 3.7%, while sales fell in all other regions: by 1.3 percent in the Northeast, 3.6% in the West and 2.8% in the Midwest.

COMPANIES IN THE NEWS

SHANGHAI, China — Wal-Mart has bowed to pressure from the 123 million-member All China Federation of Trade Unions to establish union branches in their Chinese store. Last month, the Federation threatened to sue Wal-Mart and other companies based outside China, if they don’t set up union branches in their China operations. Wal-Mart has agreed to permit branches of the official Communist Party-controlled union in its Chinese stores, if employees requested it. The Chinese market, which already sells $15 billion in goods to Wal-Mart, is regarded as a major expansion market for its retail operations, as well.REGINA, Sask. — The courts are siding with a union in its efforts to unionize a Wal-Mart store in Weyburn, in the southern part of the province. The union claims Wal-Mart has a concerted anti-union program (DUH!) and wants the documents handed over that will prove it. For example, Wal-Mart has threatened to close a store in Jonquiere, Que., if the union gets a foothold. In the latest case, three provincial appeals court judges ordered the documents in question turned over to the Saskatchewan Labor Relations Board. Wal-Mart is saying they may appeal to the Supreme Court of Canada. The world’s largest company has 1.5 million workers worldwide, 65,000 of them in Canada.CALGARY — Sears Canada today opened a Sears Appliance & Mattress store at Westbrook Mall here. It’s the first off-mall Sears store of this kind to open in Western Canada. Sears opened their first Appliance & Mattress store in Stoney Creek, Ont., and will open two more in that province (Burlington and Oshawa) before the end of the year, part of the retailer’s effort to expand in the face of slower growth in new shopping mall development.

OTTAWA — The Forest Products Association of Canada has expressed concern over the impact of the rapid and sustained appreciation of the Canadian dollar on the forest products industry and urged Canadian governments to take steps to ensure Canada remains competitive in international markets. FPAC presented its views during its appearance before the House of Commons Standing Committee on Finance. Canada’s forest products industry annually exports over C$40 billion worth of product to external markets. It is estimated that each penny rise in the exchange rate translates into a $507 million loss in annual sales revenue.

PEOPLE ON THE MOVE

Two more executives have departed Sears Canada, part of the shake-up following the appointment of Brent Hollister as new CEO, following the ouster of Mark Cohen back in August. CIO John Smith has been replaced by Scott Marshall, and position has been expanded to a senior vice-president and operations officer title, reflecting Marshall’s supervision of technology, logistics, call centres and security … Frances Magliocchi, formerly vice-president merchandising who was recently put in charge of business development as well, now replaces Barbara Duffy as senior vice-president of human resources.

U.S. MARKET INDICATORS

Durable goods orders in the U.S. fell by 0.4% in October, says the Commerce Department. Falling demand for computers, cars and civilian aircraft were to blame. The drop would have been greater, save for strong military demand, as non-defence items dropped by 1.5%.

CANADIAN MARKET INDICATORS

Total spending in retail stores advanced for a fifth consecutive month in September, says Statistics Canada, as retailers sold $29.1 billion worth of goods and services, up 0.2% from August, when sales rose 0.7%.Consumers paid 2.3% more in October for the goods and services included in the Consumer Price Index basket than they did a year earlier. This increase follows a 1.8% rise in September 2004. Gasoline prices were the primary reason for the large year-over-year increase. Excluding energy, the CPI was up 1.5% in October.

Wanted: Administration Assistant

Your skills:
detail oriented, deadline driven, flexible
software proficiency: Word, Excel, Outlook
Functionality: Dreamweaver preferred,but not essential
Bilingual English/French a plus!

Reply in confidence to Beverly Allen at 416-489-3396 or email bev@hardlines.ca

We thank all applicants for their interest; however, only those under consideration will be contacted.

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VENDOR REQUIRED

Well established sales agent sourcing major line to represent to building supply retailers, Northern Ontario.

Must have brand recognition and existing sales with opportunity to grow. Reliable support including distribution, product knowledge and customer priority are essential.

Reply in confidence to Dale Harvey,
Harvey Northern Sales
866 200 1560
harveynorthernsales@sympatico.ca

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GENERAL MANAGER – TORONTO (GTA)

A well established distributor of building supplies has an immediate opening for a person to manage several branches in the GTA. The successful candidate will have strong proven leadership skills and significant sales experience in the building supplies business. Ideally this person should have some sales experience in the drywall distribution business. Credit and collections experience would also be a strong asset.

A superior remuneration package is offered including auto allowance, pension plan and medical/dental coverage.

Please reply in confidence to buzz@hardlines.ca with Box 895 in the subject line.

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MARKETING MANAGER

At Stanley, we offer an outstanding array of benefits and a competitive salary that upholds our commitment to excellent employee care. Forward your resume to: dsutlovic@stanleyworks.com

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U.S. REGIONAL SALES DIRECTOR

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Regional Sales Director-US.

Wolf Gugler & Associates Limited, 1000 West Wilshire, Oklahoma City, OK 73116. (405) 848-3006 email: resumes@wolfgugler.com

Web site: www.wolfgugler.com

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AGENTS AND FULL TIME SALES REPS

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WHETHER OR NOT IT GETS PAINFUL IS UP TO YOU.

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RETAIL IS DETAIL. Let Noral Instore, a national service company, handle your service requirements in Canada. Noral serves some of America’s leading manufacturers, managing their lines for Canada’s top hardware retailers, big boxes and mass merchandisers.

Contact Dave Leslie at 905-702-9443, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com

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John Caulfield, Contributing Editor

vol. x, #47, November 22, 2004

IN THIS ISSUE:
• Done deal: Homecare and Tim-BR-Marts unite
• Home Depot & Lowe’s: big boxes make big gains
• Kmart buys Sears
• CanWel aims to keep customers with Sodisco takeover
• Hudson’s Bay combines management teams
• Cologne creates Asian sourcing show
• TruServ U.S. replaces buying team
• Canadian Tire signs Debbie Travis

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“There is the greatest practical benefit in making a few failures early in life.”
— Thomas Huxley (English biologist, 1825-95)

BIG SALES, EARNINGS GAINS FOR BIG BOXES

ATLANTA and MOORESVILLE, N.C. — Home Depot and Lowe’s continued their assault on the home improvement market in the third quarter, racking up sizeable gains in revenue and profit, and projecting more of the same over the following three months and into 2005.For the three months ended October 29, the results for both companies were as follows:

Home Depot		Lowe’s
$18.772B	Revenue	$9.064B
13.1%	Chg. v. 2003	16.2%
$1.371B	net income	$522M
14.8%	Chg. v. 2003	15.5%
4.5%	same-store growth	5.2%
38	store openings	35

Through nine months, Home Depot earned $3.96 billion, an 18.1% increase over the same period a year ago, on sales of $56.282 billion that rose 13.3%. Lowe’s nine-month earnings jumped 14.4% to $1.681 billion, on revenue of $27.914 billion, which represented an 18.3% increase.

Home Depot’s average ticket through nine months increased 7.4% to $55.11 per transaction. In the third quarter, the company’s appliance sales rose 40%, and its services business increased 26% to $957 million. The company also opened its 1,000th Tool Rental Center. Its stores in Mexico achieved double-digit same-store sales growth in the quarter.

Its recent financial performance prompted Home Depot to raise its earnings-per-share growth estimates for the full year to 19-20%, from 14-17%.

Lowe’s expects to open another 56 stores in the fourth quarter, during which its sales are expected to rise by between 16% and 17%. Bob Tillman, Lowe’s CEO, told investors that record housing turnover rates are driving his company’s business. “I’m confident that demographic and psychographic trends in the U.S. will support our growth, and [the] growth of the home improvement industry, for many years to come.”

HOMECARE MERGES WITH TIM-BR-MARTS

CALGARY & MISSISSAUGA, Ont. — After months of speculation, two major Canadian buying groups have finally merged. Members of Western-based Tim-BR-Marts Ltd. and Homecare Building Centres Ltd. in Ontario, both existing members of the umbrella group Matreco, have agreed to become one entity.Homecare, which operates as TIM-BR Mart Ontario, represents 150 stores in Ontario. Its larger, Western counterpart has 153 stores and represents about $1.2 billion in sales, more than double the Ontario group’s sales. The super-sized Tim-BR-Marts Ltd. will represent more than 340 stores with annual purchases exceeding one billion dollars. With sales at retail of nearly $2 billion, the group will rival the country’s largest buying group, Independent Lumber Dealers Co-operative in size.The group will be headquartered in Tim-BR-Marts’ Calgary office and be specifically responsible for negotiating major commodity buying programs. Tim Urquhart, currently president of the Western organization, will remain at the helm of the combined group. Don Nash, currently president of Homecare, will remain in Mississauga, Ont., operating out of a pared down office as executive vice-president. The Ontario regional office will be responsible for negotiating the Ontario vendor programs and all of the TIM-BR MART retail marketing programs.

The new group will include Commercial Independent Dealers Inc. (CID), the commercial buying group division of Homecare in Ontario.

Anticipated benefits of the consolidation include increased buying power, lower overhead costs, and stronger support for the TIM-BR MART retail and brand, which is widespread in Ontario, but slowly gaining ground across Canada.

KMART AND SEARS TO MERGE

HOFFMAN ESTATES, Ill., and TROY, Mich. — Kmart Holding Corp., the recovering discount chain, is merging with Sears, Roebuck & Co., the struggling department store retailer, in a deal valued at more than $11 billion.The combined company, to be known as Sears Holding Corp., would be the third-largest retailer, in sales, in the United States (behind Wal-Mart, Home Depot and Target), with $55 billion in annual revenue, 2,350 full-line stores and 1,100 specialty stores. Both chains will continue to operate under their respective brands, although the corporation’s headquarters will be in Hoffman Estates, where Sears is headquartered. Kmart will maintain a “significant presence” in Troy, Mich., its headquarters city. The merger is expected to close by March 2005.The organizational chart may be the most intriguing element of this deal. Edward Lampert, Kmart’s chairman, will be the chairman of Sears Holdings’ 10-person board, which will include seven members from Kmart, and three from Sears. Alan Lacy, Sears’ chairman and CEO, will be vice chairman and CEO of the newly formed company. Aylwin Lewis, Kmart’s president and CEO, will become president of Sears Holdings and CEO of Kmart and Sears Retail. Sears’ executive vp and CFO, Glenn Richter, will hold similar positions at Sears Holdings. William Crowley, Kmart’s senior vp-finance, will be executive vice-president, finance and integration of Sears Holdings.

Both companies’ boards have approved this agreement, which calls for Kmart shareholders to receive one share of new Sears Holdings stock for each Kmart share. Sears’ shareholders can choose $50 in cash or half a share of Sears Holdings stock. (That’s the portion of the deal valued at $11 billion, representing a 10% premium over the stock price’s close on Tuesday, November 16.)

In a prepared statement, Lacy said this merger would “greatly strengthen both the Sears and Kmart franchises by accelerating the Sears off-mall growth strategy and enhancing the brand portfolio of both companies. This will clearly be a win for both companies’ customers, while significantly enhancing value for all shareholders. We will have a total combined store base of nearly 3,500 stores and the leading service organization in the industry, capable of a major expansion to serve the needs of existing Kmart and Sears customers.” Of course, it remains to be seen how many of these stores Sears Holding keeps open or closes to shore up its profitability.

Kmart, which went into bankruptcy in 2002, recently posted its fourth consecutive quarter of net earnings gains. As part of its restructuring strategy — which saw the company close nearly 600 stores and lay off 57,000 employees — Kmart recently agreed to sell 50 stores to Sears for $575 million. Since emerging from Chapter 11 in May 2003, its stock price has risen to $101 per share, from $15. Sears, on the other hand, reported lower sales and an $867 million net loss through the first nine months of 2004.

Company officials expect the merger eventually to reduce the new company’s operating costs by $500 million per year. The companies expect to realize about $200 million in incremental gross margin from “revenue synergies” by capitalizing on cross-selling opportunities between Kmart and Sears’ proprietary brands and by converting a “substantial number” of off-mall Kmart stores to the Sears brand in addition to the 50 Kmart stores Sears acquired earlier this year.

The merger will not affect agreements to carry home and fashion lines including Martha Stewart Everyday, Lands’ End and Sesame Street, the companies said.

WHO’S KMART’S DADDY?

Under the merged operations of Kmart and Sears, Edward Lampert, the chairman of Kmart, will be the chairman of Sears Holdings. Lampert, 42, is a Yale graduate and former Goldman Sachs executive, who at the age of 26 started his own hedge fund. He also owned part of the Texas Rangers baseball team when George W. Bush was part-owner.Lampert’s company, ESL Investments, owns 15% of Sears’ stock. He’s also Kmart’s majority shareholder, having gained control while Kmart was in Chapter 11. Ranked 142nd on Forbes’ list of richest Americans, he has a net worth of $1.7 billion. In January 2003, he was kidnapped in Greenwich, Conn., and held hostage for a day.

CANWEL HOPES TO KEEP CUSTOMERS AFTER SODISCO TAKEOVER

VANCOUVER — The recently announced takeover of Sodisco-Howden Group by CanWel is good news for Sodisco-Howden and its shareholders. However, the deal is expected to have a potentially negative impact on CanWel’s dealings with existing customers — some which compete directly with Sodisco-Howden.Tom Donaldson, president of CanWel, says that in an industry that has been beset with consolidation among both manufacturers and retailers in recent years, CanWel wants to be positioned as a consolidator on the distributor side, hinting at the possibility of more acquisitions.Though he wouldn’t comment on just how the two businesses will be integrated until after the deal closes at year’s end, he hopes to keep the two businesses distinct enough to enable CanWel to continue serving its wide range of retail customers across Canada. “Hopefully, the CanWel value proposition will be very strong for anyone in the retail home improvement industry in Canada.”

Jos Wintermans, president and CEO of Sodisco-Howden, agrees. “It will be business as usual at Sodisco-Howden under the new organization,” he says, adding that “It’s a very good strategic move for CanWel and for us.”

So far, no changes have occurred. Home Hardware Stores is one of CanWel’s largest customers, doing close to $100 million per year to supply its 400-plus building centers. Asked if that relationship will continue, Walter Hachborn, president of Home Hardware, says, “Right now, it’s blowing in the wind. That’s like saying, ‘no comment’.” However, he adds, “We imagine we’ll continue to do some business with them.” But he wants to let the situation “settle down” before his company makes any firm decisions.

Rona is estimated to do similar volumes with CanWel, and that company’s relationship with CanWel is also under scrutiny. However, according to company president and CEO Robert Dutton, no changes are planned, at least until after the Sodisco-Howden purchase closes.

The status quo continues at Home Depot Canada, as well. “We don’t do a lot of business with CanWel, but there’s no change in the relationship there,” says Nick Cowling, a spokesperson for Home Depot Canada.

The CanWel offer has been approved unanimously by Sodisco-Howden’s board of directors. The CanWel Offer is open for acceptance until December 21, 2004, unless extended or withdrawn by CanWel.

TRUSERV IN U.S. ANNOUNCES
MERCHANDISING RE-ORGANIZATION

CHICAGO — A new order is emerging at TruServ Corp., only days after the forced resignation of its former CEO, Pamela Forbes Lieberman. Under the direction of senior vice-president and chief merchandising officer Steve Mahurin, the co-op wholesaler announced last week that it is re-organizing its merchandising and supply chain operations. The re-organization, which includes replacing most of the existing buying team, marks the latest move to re-position TruServ as a rock-solid wholesaler following recent years of financial turmoil.“The merchandising department has been realigned as the last piece of our efforts to get this company back on track and leap-frog the competition to become ‘first in class’ among co-ops,” says Mahurin.Mahurin joined TruServ back in the spring, coming over from Home Depot. Since then, he’s wasted no time bringing the mindset and best practices of his big box experience to bear, leading an overhaul of the product line review process and assessing the organizational structure of the company’s merchandising and supply chain organization. “The co-op channel has been paying too much for product, so we’re streamlining assortments and lowering costs to help the members,” he says.

With a new sourcing office of its own in the Far East (see issue #42, October 18/04.—MM), Mahurin is reducing the overall number of merchants, and beefing up support for the buying team with a stronger merchandising staff that will be responsible for day-to-day administrative duties. Some 22 positions are in the process of being replaced. He intends to raise the overall level of sophistication of TruServ’s merchandising team, even as he trims it to eight, plus support staff. These will include hires from other retail sectors as well as within the industry, including two promotions — so far — from within, which he declined to name as of yet.

“The end result will be a smaller group of merchants with the experience to make decisions and implement them quickly,” says Mahurin.

KOELNMESSE LAUNCHES ASIAN SOURCING SHOW

COLOGNE, Germany — When Koelnmesse GmbH switched two of its shows to biennial frequency, the giant trade show company sought a way to fill the off-years with an event that would serve the industry — and generate revenue. The result is the first-ever Asia-Pacific Sourcing show.Practical World, the International Hardware Fair, is the largest show of its kind in the world. However, it announced this past year it will only be offered every other year. There will be no Practical World show in 2005. A similar scenario has been established for gafa, the garden and outdoor show that has also switched to every other year. This new Asian sourcing event will replace those two shows in the off years. Spoga, the sporting goods, camping and lifestyle show, which was historically held concurrently with gafa, will remain an annual event, while offering an expanded selection of products that had been part of gafa in the past.Practical World has been showcasing a growing contingent of Asian suppliers in recent years, so the new show is a logical evolution. It will feature Asian manufacturers of tools, locks and fittings, builders’ products and DIY supplies, gardening equipment and accessories, barbecues, camping and sports equipment, interior décor, and seasonal items. (For more info on Asia Pacific Sourcing, click here.)

COMPANIES IN THE NEWS

TORONTO — Hudson’s Bay Co. is reorganizing its leadership team, combining the merchandise, marketing and store operations of its Home Outfitters, Zellers and Bay divisions under one Hbc operating structure. The move takes effect February 1, 2005. The Bay and Zellers will continue to operate with its own brands and market position, but they’ll be supported and merchandised by a single, common and integrated structure. Under this new structure, Marc Chouinard, currently president and COO, the Bay and Home Outfitters, will become president, Hbc Merchandising Group, with responsibility for merchandise and marketing. Thomas Haig, currently president and COO, Zellers, will also move into a new role as president, Hbc Stores and Specialty Divisions.BENTONVILLE, Ark. — Wal-Mart’s earnings were up 12.7% the third quarter, to $2.29 billion, from $2.03 billion a year earlier. Sales reached $68.52 billion, up 9.5% from $62.48 billion a year earlier. Same-store sales were up by 1.7% across Wal-Mart’s U.S. divisions. The Wal-Mart division’s same-store sales were up 1.3%; Sam’s Club was up 4.0%. The international division remains an area of rapid growth for Wal-Mart, with sales increasing by 18.0%. Year to date, sales rose to $203.01 billion from $181.84 billion a year ago. Earnings hit $7.10 billion, up from $6.33 billion.TORONTO — Television design maven Debbie Travis has been signed by Canadian Tire to front a new eponymous line of home products, starting with paint, which will be launched next spring. The Debbie Travis branded collection “will combine inspiring styles and designs with Debbie Travis’ signature approach to providing simple, stylish and imaginative design solutions,” according to a prepared release. The deal reflects Canadian Tire’s focus on differentiating itself with exclusive products and brands and marks a move to dominate in the fast-growing home décor business.

SAN FRANCISCO — eBay, the online auction service, is going after holiday sales more aggressively, by launching a shopping catalogue of its own. The 32-page catalogue will be mailed today to millions of eBay customers, representing the users of the services of some 125 million eBay online sellers.

DORTMUND, Germany — Tired of discos? Go to Wal-Mart to find love — and pick up a jug of milk cheap. That’s what’s happening at one store in Germany every Friday evening, where Wal-Mart workers will greet you with a glass of sparkling wine and fresh oysters. Get your picture taken and added to a “singles bulletin board.” Then look for love — and low prices.

MINNEAPOLIS — Waters Instruments Inc. had first-quarter net sales from continuing operations of $6.7 million, comparable to the same quarter a year ago. Net income from continuing operations reached $374,000, down from $466,000.

PEOPLE ON THE MOVE

David Beck has left Tim-BR-Marts Ltd., where he had served as head of store planning, to join Langtry Industries. He’s now western sales manager for Langtry’s Lily Fasteners division, stationed in New Westminster, B.C. (800-665-6605)Lowe’s has promoted Jim Frasso to senior vice-president store operations for its Southeast division. Frasso previously served as regional vice-president of the company’s Florida region. He joined Lowe’s in 1994 and has more than 28 years of retail experience. He replaces Greg Wessling, who will retire at the end of 2004, completing a 30-year career with Lowe’s.Guardian Building Products Distribution Canada has announces the appointment of Ian Morrison as Ontario sales manager. With more than seven years of industry experience, he will complement Guardian’s existing sales team.

U.S. MARKET INDICATORS

Retail sales in October were up by only 0.2%, reports the Commerce Department. That follows a much healthier increase in September of 1.6%. Slower sales in the automotive sector were the main reason for October’s low rise. Excluding vehicle sales, retail sales were up by 0.9%. However, building supply and garden stores were among the sectors reporting lower sales.Housing starts in October were 2,027,000, up 6.4% from September and up 2.2% from October 2003, according to the Census Bureau. The value of building permits reached 1,984,000, down 0.7% from last month and down 1.5% from the same month one year ago.

CANADIAN MARKET INDICATORS

The average price of a resale home in Canada in October was $252,619, up 8.4% over the same month last year, says a report by the Canadian Real Estate Association. Some markets are expected to cool next year, however, including Toronto’s, as the average cost of a home is expected to rise at a 3.5% rate, just ahead of inflation. The average price of a resale home in Toronto by the end of next year is forecast to reach $329,000, up from a forecast $318,000 for the end of 2004

NOTED…

ForestLeadership will host its 2005 Conference, Partnerships towards Sustainability, March 1-3 in Toronto. The event will feature plenary sessions, breakouts, the ForestLeadership Awards Gala Dinner, an exhibit area and a spouse program. For more info, www.ForestLeadership.com.

OVERHEARD…

“The combination of Kmart and Sears is extremely compelling for our customers, associates and shareholders as it will create a powerful leader in the retail industry, with greatly expanded points of distribution, leading proprietary home and apparel brands and significant opportunities for improved scale and operating efficiencies. The merger will enable us to manage the businesses of Sears and Kmart to produce a higher return than either company could achieve on its own.” — Edward Lampert, Kmart’s chairman, in a prepared release. He will be the chairman of Sears Holdings under the merger of the two retail companies.

SALES REP WANTED

Well established sales agent sourcing major line to represent to building supply retailers, Northern Ontario.

Must have brand recognition and existing sales with opportunity to grow. Reliable support including distribution, product knowledge and customer priority are essential.

Reply in confidence to Dale Harvey,
Harvey Northern Sales
866 200 1560
harveynorthernsales@sympatico.ca

**********************************************************************************

GENERAL MANAGER – TORONTO (GTA)

A superior remuneration package is offered including auto allowance, pension plan and medical/dental coverage.

Please reply in confidence to buzz@hardlines.ca with Box 895 in the subject line.

**********************************************************************************

BRANCH MANAGER–DURHAM REGION

Our Client is proudly Canadian, and a leading innovator and manufacturer of a variety of exterior home beautification and protection products. Growth has initiated the start-up of a Durham facility. An energetic Branch Manager is required to take on the challenges of developing a regional business and achieving branch sales objectives. You’ll be responsible for sales, distribution and people…and what better than to build a business with other people’s money?

The ideal candidate will have a solid knowledge of the Installer, Remodeler and Retail marketplace, which includes lumberyards and buying groups. Building products background and demonstrated sales and supervisory successes within the industry is ideal. Strong Customer presentation skills and computer literacy are essential and you thrive managing in a team environment. Competitive compensation and benefits package and the opportunity for career advancement are in turn offered. To apply, please contact Wolf Gugler in strict confidence at (416) 386-1719, or email your resume to him at resumes@wolfgugler.com, quoting Durham Branch Manager. You can also apply online at www.wolfgugler.com.

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U.S. REGIONAL SALES DIRECTOR

To inquire further about this opportunity, please contact Wolf Gugler in strict confidence, quoting Regional Sales Director-US.

Wolf Gugler & Associates Limited, 1000 West Wilshire, Oklahoma City, OK 73116. (405) 848-3006 email: resumes@wolfgugler.com

Web site: www.wolfgugler.com

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NATIONAL ACCOUNTS MANAGER

**********************************************************************************
AGENTS AND FULL TIME SALES REPS

**********************************************************************************
SERVICES OFFERED

WHETHER OR NOT IT GETS PAINFUL IS UP TO YOU.

**********************************************************************************

Contact Dave Leslie at 905-702-9443, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com

**********************************************************************************
MARKETPLACE

NORTH AMERICA’S “PREMIER MANUFACTURER”
of Propane Cylinders

NOW available in Canada

(5 lb. through 420 lb.
propane cylinders available)

. Recognized Market Leader .
. Unsurpassed Quality .
. Reliable Delivery .
. Outstanding Customer Service .

ONLY $2.50 PER WORD FOR THREE WEEKS IN THE CLASSIFIEDS.
TO PLACE YOUR AD, CALL PHYLLIS NOWELL AT 416-489-3396 OR EMAIL: phyllis@hardlines.ca

Hardlines is published weekly (except monthly in December and August)
by McLARNEYCOM
542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7
ï¿½ 2004 by Michael McLarney.
HARDLINES™ the electronic newsletter hardlines.ca
Phone: 416.489.3396; Fax: 416.489.6154
Michael McLarney, Editor & Publisher: mike@hardlines.ca
Beverly Allen, Director of Sales & Marketing: bev@hardlines.ca
Nancy Wright, Circulation Manager: nancy@hardlines.ca
Phyllis Nowell, Sales Manager: phyllis@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: $229 (Canadian subscribers add $16.03 GST = $245.03 per year/ GST #13987 0398 RT). Secondary subscriptions at the same office are only $36 (Canadian subscribers add $2.52 GST = $38.52). Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to Hardlines/McLarneyCom.

Nov15_04

John Caulfield, Contributing Editor

vol. x, #46, November 15, 2004

IN THIS ISSUE:
• Retail association closes its doors
• Sodisco-Howden gets friendly bid from CanWel
• Rona profits soar in 3Q
• Ace’s results measure up
• Lowe’s lends helping hand at Christmas

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“Pessimist: one who, when he has the choice of two evils, chooses both.”
— Oscar Wilde

CRHA CALLS IT QUITS, BUT SHOW MUST GO ON

MISSISSAUGA, Ont. — In a surprise announcement last week, the Canadian Retail Hardware Association sent out a release saying it has ceased operations, after 98 years serving independent hardware dealers. The Canadian Hardware and Building Materials Show, once owned and operated by the CRHA, will continue — with a new name and venue — under the auspices of trade show organizer Messe Frankfurt Inc.Talking on his cell phone, former head of the CRHA, Bob Elliott, said, “There’s still a need for an organization like this. We just ran out of time to put it together.”

The CRHA had historically relied on the annual trade show for the bulk of its revenue. In fact, in its heyday in the early ’80s, CHS was drawing more than 700 exhibitors and earning the association in excess of $800,000 in profit. But consolidation within the retail home improvement industry caused decline in overall buying influences, sending attendance at the show into a spiral over the past several years.

In 2003, a partner in the show, the Lumber and Building Materials Dealers Association of Ontario, pulled out of CHS and started a show of its own in February 2004, just a week after CHS. The split led to further deterioration of the show, with only about 150 exhibitors on hand. Many expected it to be the last Canadian Hardware Show, until on the last day, CRHA announced the signing of a letter of intent with Messe Frankfurt Inc., an international trade show company that organizes some 100 shows worldwide. Under the planned new partnership, the show was renamed, new partners were solicited, and a new venue booked.

Unfortunately for the CRHA, the deal with Messe Frankfurt never got past the signing of a letter of intent to work together, and the CRHA’s bank couldn’t wait any longer. “We were working on an agreement to close the letter of intent and Frankfurt didn’t sign fast enough to provide the cash flow,” says Elliott.

Meanwhile, however, the German organization did begin establishing itself here. It paid the wage for CRHA’s trade show exhibitor salesperson, Lynn Cronin, invested in some marketing of the show, and paid the deposit on the new venue — the Toronto Congress Centre. At the same time, CHS was renamed H²X Canada — Hardware and Home Improvement Expo + Conference. By the time the CRHA was forced to close its doors, all vestiges of the Canadian Hardware and Building Materials Show were gone, leaving CRHA in no position to negotiate any rights to the former Canadian Hardware Show, even under the letter of agreement. “They paid us very little for that,” Elliott says.

NEW OWNERS WILL CONTINUE CANADIAN SHOW

ATLANTA — With the demise of the Canadian Retail Hardware Association, a tentative new partner in that association’s trade show will go it alone. Messe Frankfurt Inc., whose North American headquarters are here, will mount the renamed show, H²X Canada — Hardware and Home Improvement Expo + Conference, February 19-22, 2005 at the Toronto Congress Centre.“We were certainly sad to see an association that’s been around [almost] 100 years disappear, says Roland Bleinroth, president of Messe Frankfurt North America. “It was as surprising for me as it was for you.”

With CRHA, his organization had attempted to re-invent the ailing show with a new name. It also recruited the Paint and Decorators Association as a stakeholder, which will have a décor show of its own concurrent with H²X. “This is an attempt at renewal and to do something different than before,” Bleinroth explains. “But it’s not been received as enthusiastically as I’d hoped,” he admits, with exhibitor signups falling short of expectations. He’s further concerned about response from the industry to the new show, now that it will have no Canadian partner.

Nonetheless, Bleinroth remains positive, and says he’s committed to the new show in 2005, which has 46 exhibitors signed up so far. The décor side of the event has another 23.

SODISCO-HOWDEN BOARD APPROVES OFFER FROM CANWEL

MONTREAL — Sodisco-Howden Group has approved an offer from national building materials distributor CanWel Building Materials for the purchase of all outstanding Sodisco-Howden shares. At a price of $3.25 per share, the offer represents a premium of 65 cents, or 25% to the closing price of $2.60 for the shares of Sodisco-Howden at the end of trading on November 9.The deal was fully supported by Sodisco-Howden’s board of directors. Currently, a major investor is Participations Paribas, headquartered in France. The takeover by CanWel provides the needed buyer for such an exit, and rewards remaining Sodisco-Howden shareholders for their patience as Bay Street failed to value the stock according to the company’s rising fortunes.

CanWel’s all-cash offer is worth a total of $65.21 million, based on the fully diluted value of the available shares. CanWel went public last spring, raising a war chest of $43.5 million. In addition, a new line of credit worth up to $200 million was structured on September 30. Combine that with a healthy year to date (third-quarter earnings reached $3.8 million on sales of $179 million), and Tom Donaldson, president and CEO of CanWel is confident of that the investment will be a sound one. “We’re very comfortable with the debt load that this kind acquisition will entail,” he says.

As Canada’s only publicly held hardware wholesaler, independent of any co-op structure, Sodisco-Howden remains something of an industry anomaly, one that has attracted it a lot of negative press. However, it’s enjoyed more than a year of profitable results — despite new competitors — and fill rates that consistently exceed 95%. At its fall dealer market, held two weeks ago, aggressive marketing plans were announced to support Sodisco-Howden’s two licensed banners, Pro and Ace.

“What attracted us to Sodisco-Howden was the quality of the people and the quality of the organization,” says Donaldson.

CanWel had 2003 sales of $540 million, while Sodisco-Howden’s wholesale sales reached $485.4 million in 2004. The deal is expected to close by the end of the year.

BIG BOXES MAKE BIG GAINS IN HOME IMPROVEMENT SALES

TORONTO — Since 2002, the sales of hardware, home improvement and renovation products has grown by more than 8% per year.Big boxes, including Home Depot, Rona Home and Garden, and Kent Superstore, have grown from zero in 1992 to more than one-fifth of the industry in 2003. Last year alone, big box sales accelerated at 12.3%, well above the industry average of 8.2%.

When Home Depot came to Canada just over a decade ago, they promised to put as many as 50 of their large-surface warehouse stores across Canada, and nobody in the industry could imagine how the market could support that many. Yet, by next year, Canada will have more than 200 big boxes — and by 2006 they’ll represent one-quarter of this market.

While new formats grow, more traditional store types are facing tougher competition than ever before. Home centres and building centres have seen their market share erode only slightly, but the biggest losers have been smaller hardware stores. Their share of the retail home improvement market has dropped dramatically over the past five years.

(All this data is drawn from “Retail formats battle it out: market share by store type,” a special industry report that appears in the latest issue of Hardlines Quarterly Report. HQR is our sister publication, offering analysis and research on issues affecting the retail home improvement industry today. Call us for details or click here for more info —Michael)

LOWE’S BRINGS CHRISTMAS CHEER TO HABITAT

MOORESVILLE, N.C. — Lowe’s Cos. has recently launched an in-store promotion whose goal is to help raise funds, through customer purchases, for Habitat for Humanity International‘s ongoing home-building activities.Between November 7 and December 12, Lowe’s stores will have “Homes for the Holidays” displays at each checkout counter. Customers can make a donation in any amount to Habitat, and the clerk will add the donation to the customer’s receipt. Lowe’s will collect the gifts and forward them to Habitat for Humanity International, which will use the donations to build houses in partnership with its affiliates in 100 countries throughout the world.

Lowe’s, the industry’s second-largest dealer, is the national underwriter of Habitat’s Women Build program. The program encourages and empowers women to get involved in the construction of Habitat houses. Women crews have built more than 350 Habitat houses in the United States and the number continues to grow. This year, Lowe’s donations helped fund and build 131 Habitat for Humanity houses, including 116 Women Build homes.

CANADIAN TIRE PROFITS WAY UP IN 3Q

TORONTO — Canadian Tire Corp. has posted a healthy third quarter, with net earnings of $69.4 million, an increase of 17.2% over $59.2 million in 2003. Even excluding non-operating gains and losses, net earnings were $66.2 million, an increase of 14.2%.For the first nine months, net earnings were $191.1 million, up 23.1% from $155.2 million in 2003. Excluding non-operating gains, net earnings were $178.3 million, up 18.1% from $150.9 million last year.

In the Canadian Tire Retail business, sales by Canadian Tire dealers were up by 3.9% to $1.62 billion. Same-store sales increased by 1.2% during the quarter. Pre-tax earnings for the quarter were $1.5 million from last year’s $4.2 million. The company attributed the positive results to strong customer response to promotions and growth in the tools, car care and accessories, and outdoor living categories, which include pool equipment and patio furniture. Some seasonal categories, on the other hand experienced “softness.”

During the quarter, CTR opened two new Concept 20/20 stores, bringing the total number of Concept 20/20 stores to 18. A total of 321 of CTR’s 455 stores are now new-format stores, including the Concept 20/20 stores.

RONA’S 3Q EARNINGS JUMP

BOUCHERVILLE, Que. — Rona inc. reported third-quarter net earnings of $43.5 million, up 80.7% over the same period last year, due, the company says, to higher same-store sales, the expansion of the corporate and franchised store network and the recruitment of affiliated stores. The company is also enjoying higher operational efficiency, in part thanks to rationalization of its acquisition of Réno-Dépôt in 2003.Rona’s consolidated net sales include sales generated by its distribution centers and corporate stores, as well as Rona’s share of sales and royalties from franchise operations. Consolidated net sales for the quarter reached $1.01 million, a 35.4% increase over last year. However, as Rona’s store base grows, more and more net sales are being generated at the retail level. Since early 2004, corporate and franchised store sales have accounted for 70.1% of Rona’s total net sales, compared with 61.6% for the same year-ago period.

Retail sales for those corporate and franchised stores jumped 46.1% to $724.0 million in the third quarter. Part of the growth came from the integration of the 20 Réno-Dépôt and The Building Box stores, whose results have been included in Rona’s results since August 2003. The Building Box stores in Ontario have been doing business under the Rona Home & Garden banner since April 2004.

During the 3Q period, same-store sales increased 9.8%.

STROBER ACQUIRES MOORE’S LUMBER

BROOKLYN, N.Y. — The Strober Organization deepened its market penetration into the Southeastern United States last week when it finalized its agreement to acquire Moore’s Lumber and Building Supplies, a pro dealer with 19 yards in six states that generated $185.3 million in sales in 2003.Strober did not disclose the terms of the deal, which a company spokesperson, Brenda Mickiewicz, said had been in negotiation for six months. Fred Marino, Strober’s CEO, was unavailable for comment, as was Jim Cavanaugh, president of Hope Lumber & Supply, the Oklahoma-based pro dealer whose parent company, Rooney Holdings, had acquired Moore’s in 1997 in a joint venture with Watermill Ventures, an investment firm based in Waltham, Mass.

Fifteen of Moore’s stores, located in Virginia, Maryland, Ohio, Tennessee, North Carolina and West Virginia, will now be managed by The Contractor Yard, a 26-yard division of Strober based in Charlotte, N.C. Strober had acquired the Contractor Yard chain from Lowe’s Cos. in January 2004. Ben Phillips, The Contractor Yard’s CEO, was unavailable for comment, and Hardlines could not determine at press time how Moore’s current senior-level management would be integrated into this management structure. Strober’s Mickiewicz says that one Moore’s vp, Cal Saunders, is staying on with The Contractor Yard in the new position of vp-administration and human resources.

Moore’s other four stores, all located in New York, will report to Strober’s CEO Bob Gaites.

Strober now operates 90 stores in 15 states. Its projected sales for 2004 are $1.1 billion, which would make this company the 16^th-largest home improvement retailer in the United States. And it appears that Strober isn’t through expanding, either. In a prepared statement, Marino says his company “has aggressive growth objectives, and this acquisition further positions the company to achieve these goals.”

COMPANIES IN THE NEWS

OAK BROOK, Ill. — Co-op hardware wholesaler Ace Hardware Corp. watched sales to its dealer members climb by 5.5% in the third quarter. A 5.1% increase in domestic sales, together with a whopping 18.4% surge in international sales, pushed Ace’s activity through its warehouse to $811.2 million, up from $768.8 million in the third quarter of 2003. And even though third-quarter earnings were flat, they were in line with company expectations, due to increased investments at the retail level. Year-to-date sales were $2.47 billion, an increase of 6.4% over sales of $2.32 billion for the nine-month period in 2003. Earnings year-to-date were up 5.9%, to $86.7 million. The company expects to exceed the $100 million in annual earnings it achieved in 2003. During the third quarter, 38 new Ace stores were opened.Ikea is making a foray into pet accessories. According to U.K.-based DIY Week, products will include baskets, bowls, leads and animal toys. The retailer is currently testing the program in 20 of its stores worldwide.

TROY, Mich. — Kmart Holding Corp. has announced the launch of a new credit card. Called Kmart Rewards, the rewards program offers cash rebates on purchases. It has no annual fee, and offers $10 off the first card purchase of $50 or more and a $10 reward for every $250 in account purchases thereafter. HSBC North America, through its retail services division, is managing Kmart’s new credit card program.

OAK BROOK, Ill. — Ace Hardware Corp. has gotten top ranking among hardware and lumber co-operatives in the National Cooperative Bank‘s latest list of America’s 100 highest revenue-earning co-ops. Ace placed seventh overall, up from sixth spot in 2002 (rankings are based on 2003 revenues). Six hardware and LBM businesses made the list, accounting for a total of $8.9 billion in total revenues.

NEW YORK — Target Corp. posted quarterly revenue of $10.9 billion, up 11% from $9.8 billion a year earlier, driven by a 4.5% increase in same-store sales. Quarterly profit rose to $537 million, compared with $302 million a year earlier. This included a $203 million gain on the sale of its Mervyn’s retail subsidiary, with 257 stores and four distribution centers, to an investment group and its credit card receivables for a total of about $1.65 billion.

PEOPLE ON THE MOVE

Brad West has joined Jeld-Wen of Canada Ltd. as corporate sales manager. He oversees Ontario and Eastern Canada, working from his office in Cobourg, Ont. West was formerly a buyer with Castle Building Centres Group … Neil Ash operates as sales manager for Western Canada. He was previously Jeld-Wen’s general manager of distribution.

U.S. MARKET INDICATORS

Retail sales for October were $342.1 billion, up 0.2% from September and up 7.6% from October 2003, according to the Commerce Department. Excluding automobiles, retail sales in October were $264.1 billion, up 0.9% from last month and up 8.5% from one year ago.Wholesale inventories in September were $319.3 billion, up 0.5% from August and up 9.8% from one year ago, says the Commerce Department. Sales were $276.9 billion, up 0.6% from last month and up 14.5% from September 2003.

CANADIAN MARKET INDICATORS

Housing starts were down in October, reports CMHC, dropping from 237,900 to 225,000 at a seasonally adjusted rate in October. October urban starts decreased 4.0% to a seasonally adjusted annual rate of 196,500 units, with a slowdown in both single and multi-family sectors. Urban single detached starts fell by 4.2% to 102,200 in October, while urban multiple starts decreased 3.8% to 94,300. The estimated number of seasonally adjusted annualized starts in Canada’s rural areas was 28,500 units.Prices in Canada’s new housing market continued to rise in September in response to healthy demand from home buyers, says Stats Canada. According to the New Housing Price Index, the price of new homes rose 5.8% in September, compared with the same month last year. This was down slightly from the 6.0% annual increases registered in July and August and the 6.2% increase registered in June.

NOTED…

The U.S. Consulate General in Toronto invites Hardlines subscribers (including manufacturers, agents, distributors, builders, developers) to join an official trade delegation from Canada that’s going to the International Builder’s Show in Orlando, Fla., January 13-16, 2005. As a member of this delegation, you will enjoy savings on your registration fees and earn VIP status that gives you assistance during your stay from a member of the U.S. Consulate staff and representatives of the U.S. Department of Commerce. For registration and fee information visit: http://www.buyusa.gov/canada/en/309.html

OVERHEARD…

“The driving factor in today’s shopping experience is what’s good for kids.” — Bill Morrison, president and CEO of TruServ Canada, underscores the importance of the entire family — and especially children — in buying decisions. He was speaking recently at a breakfast seminar hosted by the Canadian Hardware and Housewares Manufacturers Association.

SALES REP WANTED

Well established sales agent sourcing major line to represent to building supply retailers, Northern Ontario.

Must have brand recognition and existing sales with opportunity to grow. Reliable support including distribution, product knowledge and customer priority are essential.

Reply in confidence to Dale Harvey,
Harvey Northern Sales
866 200 1560
harveynorthernsales@sympatico.ca

**********************************************************************************

GENERAL MANAGER – TORONTO (GTA)

A superior remuneration package is offered including auto allowance, pension plan and medical/dental coverage.

Please reply in confidence to buzz@hardlines.ca with Box 895 in the subject line.

**********************************************************************************

BRANCH MANAGER–DURHAM REGION

**********************************************************************************

DISTRIBUTORS SOUGHT FOR AUSTRALIAN PRODUCTS:

The Australian Trade Commission is inviting interest from Canadian importers/distributors and retailers for the following innovative products:

Patented foldable ironing board (3 models)
Plastic paint roller cleaner and “twist tie” organiser
Portable foldable clothes lines for in-doors and outdoors
Filters for vents/registers (represented by Electrolux Australia)

For further information please contact Fareeda Chand 416-323-1418 or email fareeda.chand@austrade.gov.au

**********************************************************************************
ONTARIO SALES MANAGER

New Canadian distribution company is seeking a proven sales manager for the Ontario Region. Candidates must have a minimum of five years management experience. Competitive salary, vehicle, benefits and the opportunity for advancement apply. Please forward resumes including expected remuneration to buzz@hardlines.ca with the subject line P.O. Box 259

**********************************************************************************
SERVICES OFFERED

WHETHER OR NOT IT GETS PAINFUL IS UP TO YOU.

**********************************************************************************

Contact Dave Leslie at 905-702-9443, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com

**********************************************************************************
MARKETPLACE

NORTH AMERICA’S “PREMIER MANUFACTURER”
of Propane Cylinders

NOW available in Canada

(5 lb. through 420 lb.
propane cylinders available)

. Recognized Market Leader .
. Unsurpassed Quality .
. Reliable Delivery .
. Outstanding Customer Service .

ONLY $2.50 PER WORD FOR THREE WEEKS IN THE CLASSIFIEDS.
TO PLACE YOUR AD, CALL PHYLLIS NOWELL AT 416-489-3396 OR EMAIL: phyllis@hardlines.ca

Hardlines is published weekly (except monthly in December and August)
by McLARNEYCOM
542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7
ï¿½ 2004 by Michael McLarney.
HARDLINES™ the electronic newsletter hardlines.ca
Phone: 416.489.3396; Fax: 416.489.6154
Michael McLarney, Editor & Publisher: mike@hardlines.ca
Beverly Allen, Director of Sales & Marketing: bev@hardlines.ca
Nancy Wright, Circulation Manager: nancy@hardlines.ca
Phyllis Nowell, Sales Manager: phyllis@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!
______________________________________________
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Nov8_04

John Caulfield, Contributing Editor

vol. x, #45, November 8, 2004

IN THIS ISSUE:
• TruServ’s Lieberman resigns unexpectedly
• Sodisco-Howden begins defining its banners
• Masco’s big box sales slip
• TruServ Canada moves rural format West
• Kingfisher steps up Eastern European expansion

* * * * * *
NOTE: Dollar amounts are stated in the currency of the country from which the story originates.
— Michael McLarney, Editor & Publisher

* * * * * *

“Every morning, I get up and look through the Forbes list of the richest people in America.
If I’m not there, I go to work.” — Robert Orben (American humorist, 1927-)

TRUSERV TURNAROUND QUEEN RESIGNS SUDDENLY

CHICAGO — Pamela Forbes Lieberman has resigned as president and CEO of TruServ Corp., the industry’s third-largest dealer-owned buying group. The company’s board of directors requested her resignation.In a prepared statement that appeared on TruServ’s web site November 2, the company said Thomas Hanemann, 64, a board member and the former president of the AutoZone chain, would step in as interim CEO, and that TruServ’s chairman, Brian Ableidinger, would oversee the transition with the goal of choosing a new chief executive by early 2005.

“Now is the right time for new leadership with greater operational experience necessary to implement the company’s strategic plan and take advantage of the opportunities to grow sales, add members and become more competitive,” said Ableidinger in the prepared statement. The company did not provide any further explanation of this move.

Lieberman’s resignation came only one day after the co-op reported a slight decline, to $474.5 million, in its wholesale sales for the quarter ended October 2, during which TruServ incurred an earnings loss of $9.8 million, compared with a $14.3 million gain for the same quarter in 2003. Through the first nine months of its fiscal year, TruServ’s revenue was up 3% to $1.55 billion, and its earnings — which the co-op refers to as its net margin — was $32.4 million, versus $11 million for the same period a year ago.

In that period, the co-op reduced its debt by $25.1 million, and lifted a moratorium on its members cashing out of their stock ownership, which had been a source of intense contention within the buying group’s dealer ranks.

The 50-year-old Lieberman joined TruServ in March 12, 2001 as its senior vp-finance. That July, she was promoted to chief financial officer and chief operating officer, and became the co-op’s president and CEO November 16, 2001. In recent interviews, Lieberman gave no hint that she was either thinking of leaving the company, or that her job was in jeopardy. “I am extremely proud of our team’s accomplishments in turning around TruServ, restoring it to sustainable profitability and cash flows and greatly reducing the outstanding debt,” she said in a prepared statement. “I deeply regret leaving the co-op and I have nothing but good wishes for its continued success,” Forbes Lieberman said.

TruServ, which will change its name officially to True Value Co. as of January 1, 2005, has nearly 6,200 dealer-members whose stores draw merchandise from the co-op’s 12 distribution centers.

WHAT REALLY HAPPENED TO PAMELA FORBES LIEBERMAN?

SPECIAL REPORT — A strong background in operations and retailing is what TruServ Corp. will be looking for in candidates for the chief executive position that opened within the buying group following the forced resignation of Pamela Forbes Lieberman.“We want someone who has ‘been there, done that,’ and can make our members more successful at retail,” said Brian Ableidinger, the co-op’s chairman, who is overseeing a CEO search that is expected to extend into 2005.

In an interview with HARDLINES, Ableidinger and Tom Hanemann, a board member who will serve as interim CEO during the search period, emphasized in the strongest possible terms that Lieberman’s departure should not be seen as evidence of more corporate turmoil, but as a “logical transition” within a beleaguered buying group that had righted itself financially, and now was moving forward with a strategy to increase revenue, add members and improve its overall competitiveness.

Lieberman’s financial expertise, they explained, had been critical to re-establishing TruServ’s credibility among members, suppliers and creditors, which had been shaken by accounting improprieties and a crushing debt burden. Both executives praised Lieberman’s efforts to streamline the company and stabilize its balance sheet. “We are celebrating what Pamela has accomplished,” said Hanemann.

However, TruServ’s board determined that Lieberman did not have the appropriate “skill sets” to lead the co-op into its next stage, even though Ableidinger said board members were generally in agreement with the strategic plan Lieberman and her management team had devised over the past six months. “It became evident” he said, that TruServ needed someone with a broader vision “who could execute that plan.” He added that Lieberman would assist in the transition “for a short time.”

The co-op has hired a search firm, which Ableidinger did not identify. It was unclear whether that search will consider current senior-level managers. But Hanemann was quick to note that “there’s no other shoe to drop,” and that the co-op’s existing management team “is committed to the success of the co-op. I don’t anticipate anyone else leaving.”

RONA WILL PULL OUT OF ALLIANCE GROUP

FORT WAYNE, Ind. — The international hardware buying group Alliance LLC will lose one of its three members, namely Rona Inc., as of December 31. The group, an organization unique in North America for its international scope, also comprises Home Hardware Stores Ltd., of St. Jacobs, Ont., and Do it Best Corp., which provides space for the Alliance in its offices here in Fort Wayne.The group, which for years had two non-competing members in Canada and one in the United States, consolidates buying decisions for 12 core hardlines categories, with a committee of buyers from each of the dealer-owned co-op distributors. They work with Greg Thomas, executive director of the Alliance, who is quick to note that the group will continue, regardless of its smaller size.

“The Alliance will continue on with Do it Best and Home Hardware as partners,” says Thomas. “We always planned to have our 2005 strategy meetings in November. So they’ll be held this week and the following week.”

He adds that he’s “positive” about the move, saying, “It was a mutual parting of the ways, as far as the Alliance partners were concerned.” He also expects Rona to be replaced in time. “We’re going to explore the possibility of new members in the future, though we haven’t put a time frame on that.” Any new members could come from either the United States or Canada, or both.

The exact reasons for the break-up were not disclosed, nor would Rona comment. But an examination of the changes Rona has undergone in recent years will provide some clues. When the group was formed, each member wholesaler was dealer-owned — and non-competing. Now not only does Rona have a strong presence outside its home province of Quebec — competing head to head with Home Hardware — but it is now a public company, and the former dealer owners have become stock holders.

SODISCO-HOWDEN CEO POSITIVE AMIDST MIXED 3Q RESULTS

MONTREAL — With a quarter of healthy profit growth, despite only a moderate increase in revenues, Sodisco-Howden president and CEO Jos Wintermans is optimistic about the company — and its dealer customers.Service levels are up, he notes, adding that the national hardware distributor’s fill rates have exceeded 95% for more than a year. Dealers are responding to that service, “and now they’re talking about how they can give us even more business.”

Sodisco-Howden’s third-quarter revenues totalled $129.8 million, up 3.6% from the same quarter in 2003, thanks in large part to the the expansion of its Servimat LBM distribution into Atlantic Canada last spring.

The company has also regained sales momentum in its high margin hardware warehouse segment in the Ontario market, which had been eroded by the defection of one of its key customers, TIM-BR Mart Ontario, to join a competing hardlines distribution network, Quincaillerie Matreco Hardware.

Despite that erosion, which held sales back, Sodisco-Howden was able to increase its net earnings for the third quarter by 23% to $2.9 million.

“We’re revamping our core categories. For example, we just relaunched electrical, and now we’re rapidly redesigning our other categories [plumbing, paint and hardware]. The reaction,” says Wintermans, “has been great.”

Wintermans says he is expanding assortments in these categories to make it easier for his customers to buy everything they need from Sodisco-Howden. Dealers who want specialty items in these departments often have to rely on specialty distributors. To that end, the buying team has been expanded, with three additional category managers and another four support staff added over the past year. “We will offer a full program in these categories, so they won’t have to order from anyone else,” Wintermans says. “But it only works if we have everything the dealers need.”

SODISCO UNVEILS AGGRESSIVE PLANS TO PROMOTE BANNERS

MONTREAL — At its fall dealer show last week, executives from Sodisco-Howden introduced plans for a number of programs to better define — and promote — this national hardware distributor’s two banners, Ace and Pro.One of the initiatives introduced at the Sodisco-Howden’s fall market was a revamping of the advertising program. Flyers will get a new look, with both Pro and Ace programs using a 10×21-inch long format, with full colour super white newsprint. Even the product shots themselves will be more stylish, showing products in use or in association with other items to help sell them better.

The catalogue has been changed as well. Instead of one giant catalogue for customers that is sent out in spring, it will be replaced by eight “mini-catalogues”, which will be sent out throughout the year.

The two Sodisco-Howden banners will also get some heavy TV advertising, beginning early in 2005. The Ace program will mirror Ace in the U.S., to capitalize on the heavy ad spill over from ads from Ace in the U.S. Even product specials will run parallel to Ace’s flyers in the U.S. (Sodisco-Howden, which bought up Ace Hardware Canada in November 2003, licenses the use of the Ace brand in Canada).

The programs for each banner will become part of a process of defining a distinction between the two. Pro will become the project oriented, while Ace will be more DIY customer.

“The challenge for the Ace banner is to get volumes up and to develop private label products,” says Normand Cyr, vice-president marketing for Sodisco-Howden. “Our goal will be to increase the number of SKUs in private label to emphasize the Ace brand in the stores.”

MASCO REPORTS STRONG SALES GAINS

TAYLOR, Mich. — Masco Corp., one of North America’s leading suppliers of home improvement products, reported a 12.4% increase in revenue, to US$3.173 billion, for the three months ended Sept. 30. Through nine months, the company’s sales were up 15.9% to US$9.04 billion.The company’s quarterly net income jumped 13% to $359 million, and by 10.4% to $788 million through nine months.

Masco officials attributed its gains to three factors: the introduction of new products, gains in market share, and a strong home-buying and home improvement environment. However, Keith Hughes, an analyst with SunTrust Robinson Humphrey, told Reuters that Masco’s quarterly sales growth of 6% with key retailers — including Home Depot and Wal-Mart — were lower than some observers had expected. A year earlier, those same sales were up 8%.

During the quarter, the company continued in its efforts to dispose of certain European assets. The sale of companies in Germany and Spain generated proceeds of $191 million and a pre-tax net gain of $108 million.

Through nine months, Masco’s sales of cabinets and related products were up 15% to $2.432 billion; plumbing product sales rose 16% to $2.299 billion; sales from the company’s Masco Contractor Services division, which provides turnkey installation services for major home builders, increased 16% to $2.053 billion; its sale of decorative architectural products grew by 21% to $1.254 billion; and merchandise that Masco classifies as “other specialty products” increased by 16% to $1.002 billion.

COMPANIES IN THE NEWS

WINNIPEG — TruServ Canada has begun rolling out its unique Country Depot store format outside of Ontario. The first such store in Western Canada will open in Okotoks, Alta., later this winter. In addition, another eight or nine Country Depots are planned for Ontario in 2005.BOUCHERVILLE, Que. — In a move designed to reduce its debt, Rona Inc. has sold nine properties in Quebec and Ontario, most of them the sites of big box stores, and will lease them back. The leaseback transaction was done with H&R Real Estate Investment Trust, which is acquiring the properties for $102.8 million and leasing them back to RONA. All proceeds from the sale of the properties will be used to reduce debt.

BURNABY, B.C. — Taiga Forest Products Ltd. had sales for the three months ended September 30 of $383.5 million, up 25% from $306.2 million in the same quarter last year. Earnings for the three months were $5.5 million, compared with $4.4 million last year. For the six month period, Taiga’s sales were $767.9 million, up 36% from $564.6 million for the same period last year. Earnings for the six month period this year were $11.3 million, compared with $5.0 million or $0.63 per share last year.

HOFFMAN ESTATES, Ill. — Sears, Roebuck and Co. reported domestic store revenues of $1.90 billion for October, up 0.1% from the same month in 2003. Same-store sales were up 1.9%. The company had good results from sales of appliances, as well as the home electronics business. Sales year-to-date are down 3.4%, and year-to-date same-store sales fell 2.1%.

BENTONVILLE, Ark. — Wal-Mart Storesreported net sales for October of $21.04 billion, up 10.4% from $19.07 billion in the same month a year earlier. Sales year-to-date were $203.0 billion, an increase of 11.4%. The Wal-Mart Division’s sales for the four-week period were $13.92 billion, up 9.4% over sales of $12.72 billion. Sam’s Club sales for the month were $2.82 billion, up 6.8%. The International Division’s October sales were $4.311 billion, up 16.2%.

LONDON — Kingfisher intends to bolster its presence in Eastern Europe, says DIY Week. Europe’s largest home improvement retailer has plans to increase the number of its Castorama stores from 21 to 60 by 2009. Poland alone will become the target for up to 100 stores. French DIY retailer Leroy Merlin has 11 stores of its own in Poland, and intends to open two more.

BENTONVILLE, Ark. — Like many American retailers, Wal-Mart is running behind many European companies in its efforts to expand into China. But count on it to make up for lost time. It will have a total 43 there by year’s end, and plans another 10 for next year. France’s Carrefour SA and Germany’s Metro AG are already up against the likes of local firms such as Beijing Wangfujing Group and Wumart Stores, but next month, foreign retailers will get greater access to China’s $240 billion retail market, thanks to the lifting of geographic and joint venture requirements.

PEOPLE ON THE MOVE

Monty Gibson has been appointed territory manager responsible for Ontario at Johns Manville Canada. He was formerly a sales representative with CGC. (905-331-0199)Dave Pestill has joined Silk Dimensions Systems Inc. (formerly Dimensions Retail Systems) as national sales manager. He has a 19 years of experience in sales, including 12 years in management in high-tech industries in Southern Ontario. Pestill reports to Judy Palmer, POS goddess and vice-president marketing and sales. (800-731-9026)

U.S. MARKET INDICATORS

Spending on new construction was virtually flat in September, with a slight lift in non-residential building, as the first decrease in housing construction outlays since early 2003 offset a slight gain in non-residential building activity, reports the Commerce Department. Construction put in place in September ran at a $1.014 trillion annual rate, $136 million lower than in August.

CANADIAN MARKET INDICATORS

Housing starts in Canada will reach 226,800 units this year as favourable economic factors carry starts to a 17-year high, according to Canada Mortgage and Housing Corporation’s latest Housing Outlook report.

OVERHEARD…

“People say they want good service, then they shop at Wal-Mart.” — Bill Morrison, president and CEO of TruServ Canada, giving lie to the truism that people will pay a premium for service. The important things, in fact, are great value, good assortment of merchandise and a no-hassle return policy. He was speaking recently at a breakfast seminar hosted by the Canadian Hardware and Housewares Manufacturers Association.

BRANCH MANAGER–DURHAM REGION

**********************************************************************************

DISTRIBUTORS SOUGHT FOR AUSTRALIAN PRODUCTS:

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Patented foldable ironing board (3 models)
Plastic paint roller cleaner and “twist tie” organiser
Portable foldable clothes lines for in-doors and outdoors
Filters for vents/registers (represented by Electrolux Australia)

For further information please contact Fareeda Chand 416-323-1418 or email fareeda.chand@austrade.gov.au

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