John Caulfield, Contributing Editor
vol. xi, #36, September 26, 2005

IN THIS ISSUE: • Stanley buys National • Canadian Tire wants more big stores • Federated confirms membership in NRHA • Home Hardware blur the lines with wine, laundry soap • CMHC says housing will stay strong • Do-it Best returns record rebates • Home Depot, Lowe’s face lawsuits * * * * * *

“The worst-tempered people I ever met were the ones who knew they were wrong.” — Wilson Mizner (American author, 1876-1933)
NEW BRITAIN, Conn. – Toolmaker Stanley Works has agreed to purchase National Manufacturing Co., a leading hardware supplier, for US$170 million in cash. The deal, which both companies’ boards have approved, is subject to approval by two-thirds of National’s shareholders. The acquisition should close by late this year or early next.Sterling, Ill.-based National, which does business as National Hardware, generates an estimated US$200 million in annual revenue. The company, with 1,750 employees, says it sells to 25,000 retail outlets in North America, and that around 85% of its business comes through its distribution through dealer-owned buying groups. However, National’s position as a warehouse supplier with co-ops like Ace Hardware and True Value has been threatened in recent years by those companies’ decisions to develop hardware programs of their own that they now source offshore.For Stanley, the National acquisition comes on the heels of its US$494 million purchase of France’s Facom Tools. Stanley said it intends to combine National’s assets with its own Heritage builders’ hardware business.
MARKHAM, Ont. – Canadian Tire plans to add $2 billion in retail sales over the next five years – an aggressive goal – but one that’s backed by equally aggressive expansion plans and carefully developed retail strategies. Almost 200 delegates at the recent Hardlines Conference, held here recently, heard first-hand about Canadian Tire’s strategies directly from the Retail Division’s president, Mark Foote.The company’s latest retail formula, Concept 20/20, has been rolled out to 34 new and existing stores so far. Foote anticipates the opening of another 20 such stores in 2006, along with 50 retrofits of existing dealers. The success of the formula, says Foote, is in the numbers: customer traffic in these stores is up 19%, while the average basket size has increased by five dollars. Not only that, but the number of units per basket has gone up by 3.8%.Within the 20/20 model, Canadian Tire is experimenting further, as well. A big store built last fall in Kingston, Ont., which is nearly 100,000 square feet in size, has become a real winner for the company, so Foote says he’d like to see more of the same. He believes there’s room for another 12 to 15 stores like it across Canada. Another challenge for Canadian Tire is securing its presence in the overcrowded urban markets. An “urban” outlet has gone up in Vancouver, which maximizes the high-cost real estate there by building on two levels. Foote told the audience that another store, being planned for Burlington, Ont., would be well suited to a large format, but he wants to avoid having to go with a two-level design.
CALGARY – Federated Co-operatives Limited and the North American Retail Hardware Association have firmed up a deal that makes FCL the latest retail group in Canada to join the NRHA (first reported in our July 18/05 issue–MM). NRHA, formerly the National Retail Hardware Association, incorporated a Canadian arm earlier this year, following the demise of the Canadian Retail Hardware Association at the end of 2004, ending almost a century of existence. The reorganized NRHA has been looking for recruits among retailers north of the border for its online training programs ever since.“Following the announcement that CRHA was closing, we felt retailers in Canada needed representation as well as the services we provide,” says NRHA-Canada managing director Scott Hoy.Under the latest deal, NRHA will provide every FCL-affiliated retailer with the opportunity to join NRHA-Canada as part of a new electronic membership agreement between the two organizations. This electronic membership gives each Federated retailer the option of full membership privileges, including access to a newly created FLC education and training website, which features a compilation of NRHA education and training tools. Included in this online training package are the NRHA’s Advanced Course in Hardware Retailing and the Building Materials Product Knowledge employee training courses. Both have been reformatted into Canadian versions and are available electronically on the Federated education and training website. The electronic membership model reduces costs greatly to each dealer, giving them a single price for unlimited access to the training courses for their staff, says Hoy. “By delivering these industry-leading employee training courses electronically through this electronic membership initiative, Federated affiliated retailers will be able to put as many students through these training courses as they like.”
ST. JACOBS, Ont. – The range of products on offer at the latest market for Home Hardware dealers, held here last week, reflects the opportunities – and emphasizes the urgency – for dealers to re-invent what a traditional hardware store stands for.Alongside staple lines such as tools, builders’ hardware and flooring were exhibitors that reflect the blurring lines of retail – and Home Hardware’s slogan for the show: “It’s a whole new ball game.”Dealers could evaluate wine making kits, available from Paklab, a Boucherville, Que.-based company that was at the show for only the second time. According to Elena Neri, corporate business development manager, the kits received a lot of attention from dealers, especially in rural markets. “It’s an amazing way, and a great alternative, to having your own table wine,” she said. Other vendors with more bread-and-butter lines were looking at ways to increase their shelf presence. Jennifer Prentice, a sales rep for Unilever, had large jugs of laundry detergent alongside the smaller bottles of household cleaners. The traffic in convenience products such as these, she pointed out, can turn a small hardware store into a weekly destination and a one-stop shop. Equally important were the many support services on display, everything from POS to online training programs. “Dealers understand that to be competitive today, you can’t milk the business,” said Bill Ferguson, Home Hardware’s dealer support manager.
MARKHAM, Ont. – Canada has very little excess housing capacity, so expect short-term interest rates – and mortgage lending rates – to start rising before the end of this year. This was just one of many nuggets of information shared by Bog Dugan, chief economist for Canadian Mortgage and Housing Corp., at the latest Hardlines Conference, held here recently. However, Dugan, pointed out, even if interest rates rise above 5%, they will remain very low by historical standards – for example, in 1982 five-year rates exceeded 20%.Must Canada contend with a real estate bubble that will eventually burst? Not according to Dugan. Even though a high sales-to-new-listings ratio continues to create upward pressure on house prices, markets are moving toward more balanced conditions, which will dampen the rate of increase in house prices. “Looking ahead, rising mortgage carrying costs will cause demand for home ownership to edge lower,” he said. “As a result, sales of existing homes will decrease this year and next.” At the end of the day, he pointed out, price gains are a normal market response to sellers’ market conditions and growth in real Canadian house prices remains in line with growth in real disposable income.
SPECIAL REPORT – How the industry’s two largest dealers treat their stores’ employees is once again coming under scrutiny by government officials. A Circuit Court judge in Memphis, Tenn., has certified a class action suit filed against Lowe’s on behalf of former and current employees. The suit, which involves five law firms defending the plaintiffs, seeks to recover overtime payments they claim the chain owes them, according to the Memphis Business Journal. The attorneys have posted a website,, that is calling on other employees to join the case. In a previous hearing, Lowe’s officials estimated that as many as 75,000 of its employees could be involved in such an action if it were certified. This week in Boston, the Equal Employment Opportunity Commission filed a suit in federal court against Atlanta-based Home Depot, claiming that a black former employee, who drove a forklift at the retailer’s store in Saugus, Mass., had been racially harassed by coworkers, and was fired in May because he complained about the treatment. The Boston suit also states that store managers tolerated the harassment. The New York Daily News reported on Friday that, as part of a larger class-action suit, federal officials have also sued Home Depot over the alleged racial harassment of employees of West Indian origin at its store in the Red Hook section of Brooklyn. The managers there are reportedly all white. Home Depot stated officially that it continues to enforce a “zero tolerance” policy against any forms of employee discrimination.
BENTONVILLE, Ark. – The world’s largest retailer is expanding in Central America and Eastern Europe. Through a partnership with a major supermarket chain in Guatemala, Wal-Mart will buy one-third of Central America Retail Holding Corp., which runs two chains and a total of 250 stores. That ownership was purchased from Dutch retailer Royal Ahold, which has chosen to divest itself of its holdings in Latin America to focus on the European and Asian markets. Wal-Mart has also announced plans to move into Hungary via the acquisition of Cora, a chain of seven hypermarkets owned by French-Belgian retailer Louis Delhaize.FORT WAYNE, Ind.— Do-it Best, the dealer-owned buying group based here, is returning US$113.7 million to its 4,100 members in the form of rebates on orders placed through the co-op’s warehouses. That figure represents the highest total that Do-it Best has paid out in its 60-year history. The buying group also reported that its wholesale revenue for the fiscal year ended July 31 rose to US$2.95 billion, representing a 4.7% increase over the previous year’s total, according to Do-it Best’s vp-finance Dave Dietz. The rebate in fiscal 2005 was 5.7% higher than last year’s.PHILADELPHIA–Home furnishings retailer Linens ’n Things may consider selling off, as it faces tough competition from Target and Wal-Mart. To complicate things further, third-quarter earnings will be affected by weak back-to-school sales, the company says. Same-store sales for the quarter are expected to drop by as much as 10%. FRANKFURT–Praktiker, a major European DIY chain with some 340 stores in nine countries, is being spun off by its parent company, supermarket giant Metro AG, which wants to issue an IPO. Financial institution J.P. Morgan is leading the syndicate to undertake the IPO. MONTREAL – In an effort to improve earnings in its Home Furnishings segment, Dorel Industries Inc. will consolidate its Ameriwood Industries business, the company’s RTA furniture division. Production will cease at its Wright City, Missouri facilities by the end of this year. Ameriwood will re-focus on new product development within each of its four product groups, relying on imports, as well as domestic production. According to Dorel president and CEO Martin Schwartz, the company’s “manufacturing footprint exceeded anticipated market needs.” The closure of the Wright City plant will affect approximately 300 employees and result in a pre-tax restructuring charge of approximately US$11 million. Production will be shifted to Dorel’s remaining RTA factories in Dowagiac, Mich., Tiffin, Ohio and Cornwall, Ont.
Sales at large retailers moved ahead 0.8% in July, marking two consecutive months of moderately strong growth. Other than slight declines in April and May, sales have increased steadily throughout 2005. The strongest sales growth was recorded in the “other goods and services” category (which includes products such as tobacco, automotive fuels, oils and additives, stationery and pet food), followed by sporting and leisure goods and food and beverages. Slight sales declines were seen among health and personal care products, as well as hardware, lawn and garden products, which were down 0.3%.In August, consumers paid 2.6% more than in August 2004 for the goods and services included in the Consumer Price Index (CPI) basket. Inflation was also up strongly from the 2.0% increase recorded in July. However, the 12-month change excluding energy rose more moderately, from 1.4% in July to 1.6% in August.Wholesale sales in Canada fell for the first time in six months in July when $39.7 billion worth of goods and services were sold, down 0.5% from June. In July, four of the seven sectors, whose sales accounted for 67% of total sales, posted declines. Most of the drop in total sales was attributable to declines in the building materials (-2.8%) and machinery and electronic equipment (-1.8%) sectors.
Housing starts in August were 2.009 million, down 1.3% from July and down 0.8% from August 2004. Permits were 2.124 million, down 2.2% from July but up 3.2% from one year ago.

****HARDLINES MARKETPLACE**** Don't miss the products and services on the Hardlines web Marketplace: And check out Hardlines Classifieds on the web:

HELP WANTED OUTSIDE SALES PERSON REQUIRED Established hardware and building materials wholesaler looking for an energetic self-starter able to work without supervision to fill a challenging entry-level position in merchandising and outside sales. The successful candidate will have 2-3 years experience in retail merchandising and sales, preferably in the building supply and hardware industry. This position entails travel throughout British Columbia and would be ideal for an outdoors enthusiast. Interested candidates should submit resumes to General Manager, PO Box 9010, Surrey, BC V3T 4X7 (09.26_10.10) ********************************************************************************** Alexandria Moulding, a family owned multinational company founded in 1943, based in eastern Ontario, is searching for a: DIRECTOR OF SALES (Competition 2005-016) Ideal candidates possess appropriate University education or equivalent, and a minimum of 15 years of experience in managing a national sales department of a wood moulding distribution organization or related business. Excellent communication, organizational and leadership skills are required. Bilingualism is a strong asset. The new incumbent, reporting to the General Manager of the Canadian operations, will recruit and manage a sales team; provide training, budget and hands on support in the field. Your understanding of the dynamics of sales, marketing, profit & loss, distribution, manufacturing and inventory will facilitate organizational efficiency. You will ensure complete customer satisfaction through pro-active interaction with key clients. Alexandria Moulding is an equal opportunity employer and offers competitive compensation. Only individuals selected for interviews will be contacted. Interested individuals shall send their résumé to: Alexandria Moulding Inc. Human Resources Department - Competition 2005-016 95 Lochiel Street East Alexandria (Ontario) K0C 1A0 Fax (613) 525-0807 E-mail: (09.19_10.03) ********************************************************************************** BRAND MANAGER—TORONTO Due to their growing list of successes our client, a GTA-based brand dominant needs to add a marketing performer to their current Marketing team. You’ll facilitate and execute the marketing strategy for a brand including launches, line extensions and collaborating with the sales team. This involves true brand management including brand/line reviews, packaging and merchandising, and assisting with brand strategy development. Achieving market penetration, profitability targets and classic consumer products brand management are your goals. Tell us about your product management successes as a Product Manager or APM. Great career upside potential and an excellent team of individuals to work with, in addition to a competitive compensation package. Please contact Wolf Gugler in complete confidence, quoting file PM-05. Wolf Gugler & Associates Limited, (888) 848-3006. Email: Web site: (09.19_10.03) ********************************************************************************** The How-To People are looking for the 10 best Recruiters in Canada.   The greatest story in the Canadian hardware business today is still being written...and the most exciting chapters are yet to come. If you feel you have what it takes to play a role in the implementation of RONA's strategic development plans in recruiting and building relationships with new dealers from coast to coast, we want to hear from you. Now. Especially if you have experience in the hardware, building materials and home improvement industry, the ability to interpret financial statements and present budgets, and strong communications skills, planning and organizational skills. If you can see yourself succeeding as one of 10 new RONA Development Managers, please send your résumé without delay...and in total . If selected for an interview, we'll reply with a detailed job description and contact you in regards to this step forward in your career. (09.12_09.26)  

********************************************************************************** Xtreem Sales is a well established sales agency in the hardware industry. Rapid growth is creating a need for expansion outside of Ontario. We are looking for successful and motivated agencies in the hardware and grocery industries to sell existing product lines.

Confidential inquiries to John Frizzell at (519) 762-9966 or (09.12_09.26)  



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