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, faade, and some feature displays; and finally, enhanced which adds exterior faade/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 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.

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.

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.

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 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.

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.

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.

“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)

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.

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.

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.

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.

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.

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.

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.”

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.

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.

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.

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.

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.

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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.

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.

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.

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, 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.

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.

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%.

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.”

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.

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“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.

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.”

“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’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.”

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 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.

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.

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According to Lieberman, the strategy is a two-pronged one that begins right in the warehouse. Achieving excellence on the wholesale side requires “putting together initiatives that have resulted in industry leading fill rates,” she says. Combining that with the right assortments — and low prices — makes for a winning retail formula.

Besides being an effective wholesaler, TruServ is focused on serving the members. “We have to hone processes for rolling out retail programs for our members,” she says. “For example, a program under way right now is a one-call resolution center, where our members call one party within the co-op, and that person takes [their issue] from beginning to end and owes the response to the member. That way, the members don’t have to call any other parties in the building.”

Effectiveness is directed to member support in the stores, as well. As Lieberman says, it’s vital to give dealers tools to win at retail, and store modernization is at the top of the list. “We find, as members make their retail structures exciting for the consumer to shop, there’s a 17% pop in sales.

“Consumer data that we looked at shows that what consumers want is a great layout with fast in and out, and expert friendly service as well.”

“Our long term objective is to use this program to develop new tools, programs and ideas that will help our members increase their ability to compete in today’s retail world,” said Ray Falkenberg, vice-president, sales, operations and member relations.

Three stores have been chosen to launch the program, one for each of TruServ Canada’s national banners — True Value Hardware, Country Depot and V&S stores. The True Value and V&S stores recently completed their renovations and both held “Renovation Sale” events in late September.

“The best practice store is there for us to test anything that has to do with retail operations. What we’re really trying to do is get better at helping our retail members.”

Best practices will help dealers measure success, not just through sales, but by measuring traffic, closure rate, and average basket size. “If you’re not closing 85% or more of your customers coming in, then you’re losing opportunity, you’re letting business go out the door,” Falkenberg says.

“We are very pleased with the results to date,” he continues, adding that the Country Depot renovation begins this month.

Wal-Mart‘s rise as the world’s largest retailer, which stocks an extensive line of hardgoods, has also been responsible for thousands of small stores closing or failing, and with them, the wholesale distributors that supplied them.

While nearly 100 wholesalers remain, many of them are specialty wholesalers, and the industry actually is dominated by six firms, five of them dealer-owned co-operatives, with Ace Hardware at the top of the list. The exception is Orgill, which remains privately-owned, and ranks in fourth place.

Today, these six wholesale distributors account for $8.6 billion in sales to their retailer customers. Of that, the top three move $7.5 billion worth of products to their member customers (source: Do It Yourself Retailing).

Dealer ownership encouraged concentration of purchases and operational efficiencies, delivering to member-owners lower costs for goods purchased as well as the lingering profits of the wholesale operation. It also encouraged offering multiple ways to buy, so independent retailers could better compete with larger chain store competitors, with programs such as drop-shipments direct from factory to store, but billed through the wholesaler; or pool-buys brought into a single shipping point and then redistributed to individual retailers. Group advertising coordinated by wholesalers also enabled stores to convey more effectively their messages to consumers with colorful, professionally prepared advertising.

The concept of dealer ownership has been exported around the world to other countries, but only in Canada and Australia has it attained the kind of success it achieved in America, though it also is strong in New Zealand and more recently in South Africa.

He refers to the discussions he has had with a number of dealers whose business is primarily selling gypsum, insulation, steel and other building materials directly to contractors and builders.

Then, he says, growth within the group will come either from the dealers themselves as they grow their respective operations, or from “diversification of product lines.” Though, he notes, “even that’s limited, as we don’t ever want to be lumber buyers.”

But what kind of a group does Skrepnek envision? “I see continued consolidation, and I see the groups that can direct volumes being the winners. They will persist.” He believes that even combining existing groups, such as the rumoured consolidation currently occurring among two Matreco members (see last week’s issue—MM), won’t offer advantages unless those dealers really make their purchases in a unified way. “Otherwise, they’re booking volumes that won’t benefit the supplier.”

That effort to deliver orders from the members — and value to suppliers — is what Skrepnek believes will be key to TSG’s success. And he looks to existing groups that already deliver that kind of value, such as Le Groupe BMR and Independent Lumber Dealers Co-operative, as the ones for TSG to emulate.

As part of a morning program, the CEOs of two of Canada’s major home improvement retail groups will speak. Robert Dutton, president and CEO of Rona inc., will speak on Monday, February 21, and Bill Morrison, president and CEO of TruServ Canada, will speak on Tuesday, February 22.

Attendance at these talks is included in the registration for H²X Canada.

H²X Canada will also offer a seminar program on the day before the show, Saturday, February 19, aimed at retailers, retail store staff, manufacturers and sales agents. Topics will include: winning retail strategies, building community relations, risk management, dealing with the municipal government, hiring and firing tips, loss prevention and best practices.

Store tours in the Toronto area are also being organized as part of the seminar program and participants will have the option of attending either the afternoon sessions of the conference or taking the store tour. Stores in the tour will include Elte Carpet, Summerhill Hardware and Ginger’s Boutique, as well as a new LCBO store.

SAN JOSE, Calif. — When it comes to white goods, Sears still claims it has more than double the market share of its closest rival (that would be Lowe’s — MM), but it’s feeling the heat, so it’s adding appliances to four of its Orchard Supply Hardware stores in this state. These stores are now carrying Amana, GE, Frigidaire, Kenmore, Maytag and Whirlpool. Major appliances include refrigerators, washing machines, dryers, dishwashers, freezers, countertop microwaves, over-the-range microwaves, and washers.

MISSISAUGA, Ont. — Dynamic Paint Products has acquired Legebokoff & Son Import/Export. The family held business, based in Burnaby, B.C., has been a Dynamic distributor for many years. The deal is expected to shave time off deliveries to Dynamic’s Western customers of paint sundries.

VANCOUVER — West Fraser Timber Co. reported 3Q earnings of $78 million on sales of $700 million. That’s up from earnings of $3 million on sales of $484 million in the same period in 2003. For the first nine months of 2004, earnings were $171 million on sales of $1.85 billion. This compares to earnings of $9 million on sales of $1.45 billion for the first nine months of 2003.

ROCKFORD, Ill. — Amerock Corp., a division of Newell Rubbermaid, will lay off 450 workers and close the doors on its cabinet hardware facility here in 60 days. Although production is closing — a victim of outsourcing — Amerock’s admin services, including distribution, customer service and HR, will remain for an indefinite term.

VANCOUVER — Canfor Corp. had net income of $201.6 million for the third quarter of 2004, up from $17.8 million in the same quarter of 2003. Year-to-date net income was $377.2 million, compared with $51.2 million in the same period in 2003. Operating income in the third quarter was $216.6 million, which is an $8.6 million decrease from the previous quarter, but $174.7 million higher than in the same quarter in 2003. While market conditions continued to be strong, prices fell off through the latter part of the quarter and were further reduced by the impact of the strengthened Canadian dollar on US dollar sales. Canfor says the integration of Slocan is proceeding successfully, with anticipated synergies by the second quarter of 2005.

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Tim-BR-Marts in the West has taken a “wait-and-see” attitude toward this new source of hardlines supply, choosing instead to rely on existing suppliers, especially Sodisco-Howden Group. However, it could end up becoming instrumental in more substantive consolidation.

The Ontario group, which represents 150 stores representing both traditional TIM-BR Mart dealers and commercial/industrial yards within the CID group, had $350 million in purchases. If combined with the larger Western group, which had $565 million in purchases in 2003 to 153 dealers, combined retail sales would reach close to $2 billion.

Further anticipated results of this consolidation would include: better buying and improved rebates, lower overheads, and more cohesive store planning and flyer programs across the country.

The five new stores have also added some 52,200 sq.ft. to Rona’s total retail selling space.

“It’s only mid-October, so we’re very proud to have already topped the ambitious growth target we set at the beginning of the year,” says Claude Bernier, executive vice-president, traditional and specialty stores. “We’ve got another 10 weeks to go before the end of 2004, another 10 weeks to advance our position as the Canadian leader in the hardware and home renovation industry.”

In Ontario, the new members are Windsor-based Angileri Brothers Building Materials Ltd. (with two locations) and Hook’s Hardware in Cloyne. In British Columbia, Earlys Building Supplies Inc. in Campbell River has joined as a Rona Building Centre. In Quebec, the Espérance Group has acquired the Centre de rénovation Pointe et Meunier in the Montreal suburb of Carignan and converted it to a Rona Le Rénovateur.

“Sears is the leading retailer of appliances with double the market share of our closest competitor. This format gives us the ability to extend our great appliance offering in a new way, right in our customers’ neighborhoods,” says Bob Gartner, vice-president and general merchandise manager of Sears Hardware.

These stores feature changes in other departments that include permanent displays of patio furniture and grills; the elimination of both “top stock” inventory and signs over the aisles to improve visibility and lighting; and a new assortment of hardware merchandise, the specifics of which Sears did not disclose.

Sears has only recently launched the Sears Hardware format in Canada, with three pilot stores that opened last month. The outlets, which range in size from 8,500 to 10,000 sq.ft., were former Sears Auto Centers in the parking lots of full-line department stores. These stores don’t stock appliances, and there are no immediate plans to do so. However, according to Sears Canada spokesperson Vincent Powers, “We can always learn from what’s successful in the States,” and the addition of appliances “in time” might be a possibility.

In addition, says Powers, Sears Canada is “considering” bringing in patio sets and barbecue grills into the new Hardware stores for the spring selling season.

Meanwhile, the locations in the U.S. with new appliance departments are in Connecticut (three stores), Illinois (five), Indiana (one), New Jersey (10), Pennsylvania (seven) and Wisconsin (two). During grand opening weekend, consumers could enter a drawing for a $1,000 shopping spree; a $1,000 set of Frigidaire appliances; 0% financing; discounts of $5 off a $25 purchase or $10 off a $50 purchase.

Other factors helping members grow their businesses, Taylor noted, are the retail programs and services offered by Do it Best Corp. One of the services highlighted was the doitbest.com web site, an e-commerce site for Do it Best Corp. members.

“Sales through doitbest.com continue to grow, up 50% over last year,” Taylor said. “Over half of our members have a site linked to doitbest.com and more than three million unique visitors shop doitbest.com each year.” This year, the group added a delivery service that enables online customers to pick up orders at their local store.

This news emerged as Stanley reported a 53.2% increase, to $63.9 million, in net income for the quarter ended Sept. 30. That profit rise was on sales of $665.6 million, which rose 18.9% over the same period a year ago. Through nine months, Stanley’s revenue increased 20.3% to $2.36 billion, and its profits jumped 280.4% to $278.8 million.

Much of that net gain, though, is attributable to an $81.9 million pre-tax charge against earnings that Stanley took to cover its ongoing restructuring, which included $10.1 million for its exit during the latest quarter from its MAC Direct retail business.

The company’s consumer products group has helped to drive its financial performance this year. In the latest quarter, that group’s sales increased 6.4% to $296.4 million, and its operating profit grew by 10.9% to $43.6 million. Through nine months, the group’s revenue was up 13.8% to $900.7 million, and operating profit rose 33.8% to $132.1 million.

Overall, Stanley’s net sales in the quarter from continuing operations — excluding the effects of recent acquisitions that included CST/Berger, Blick plc and Frisco Bay Industries — were up 10% to $791 million.

“Our consumer hand tools business and eight Industrial Tools and Security Solutions business units — fastening systems, industrial mechanics’ tools, industrial storage, specialty tools, laser measuring, assembly technologies, hydraulic tools, and access technologies — achieved double-digit percentage organic sales increases this quarter,” stated John Lundgren, Stanley’s chairman and CEO.

Lundgren projected that Stanley’s sales for the year would be up nearly 20%, with a two percentage-point improvement in operating margin and 35% growth from continuing operations. He expected 3%-5% organic revenue growth and double-digit percentage earnings growth in the year 2005.

KELOWNA, B.C. — The board of directors for Riverside Forest Products stated that a sweetened offer for their company made by Tolko Industries is “superior” to an offer tendered by International Forest Products (Interfor). Interfor’s $39 per share offer was seen by industry watchers as a life preserver for Riverside from a hostile $29-per-share bid that Tolko had made earlier. Interfor’s officers and directors had committed their 28% stake in their company to the Interfor bid in a lockup agreement. However, on October 14, Vernon, B.C.-based Tolko upped its all-cash bid to $40 per share, which suddenly looked a lot friendlier to Riverside’s board and investors. (Tolko already owns nearly 19% of Riverside’s stock, and has stated that two other major shareholders, Montreal-based Tembec Inc. and Van Berkom and Associates, have agreed to tender their shares to Tolko’s bid.)

HOFFMAN ESTATES, Ill. — Sears, Roebuck and Co. reported a 3Q net loss of $61 million, a swing from net income of $147 million in the third quarter of 2003. The drop was attributed to “softer retail demand, larger than expected costs associated with seasonal transitions and a slower ramp up of sales following certain business resets,” according to chairman and CEO Alan Lacy.

TORONTO — Sears Canada reports total third-quarter revenues of $1.50 billion, up 4.5% from $1.43 billion in the same quarter of 2003. Same-store sales increased 1.1%. Net earnings for the quarter, excluding non-comparable items, were $19.4 million, from $12.1 million last year. Net earnings including non-comparable items were $14.0 million.

WEST JEFFERSON, N.C. — Black & Decker‘s acquisition of Pentair‘s Tool Group is resulting in a paring down of operations, as 240 staff here will lose their jobs to factories in China. Seventy-five more jobs will be phased out by year’s end at a B&D facility in Jackson, Tenn., while another 330 are being terminated at a plant in Fayetteville, Kansas.

GLENVIEW, Ill. — Illinois Tool Works Inc. had a 23% rise in profit due to strong demand in both North American and international markets, although higher raw material costs kept results below expectations. Illinois Tool posted a net profit in the third quarter of $330.1 million, compared with $268.9 million in the year-earlier quarter. Sales in the quarter rose 17% from the year-earlier period to $2.97 billion.

BOISE, Idaho — Boise Cascade Corp. enjoyed third-quarter net income of $61.1 million, up from $32.9 million in the third quarter 2003. Sales in third quarter increased 73% to $3.65 billion, compared with $2.11 billion in third quarter a year ago and $3.40 billion in second-quarter 2004. Year-over-year sales increased primarily because of the acquisition of OfficeMax in December 2003. Sales were also aided by strong product prices in Boise Building Solutions and improving product prices in Boise Paper Solutions.

CHICAGO — W.W. Grainger Inc. enjoyed a 19% increase in earnings per share for the third quarter ended September 30, 2004, from 62 cents to 74 cents. Sales were $1.3 billion, up 8% versus the prior year’s third quarter. Net earnings were up 19% to $68 million, the highest net earnings for any quarter. Sales for the nine months ended September 30, 2004, were $3.8 billion, up 8% over the first nine months of 2003. Net earnings increased 19% to $197 million, compared with $165 million in 2003.

At Do it Best Corp., Stan Hardman has been named chairman of the board for the 2005 fiscal year. Hardman is the co-owner of seven Hardman’s stores throughout W.V. He succeeds Bruce Ellis, of Roswell Lumber Do it center in Roswell, N.M.

Kmart has announced the hiring of a fast-food executive, Aylwin Lewis, as its new president and CEO. Lewis, 50, was formerly with Yum Brands, which owns and franchises KFC, Pizza Hut, Taco Bell, Long John Silver’s and A&W. He replaces Julian Day, who presided over the company during its time under bankruptcy protection last year. Day remains on the Kmart board of directors.

Mike Springer has been appointed vice-president sales at Horizon Plastics, a custom molder based in Cobourg, Ont. (905-372-2291)

John T. Butcher, executive vice-president and CFO of Sears Canada Inc., has announced his intention to retire from at the end of the year. Butcher has been with the company since 1976, serving in various roles within the finance side of the business, before assuming his current assignment in 1996. Sears is currently conducting a search for a replacement.

The Conference Board has released its Index of Leading Indicators, a barometer of future economic activity, showing that fell 0.1% in September —the fourth consecutive monthly decline, suggesting that the recovery may be cooling. The Index was down 0.3% in August and July, and down 0.1% in June.

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“We’re starting to get some interest from Quebec dealers, and we had many prospects at our fall dealer market,” says Paul Straus, vice-president and CEO of Home Hardware.

Does he anticipate a magic number for Home Hardware there? “We’ll take as many as we can get,” says Straus, “but we have no real target.”

The move to more direct Asian sourcing ties in with TruServ’s efforts to increase its range of private-label products. “We will be growing our private label to complement the national brands, and when we talk about our private label, it will be under both the True Value name itself and some of our other proprietary brands, such as Green Thumb in the lawn and garden area — or Master Plumber, Master Mechanic, Master Electrician — and we’ll determine what’s right for that part product category,” says Lieberman.

“We absolutely do see growth there, but we only want our name associated with quality products.”

For a $50 fee, a landscape designer will come to one’s home and supply a plan for the yard or garden. The fee will be applied as a credit against any landscaping jobs done by the customer. Those jobs can be arranged through a variety of companies in Toronto that provide products and installation.

The latest addition to Home Depot’s roster of installed services is a “home handyman,” available for small jobs and repairs around the home. This new program is being tested in 10 stores in Toronto, as well as the new urban-concept Park Royal store in Vancouver. Advertising for the service hit the airwaves earlier this month, but timing for a national rollout has not yet been released.

The availability of Builders FirstSource is the latest one to catch Lanoga’s attention, observes Paul Hylbert, president and CEO of Lanoga. “We’re always looking for acquisitions, he told Hardlines. He expects growth to come organically, accounting for “high single-digit growth,” as well as continued acquisitions.

“We’ll continue to plan and grow and try and be consolidators, rather than sit on the sidelines,” Hylbert adds.

His enthusiasm for growth reflects his company’s confidence in the industry, and in the market factors driving it. “We see the rest of the year continuing to be good, and we see next year’s level as being strong, as well, though not as strong as this year.”

Tim Farrell, president and CEO of the AHMA, referred to insufficient attendance in Chicago, and to the allegations of mismanagement by Reed, which have resulted in AHMA filing a lawsuit, as reasons for ending the AHMA’s show: “most importantly, the best interests of our members and our industry, also, the decline of the Hardware Show for the past several years because of the alleged improper management practices of Reed and the evolutionary changes of our industry.”

However, in the end, the National Hardware Show enjoyed renewed success when Reed finally did move it to Las Vegas in spring 2004. Meanwhile, AHMA’s own show, which remained in Chicago, could not muster enough exhibitors to carry it into a second year, says Farrell.

“We made some changes, including relocating the show to Las Vegas,” says Rob Cappiello, president of the NHS for Reed Exhibitions, “and the response has been very, very positive from the industry.”

Despite the lawsuit, does Farrell foresee any reconciliation with Reed? “We’re very open to affiliations with organizations that create value for our members and our industry,” he says. “We’re not open to affiliations with organizations that, as we allege in our lawsuit against Reed, destroy value for our members and our industry.”

Cappiello does not express concern over the merits of the lawsuit, saying it’s “without merit.” In fact, he says his organization remains open to any future affiliations. “Our door is always open, if the AHMA wants to talk to us,” he says.

In a prepared statement, Universal’s CEO Bill Currie explained that his company’s DIY sales were soft due to increases in lumber costs, which may be prompting homeowners to delay improvement projects; the hurricanes that halted improvement projects in Florida and the Southeastern United States; and the higher cost of treated wood due to industry changes in the treating compounds, which may be affecting consumers’ purchasing decisions.

The Times referred to this as “The Home Depot provision,” in that Senator Zell Miller (D-Ga.) argued for the tariff reduction, claiming that the tariff wasn’t needed because no ceiling fans are made in the U.S. anymore. Miller contended that retailers such as Home Depot — which sells nearly half of all ceiling fans bought in the U.S., and whose Hampton Bay line is the best-selling ceiling fan brand in the world — needed to charge higher prices to defray the impact of the tariff.

Nearly all of the fans that Home Depot sells are made in China, and the timing of this legislation coincides with the retailer’s recent announcement of its plans to expand into that country.

COLOGNE, Germany — Koelnmesse, the giant trade fair organization based here, is beefing up its show in Shanghai, Practical World Asia, with the addition of a major lawn and garden component. The show is being held this week from October 19-21 in association with the China International Hardware Show, in which Koelnmesse became an equity partner this year. Beginning in 2005, a new “World of Gardening” segment will join “World of Tools,” “World of Security, Locks and Fittings,” and “World of Home Improvement/DIY.” Koelnmesse has been organizing Practical World Asia since 2003.

MONTREAL — MAAX Corp. had 2Q net sales of US$136.1 million, compared with US$127.4 million in the second quarter of the previous fiscal year. Excluding the impact of the fluctuation in the U.S. dollar in relation to the Canadian dollar and certain non-recurring items, consolidated net sales were up 10.5% over the second quarter of last year. For the first half of fiscal 2004, net sales grew 17.2% to US$272.3 million.

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In its heyday, that show was one of the biggest trade shows held at McCormick Place. In 1999, more than 67,000 people came into the city, generating an estimated $85 million for Chicago. The show declined steadily after that, however, and dissatisfaction over how — and where — to operate it, drove Reed and the AHMA apart. Reed went on to relocate the NHS to Las Vegas in May 2004, just weeks after the AHMA held its first show.

In a statement posted on the AHMA website, Tim Farrell, president and CEO of the Association said this: “It’s a tough decision because the Hardware Show has been such an important event to our members and our industry, and our association for such a long time, but that doesn’t change the fact that it’s the right decision.”

While no specifics were offered about what future direction the AHMA will take on behalf of its members, Farrell’s statement went on to say, “We’ve always made decisions in the best interests of our members and our industry, and this is one more example. We’re excited about pursuing what’s most valuable to our members and our industry now and in the future, not holding on to something that was valuable to them in the past.”

Rob Cappiello, president of the National Hardware Show for Reed, says the cancellation of the competing show won’t have much impact on his event. “We were sold out last year, and before this announcement we were already 86% sold out for next year.” He hopes that having one show will result in a little less confusion for the industry.

But even Cappiello regards the termination of the Chicago show as a blow to the industry: “From an industry point of view, there’s always a little bit of sadness when a show disappears.”

Now, Home Depot is building these smaller stores in smaller towns. In fact, three of them are scheduled to open by the end of 2Q 2005. The first one will be in Spruce Grove, Alta., north of Edmonton, followed by Chatham, Ont., and another site in Ontario, still to be announced.

“We’re going to build these all over,” says Annette Verschuren, President of Home Depot Canada and acting President of the Expo division.

A number of stores that opened over the past few months in Canada, including Brandon, Man., and Sioux St. Marie, Ont., and Trois Rivieres, Que., were all around 80,000 sq.ft., plus 15,000 sq.ft. of garden center.

The company will continue opening traditional sized stores, as well. Expansion efforts in Atlantic Canada will feature these, following the erection of a store in Charlottetown, the first (and likely, the only) big box on Prince Edward Island. New Brunswick, which already has a full-sized store in Moncton, will be the site of at least three more stores, says Verschuren, including Fredericton and Saint John. A store is also planned for Sydney, N.S.

“This marks the beginning of Lowe’s relationship with the state of Wisconsin,” said Mike Mabry, Lowe’s executive vp-logistics and distribution. “This facility will support our growing store base in the Midwest, and help us deliver quality millwork products at an everyday competitive price to our customers.”

Lowe’s has two other millwork facilities — in White House, Tenn., and Thomasville, N.C. — that have opened within the past 15 years, according to Chris Ahearn, a Lowe’s spokesperson. Lowe’s will open its first store in Wisconsin later this year in Milwaukee, and its second store, in Plover, next spring.

Wisconsin Governor James Doyle was quoted as stating that his state’s investment was in line with his administration’s “Grow Wisconsin” initiative. The state is also providing Lowe’s with a $225,000 loan that the dealer won’t be required to repay if it operates the plant for 10 years.

The number of visitors is also expected to rise from last year, to around 40,000. Visitors to can register for the combined Practical World Asia/China International Hardware Show on the Internet at www.practicalworld-asia.com.

Interfor’s offer is subject to 51% of the shares of Riverside being tendered, the receipt of certain regulatory approvals and the satisfaction of various customary terms and conditions.

This agreement represents the latest in a series of takeovers within Canada’s forest products industry. These include Canfor‘s acquisition of Slocan Forest Products Ltd.; West Fraser Timber buying Weldwood; and Interfor acquiring three Washington state mills owned by Crown Pacific Partners.

According to Pam Danziger, president of Unity Marketing, and author of the study, natural decorations like pumpkins and cornstalks on the front porch are being joined by Halloween lights — Christmas fashion — around the eaves, and lighted, even moving, wire sculptures in the yard.

Inside the home, the focus is on tabletop centerpieces and decorative bowls for candy, candles and Halloween-themed candle accessories and paper and party decorations, Danziger says.

For more info on Unity Marketing’s new study of the decorations market, Seasonal Decorations Market Report, 2004: The Who, What, Where, How Much, and Why of Holiday Home Decorating, click here.

MESQUITE, Nev. — Do it Best Corp. will break ground on its newest retail service center here on October 25. This will be the eighth for the dealer-owned wholesaler, joining the ranks of facilities in Dixon, Ill.; Cape Girardeau, Mo.; Montgomery, N.Y.; Medina, Ohio; Woodburn, Ore.; Lexington, S.C.; and Waco, Tex. The Mesquite facility will service 250 stores throughout the Southwestern United States.

OLYMPIA, Wash. — We already know hurricanes are good for business, but volcanoes? It seems hardware dealers in communities near Mount St. Helens are having a run on dust masks and filters. The volcano has been spewing steam and ash at an increasing rate over the past several days, attracting a rash of tourists in the process.

SAINT-ANTONIN, Que. — Bargain Building Materials broke ground last week on a construction project at its head office here. The expansion, which is scheduled for completion by December 2004, represents a total investment of $550,000. In addition, the company has invested another $700,000 in its distribution center in Lachute, Que. to improve warehousing capacity by 20,000 sq.ft. Expansion efforts have been driven by the growth of Bargain’s dealer base, which has reached 15 corporately owned stores, plus five independents operating under the retailer’s “Authorized Retailer” program in Quebec, Ontario and the Maritimes.

MISSISSAUGA, Ont. — An application by the United Food and Commercial Workers Union to unionize Wal-Mart associates in Terrace, B.C. has been dismissed by the British Columbia Labour Relations Board. In its decision, the Labour Board ruled that the union does not have the minimum support among the store associates required by the B.C. Labour Relations Code to warrant the holding of a representation vote on the issue of unionization.

WINNIPEG — The recent opening of a True Value Hardware store in Brussels, Ont., marks the latest expansion effort by TruServ Canada, the dealer-owned co-op based here. The store has grown from 1,500 sq.ft. in 1945 to 8,000 sq.ft. today, and the switch to True Value has enabled the dealer to expand a number of lines, especially paint.

ISSAQUAH, Wash. — Costco Corp. enjoyed a 24% increase in profits for its fourth quarter, with same-store sales rising 8%. Net sales were up 11% to $14.8 billion.

Andrew Sarch is back from China and tells us he’s taken on the role of general manager in Canada for JinDing Group Co. Ltd. He’ll be responsible for marketing, sales and service to support and grow the company’s business in Canada. Prior to this, Sarch spent 25 years at Canadian Tire Corp., most recently as divisional vice-president in the marketing division. With a factory in Jiangsu province in China, and offices in Shanghai, Holland and Canada, JinDing Group is reportedly the world’s largest OEM manufacturer of portable electric power tools, supplying more than 200 brands to some 100 countries around the world. (905-231-9933)

William Bolton, a market research executive with an extensive background in retailing, is now the first non-dealer member to be elected to Ace Hardware Corp.‘s board of directors. Bolton is currently a consultant and advisor with Leo J. Shapiro & Associates, a Chicago-based market research firm whose clientele has included Home Depot and Sears. Over the past three decades, Bolton has also served in executive capacities with SuperValu, a grocery wholesaler; Bruno’s, American Stores and Jewel Food/Osco Stores. Since October 2003, he has served on Ace’s board in a retail advisory capacity. His term on Ace’s board runs through 2007, when he will be eligible for re-election.

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Frank estimates that the sale of Builders FirstSource could bring a price equal to seven or eight times its $115 million in projected cash flow for 2004, or between $805 million and $920 million. He also states that Builders FirstSource is on track to generate $2 billion in revenue this year, which would represent an 18% gain over 2003 sales.

Despite skepticism over Builders FirstSource profitability, which has been voiced by competitors for years, Frank says the company has doubled its cash flow in the last two years. During that time, it has been consolidating its operations, with an eye toward cost control.

“Builders FirstSource is firing on all cylinders — it’s having a great year — and is really hitting its stride,” Paul Levy, JLL’s founder, told Hardlines. Referring to Floyd Sherman, BFS’s CEO, Levy says, “The management team has come together under Floyd’s leadership. It has become one company. With its pro-only model, there are lots of opportunities for growth, especially as homebuilders [which are one of BFS’s primary customers] get larger.”

Levy went on to explain that JLL Partners is selling its holdings in BFS to give the retailer a chance to hook up with a larger partner, one that can help take it to the next level of growth. He expects that this will be a five-year process. “We aren’t in the position, financially, to be able to stay on as investors for that long.”

Levy added that JLL Partners decided against taking BFS public because that process would have required the equity firm to hold onto stock for three or four years. The Deal.com stated that JLL has invested $230 million into Builders FirstSource between 1998 and 2002, and that it hopes to recover between 2.7 and 3.2 times that investment if it manages to sell the company within this price range.

NORTH VANCOUVER, B.C. — The first urban neighborhood store to enter Canada is also just the third overall in the Home Depot chain. But the company has high hopes for the future of the concept, a scaled down retail footprint with a merchandise mix tailored to the tastes and lifestyle of the city dweller.

The setting was a posh fundraising reception, showcasing the retailer’s commitment to Rick Hansen‘s Man in Motion Foundation. Hansen made history and became a national hero when he travelled across around the world in his wheelchair in 1985, raising $26 million for spinal cord injury research. He was on hand with Verschuren, and Home Depot’s vice-president merchandising, John Costello, up from Atlanta to participate in the proceedings himself. Pop musician Jann Arden ended the evening with a private concert for the crowd.

The event also reflected Verschuren’s desire to realize a retail concept that would give a community the means, both imaginatively and practically, to transform their homes and their lives. “This store has been 10 years in the making,” she told Hardlines just before the event got under way.

The Home Depot at Park Royal center, directly across the Lion’s Gate Bridge from Vancouver’s Stanley Park, is smaller, more upscale, more décor driven than its big box predecessors. It has very little in the way of building materials, the space being devoted instead to kitchen and bath, lighting — lots of lighting, ceiling fans, locksets, décor bath accessories, and stuff one doesn’t usually see in a big box, but stuff that’s fast becoming regular fare to Home Depot shoppers — including storage, cleaning products and large appliances.

But this urban concept takes décor and accessories to a new level: knick knacks, dried flowers, vases, window coverings, and enough tea lights to fill an Ikea store.

A common feature of the urban concept, as it shoehorns its merchandise into the smaller footprints of scarce, costly downtown real estate, is to go up, not out. In Chicago, for example, an urban store in the toney Lincoln Park neighborhood is on two full floors. The new North Vancouver store has a mezzanine around the edge, giving a clear view of the centre of the store.

Ironically, those earnings projections were made at a time when Lowe’s has been trying to stimulate more sales by promoting its “Everyday Lowe Price” guarantee, which is all over its biweekly ad circulars and TV commercials. Company officials told analysts that the chain has rolled back prices on more than 1,200 items in its stores recently. They also revealed that Lowe’s is testing new checkout technology of the kind that rival Home Depot installed chain wide last year.

The two giants continue to wage pitched battles for the hearts, minds and disposable incomes of customers across the U.S., especially in larger metro markets where Lowe’s is focusing its expansion. It plans to open 150 stores in 2005, and 160 in 2006, during each year its revenue is projected to increase by 16%.

Several analysts responded positively to Lowe’s message, and recommended that their investor clients buy the retailer’s stock. However, one of Lowe’s biggest recent boosters, Aram Rubinson of Bank of America, maintains his “neutral” rating for the company, even as he raised his own estimates about that stock’s selling price to $56 per share (it was trading at $54.82 on Thursday morning).

But any efforts to unite these members — or any other groups — more substantively have yet to bring results.

“I have gone on record by stating that there are too many independent buying groups in Canada which compete against each other,” says Tim Urquhart, president and general manager of Tim-BR-Marts.” He joined as head of the group at the end of last year, but for years before that, the groups have been talking about further unification.

That includes groups such as Castle and Sexton, who are members, along with five other groups, of the umbrella buying organization, the Reliance Buying Group. In fact, more than one buying group insider over the past couple of years has admitted that “everyone is talking with everyone,” and many of the groups, agree, at least philosophically, in the benefits of one group joining with another.

Meanwhile, Reliance members have been using their combined buying power to negotiate better with key commodity suppliers. Matreco members have been pulling together their marketing and branding efforts more closely. “We continue to be aggressively marketing the TIM-BR Mart program, expanding the TIM-BR Mart program,” says Tom Smith, president and CEO of AWARD. But he doesn’t expect to go as far as his counterpart in Ontario, which converted the operating name and branding for the majority of its dealers from Homecare to TIM-BR Mart Ontario. Although about two-thirds of AWARD’s 95 dealers already carry the TIM-BR Mart banner, Smith plans to co-brand AWARD and TIM-BR Mart.

The specter of a common foe, traditionally the big boxes, and now Rona, is reinforcing a sense of purpose, at least for the likes of Urquhart, who believes further consolidation will provide direct benefits for the groups. “It is time for the independent dealers to band together and recognize their strength,” he told Hardlines. “To that end, we are talking with anyone who is willing to do the right thing for the dealers they represent.”

For now, however, growth for Urqhuart’s group continues to come one dealer at a time. “At this point, we do not have an agreement with any other buying group in Canada. What we are doing is growing our business by recruiting heavily in Western Canada, and the addition of 32 new locations (so far) attests to that.”

Other sites included Home Hardware’s own distribution facilities in Debert, N.S.; St. Jerome, Que.; Kitchener and St. Jacobs, Ont., and Wetaskiwin, Alta. “Our dealers and staff agreed that the best way to celebrate our anniversary was to create a living legacy, by rebuilding the local scenery in some of the many communities that we call home,” said Paul Straus, vice-president and CEO of Home Hardware Stores in a prepared release.

Home Hardware has worked with Tree Canada Foundation for the past six years. In addition to the planting of thousands of native evergreen seedlings, the company has donated more than $70,000 to Tree Canada.

Additionally, Taylor has put together a “Trusted Contractors” program that offers a wide range of local tradesman — from carpenters to plumbers. The program includes only trusted contractors with whom Taylor has developed a long-standing relationship.

This local lumber and hardware store also launched “Taylored to Non-Profits,” a promotion that offers special discounted pricing for non-profit organizations. Recently, it even sponsored the “Great Doghouse Construction Contest” at the Marshfield Fair, raising funds for the local animal shelter.

The retailer is also focused on local job creation, with a program of internships and part-time opportunities for high school and college students. These student interns get on-the-job training throughout the year.

Manufacturers participating in the DIY Council’s pavilion include: Allway Tools, Gardner-Gibson Co., H. F. Staples Co., Intermatic, Iron Out, Johnson Level & Tool, Rust-Oleum, and Zircon. Products range from the basics to the unique and unusual, including everything from mosquito control products to levels and other tools, including the latest in electronic tools. Other DIY Council members who will be exhibiting on their own or with their agents/distributors include AccuSharp International, Arrow Fastener, Better Living Products, Empire Level, and Knape & Vogt.

In addition to those members exhibiting with the Worldwide DIY Council, other members are exhibiting on their own or with local agents/distributors. The DIY Council will also host two of America’s largest hardware wholesalers, Ace Hardware and TruServ Corp.

For more information about the Worldwide DIY Council, click here.

Other acquisitive companies, such as The Strober Organization or Bradco Corp., which recently bought a piece of the Wickes company, may decide to throw their hats into the ring, if for no other reason than to test the waters. Industry publication The Deal.com identified several equity companies that could be buyer candidates, too. Levy said that preliminary interest in Builders FirstSource has been strong, “and there’s been enormous interest from the financial community.”

Another possible buyer could be Home Depot, which has been acquiring pro-oriented companies for its Home Depot Supply division, and has stated publicly its goal of increasing significantly its market position as a supplier of building materials to contractors and homebuilders. Company officials have stated privately that Home Depot’s goal is to build its pro business to represent as much as half of its annual sales eventually.

Paul Levy, founder of JLL Partners, the private equity firm that owns 90% of Builders FirstSource, told Hardlines that Builders FirstSource could be a perfect fit for Home Depot. This would allow the warehouse giant to achieve top-to-bottom penetration into the entire housing and home improvement sectors. Levy also believes that Home Depot would let BFS’s management team run the business more independently than might another large pro dealer, if it were to acquire the company.

He adds that it’s “realistic” to expect that the buyer for Builders FirstSource would emerge and a deal would be signed by the end of this year.

MINNEAPOLIS — Waters Instruments Inc. has acquired, through its Zareba Systems Europe subsidiary, Rutland Electric Fencing Co., the largest manufacturer of electrical fencing products in the U.K. A family owned business, Rutland has 55 employees and annual sales of approximately $9 million. Waters Instruments just finished fiscal 2004 with sales of $24.2 million, up 5.2% from fiscal 2003. The company’s goal is to reach $50 million by 2008.

TOLEDO, Ohio — Owens Corning will start building a greenfield light-density fiberglass insulation plant in the Southeastern United States. The facility, which will have a capacity for 150 million pounds per year, is part of OC’s commitment to strategic capacity expansions. Production could begin as early as the third quarter of 2006.

TOWSON, Md. — Black & Decker has received the okay from all regulatory agencies governing anti-trust rules, for the purchase of Pentair‘s Tools Group, which includes the Porter-Cable, Delta, DeVilbiss Air Power, Oldham Saw, and FLEX businesses. The purchase price will be approximately $775 million in cash, and it’s expected to close in early October. The Tools Group’s sales and operating profit for 2003 were $1.08 billion and $82 million, respectively. B&D expects to gain annual cost savings of $65 million by the end of 2007.

LONDON, U.K. — Kesa Electricals, the division that was spun off of Kingfisher as its own entity last year, enjoyed a sales increase of 5% to £1,667.3m in the first six months of the year. Profit was up by 3.6% to £54.7m, with a 7.4% increase in constant currency. In the U.K., Comet saw sales increase by 7% to £637.7 million, growing its market share despite increased competition from other retailers. French chain Darty increased sales by 24% to £653.4 million.

HOFFMAN ESTATES, Ill. — Sears, Roebuck and Co. has closed the acquisition of ownership or leasehold interest in 50 stores from Kmart Holding Corp. Purchase price was $575.9 million, against which Sears has paid 30%, with the remaining 70% to be paid upon Sears taking possession of the stores. Sears will take possession of the stores in spring 2005 and the majority of the stores are expected to be converted by fourth quarter 2005. Sears will also acquire six additional off-mall locations from Wal-Mart.

LONDON, U.K. — Wal-Mart has admitted that it has sent a team of analysts to Russia to check out possible expansion there, says Reuters. The likely location for a first opening would be in St. Petersburg. “We’ve had a team in Russia looking into the possibilities, but we’ve not made any announcements and we will not comment on speculation,” said Bill Wertz, a Wal-Mart spokesman in the United States.

MONTREAL — Forest giant Tembec has acquired 665,000 common shares of Riverside Forest Products Ltd., representing 7.05% of the outstanding shares of Riverside. The purchase was made for investment purposes.

CHICAGO — Wholesale supplier Grainger is implementing SAP enhancements to its supply chain. At a meeting of analysts held at Grainger’s newest distribution center in Robbinsville, N.J., last week, Grainger chairman and CEO Richard Keyser provided an update on the company’s technology investments, including its SAP installation and telephony program. These two initiatives are designed to help the company become more efficient at saving customers time and money when purchasing facilities maintenance products.

August construction spending reached $1,015.3 billion at a seasonally adjusted annual rate, up 0.8% from July and up 10.1% from August 2003, the Commerce Department said. Non-residential construction was $456.4 billion, down 0.2% from July but up 5.2% from one year ago. Falling mortgage rates boosted private construction and private residential construction to record highs.

Consumer confidence, as measured by the Conference Board’s Consumer Confidence Index, fell 1.9 points to 96.8, well below analysts’ expectations of 99.5. It’s been as high as 144.7 in May 2000, when the job market was strong, but has been volatile since the economy emerged from recession in November 2001.

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 .

Contact us today for more Information
www.Mantank.com