John Caulfield, Contributing Editor
vol. xi, #33, September 6, 2005

IN THIS ISSUE: • Industry responds to Katrina’s devastation • Bargain Building Materials adds franchisees • TruServ, TORBSA and groceries • Sears Canada sells credit card business • Lanoga buys big independent • Lowe’s plans new distribution center * * * * * *

“Most single men don’t even live like people. They live like bears with furniture.” — Rita Rudner (American comedian)
MOORESVILLE, N.C. & ATLANTA Big box retailers have been preparing to aid victims of Hurricane Katrina, devastated by terrific storms last week in cities like New Orleans. Lowe’s Cos. has readied hundreds of truckloads of emergency supplies to deploy for relief efforts along the Gulf Coast. The company also announced that its more than 1,125 stores nationwide will serve as official cash donation sites to benefit the American Red Cross disaster relief fund. Lowe's will match in-store customer contributions up to US$1 million. The Home Depot Foundation made a direct cash donation of US$1.5 million to support the relief and rebuilding efforts. Home Depot made a further donation of US$400,000 to emergency management organizations, including American Red Cross and The Salvation Army, for immediate disaster relief and recovery. But relief efforts go right down to the local level, reflecting the desire by Americans everywhere to help out. For example, Alspaugh’s Ace Hardware in Kingwood, Tex., hosted a lemonade stand and food collection drive this past weekend.
NATIONAL REPORT — Days after Hurricane Katrina swept through and devastated the Gulf coast in the southeastern U.S., the storm’s impact on building material supply and prices was already being felt.Random Lengths, a leading market tracker of lumber and plywood prices, notes that some panic buying sent prices of southern yellow pine, plywood, and oriented strandboard sharply higher. As of Thursday, prices for standard 2x4 studs cost US$330 per 1,000 board feet, up US$41 from last week. As much as 1 million board feet of softwood lumber in shipping ports ready to go to New Orleans may have been destroyed. A spokeswoman at Madison’s Canadian Lumber Reporter, an industry newsletter, said Thursday that 12-18 mills in the affected region have been shut down by floods, a lack of power, or blocked access roads. Some commodities, like roofing and drywall, whose supply has been erratic and even on allocation in some weeks as a result of last year’s hurricanes in Florida, could be under duress, too, when rebuilding from Katrina begins. “We are running at capacity in our five plants, so I don’t know how much more we can do,” Thomas Karol, CEO of roofing supplier Elk Supply, told the Dallas Morning News. “We are running 24 hours a day, seven days a week.” He added that the Florida hurricanes, which struck large population centers, increased overall demand for roofing material by 10% to 15%, whereas he expects damage from Katrina to increase demand by no more than 3%. “That's still a lot of new demand in a market that is already tight.” Perhaps the one saving grace is that the markets most affected by the storm are not in areas where high levels of new-home construction are currently taking place. However, the rebuilding effort could be monumental and take several years to complete. Michael Carliner, an economist with the National Association of Home Builders, told the Huntsville (Ala.) Times that the first phase for heavy demand on building materials will be repair-related, plywood, windows and oriented strand board used in roofing and walls. He predicted that homebuilding materials wouldn’t be in demand for some time, given the expected delays before any significant rebuilding can start. “Rebuilding takes a longer time to start and a much longer time to finish,” Carliner said. “What we found after each natural disaster is that it’s very hard to detect that much additional construction occurred. That reflects a number of things: the reconstruction process is very slow, it may take a decade to really complete, and a lot of people don’t rebuild.” He noted that last year’s four hurricanes that swept through Florida destroyed 27,000 homes, and he expected the damage to be worse from Katrina.
SAINT-ANTONIN, Que. Bargain Building Materials Stores/ Matèriaux à bas prix has identified a winning formula – one that involves franchisees instead of corporate stores. As a result, the company is undertaking a plan to convert its corporate stores into dealer-owned operations. The latest to make the switch are in St-Antonin, near Riviere-du-Loup, and St-Jean-sur-Richelieu. The Saint-Antonin and Saint-Jean stores, managed by Russel Beaulieu and Sylvie Giroux respectively, will handle operations of the stores, while Bargain Building Materials remains the owner of the installations and the inventory. The program marks a major strategic reorientation initiated last May, which will result in all 15 corporate outlets being franchised within the next two years. Those franchises will be owned by Bargain, but operated by independent franchisees. Currently seven of the 15 stores have been successfully converted to this new arrangement. “We realized that the financial contribution of the franchisee increases their involvement and motivation in all aspects, whether it concerns management or customer service,” says Christian Richer, president and founder of Bargain Building Materials. “This is the reason why we decided to initiate this more entrepreneurial approach in all of our stores.” Bargain also has an “authorized dealer” program, whereby existing independents can sign on to operate as Bargain Building Materials outlets. Bargain began this program two years ago, but recruitment really began in earnest in the summer of 2004. Eventually, five independent dealers were recruited under the Bargain banner. Now, within the past month, another three authorized dealers have joined, including the chain’s first stores in the Maritimes. They are located in Dieppe, a suburb of Moncton, N.B., Jacksonville, near Fredericton. The third opening, in the Saint-Valère community of Victoriaville, Que., is scheduled for later this month. “We carefully analyze the propositions that we receive, because we want to develop some solid partnerships,” says Richer. “I have the conviction that our outstanding breakthrough in the Maritimes will increase in the next few years.” The company’s operations now comprise 22 stores in total. Of those, seven are corporate stores being operated under the franchise partnership arrangement and eight are waiting to be converted. Another seven are authorized independents. Headquartered in St-Antonin, Bargain Building Materials had sales of $35.2 million last year.
KITCHENER, Ont. TruServ Canada continues to fill its ranks with both traditional and non-traditional dealers. As part of a recent supply agreement with the Ontario building supply buying group, TORBSA, it has added a third member of that group to its ranks. This one, in Kelly Lake, Ont., marks the move by a growing number of building centres to ally themselves with stronger sources for hardlines products and programs.“Our support and expertise for independent retailers is not a secret anymore,” says Lionel Gagnon, national growth manager, TruServ Canada. “Our fill rates are about to exceed 97% year to date, allowing us to continue to provide basic services consistently while focusing on the opportunities locally. We have a number of other hardware and building centers talking to us and are at the stage where we expect to make a number of further announcements shortly.” TruServ Canada has also signed a supply agreement with two grocery retailers, as part of TruServ’s latest initiative to supply general merchandise to retailers outside the hardlines arena. L.M. Food Market is a Southwestern Ontario grocery chain with locations in Harriston, Durham, Palmerston, Dundalk, Markdale, Arthur, and Elora. Selby Freshmarket has a single location in Elmira, Ontario. “This program is growing quickly with grocery and pharmacy entrepreneurs in Western Canada," says Gagnon. “We expect similar rapid additions in Eastern Canada, building our distribution capacity on products and routes already in place.”
INDIANAPOLIS — Redmond, Wash.-based pro dealer Lanoga Corp. continued to expand its market reach this week when it purchased Carter-Lee Lumber, which operates a 15-acre yard here and a 21-acre roof and truss plan in Mooresville, Ind. Lanoga, the 10th-largest home improvement dealer in the U.S., will manage Carter-Lee from its United Building Centers division, which is based in Minnesota. Carter-Lee can trace its roots back to 1873, when its founder, George Carter, ran a hardwood sawmill. The company employs 235 people and generated US$88 million in revenue in 2004, according to the Indianapolis Star. David Carter, Carter-Lee’s president, will stay on to run the yards. He told the Star he was attracted to Lanoga because the larger company could provide expansion capital but tended to leave local management in place. Only last month, Lanoga expanded into Texas for the first time through the acquisition of Parker Lumber, a pro dealer based there that operates 13 yards with US$32 million in revenue.
MOORESVILLE, N.C. — Lowe’s Cos. plans to expand its already extensive network of distribution centers. The dealer, which has 1,125 stores in 49 states in the United States and has announced plans to expand into Canada, said that it would spend $150 million to build a 1.4-million-square-foot DC in Lebanon, Ore., that would be operational in 2007; and to add a total of 1.4 million square feet of space to existing facilities in Valdosta, Ga., Statesville, N.C. and North Vernon, Ind. The Charlotte Business Journal reports that Lowe’s will spend $12 million to add 324,000 square feet to the 1.15-million-square-foot Statesville DC alone, and will add 50 jobs to that 800-worker facility.Lowe’s currently operates 11 distribution centers and 10 flatbed DCs that handle the distribution of lumber and building materials. The company recently initiated a program called R3, for Rapid Response Replenishment, whose goal is to eventually flow at least 75% of its stores’ inventory through centralized distribution points, versus 50% today. In a related development, the city of Rockford, Ill., has ironed out the details for Lowe’s to build a 1.4-million-square-foot DC there. The city has approved an estimated $2.6 million in tax breaks for the dealer, and will purchase 180 acres of land for $4.4 million, 152 acres of which it will sell to Lowe’s for $2.43 million.  
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TORONTO Sears Canada Inc. has entered into an agreement to sell its Credit and Financial Services business to JPMorgan Chase & Co. As part of the transaction, Sears Canada and JPMorgan Chase will also enter into a long-term marketing and servicing alliance with an initial term of 10 years. Sears has servicing responsibility for the Sears Card receivables portfolio, on behalf of Sears Canada Bank, which is itself a wholly-owned subsidiary of Sears Canada. Upon completion of the transaction, JPMorgan Chase will acquire substantially all of the assets and liabilities of the Sears Credit and Financial Services business, including Sears Canada Bank. Most of Sears Credit’s 1,000 Sears staff will become employees of JPMorgan Chase. The transaction is expected to close by the end of this year, subject to regulatory approvals and closing conditions.TORONTO Hudson's Bay Co.’s net loss eased by almost half in the second quarter, to $8 million from $15 million in the second quarter of 2004. Sales, however, were down slightly, to $1.602 billion from $1.627 million in the same period last year. The company recorded a loss before interest and income taxes (EBIT) of $13 million for the second quarter, compared with a loss of $10 million in the previous year. Same-store sales for Hbc’s Zellers discount division were up 0.7%, the second consecutive quarter of positive same-store sales. At the Bay (excluding Home Outfitters), same-store sales were down 3.9%. TORONTO Canadian Tire Corp. has announced the sale and leaseback of its Cambie Street real-estate project in Vancouver, to RioCan Real Estate Investment Trust for $44.5 million. Canadian Tire expects to realize a pre-tax gain on the sale of approximately $8.9 million, which will be amortized over the 20-year term of the Canadian Tire store lease. The site includes a four-storey building anchored by Canadian Tire’s newest “urban” style 20/20 concept store (see last issue–MM). ISSAQUAH, Wash. Costco Wholesale Corp. reported year-end net sales of US$51.87 billion, an increase of 10% over US$47.15 billion during the prior fiscal year. Same-store sales for the year were up 7% company wide, while the international division, of which Canada is a part, had a rise in same-store sales of 11%. For the fourth quarter ended August 28, the company reported net sales of US$16.37 billion, an increase of 10%. ATLANTA The previously announced takeover by Home Depot of National Waterworks Holdings Inc. closed at the end of August, and according to a regulatory filing, the selling price was US$1.35 billion. National, a distributor of products for wastewater transmission systems, will become part of Home Depot Supply. TORONTO Canadian Tire Corp. completed a public offering of $200 million in 30-year medium term notes pursuant to a prospectus dated March 14, 2005. The notes carry a coupon rate of 5.61% and mature on Sept. 4, 2035. Scotia Capital Inc. served as lead agent and bookrunner on the offering. Other syndicate members included TD Securities Inc. (co-lead), BMO Nesbitt Burns Inc., CIBC World Markets Inc., National Bank Financial Inc., and RBC Capital Market.
At IMG, Michael (Mike) Semerak has been appointed executive vice president of sales & marketing. He will oversee the development of IMG’s global sales and marketing strategy and handle its business financial management. Before coming to IMG, Semerak was a sales executive at Koolatron Inc., and before that he held positions at Regal Greetings and Gifts, Rona Cashway Building Centers and Canadian Tire … Also at IMG, John Spankie has been appointed HVAC territory manager for Western Canada. He will manage HVAC sales from Manitoba to British Columbia, focusing on building business for the Greentek IAT division … Tony Gittens is now Ontario HVAC territory manager. Tim Boychuk has been appointed director, information technology at TruServ Canada Cooperative Inc. He reports to Bill Morrison, president & CEO. Most recently, Boychuk was CIO at E.H. Price, and before that served as director, applications development at Motor Coach Industries. COLUMBUS, Ohio – Stephen Quinn has joined Wal-Mart as senior vice-president of marketing. He was formerly chief marketing officer at Frito-Lay, a division of PepsiCo.
Real gross domestic product advanced 0.8% in the second quarter, as continued strength in personal expenditures drove output up in the services sector, reports Stats Canada. In June, economic output edged up 0.2%, after increasing 0.3% in May and 0.4% in April. The Canadian economy grew at an annualized rate of 3.2% in the second quarter of the year, compared to 2.1% in the last quarter.
Guess how many Home Depot buyers are coming to our Conference next week? Like, ALL OF THEM! That’s right, they’re going to be there to hear from Home Depot’s new top merchandiser, Tom Taylor, evp marketing and merchandising, who’s joining us from Atlanta. They won’t be alone: executives from RONA, Castle, Home Hardware and Canadian Tire will all be there. Don’t miss it!

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HELP WANTED   PPG Canada Inc., a global leader in the production and technology of coatings and related products, has an immediate opening for a MARKETING CO-ORDINATOR This is an exciting opportunity for an energetic individual with a strong work ethic to become a part of our Architectural Coatings Group. You will be responsible for managing a variety of projects in a fast paced, deadline driven, project based environment. You will interpret, adapt and communicate corporate marketing initiatives to ensure optimal benefit to the Canadian dealer and sales operation as well as identify market trends and develop implementation programs and strategies to ensure market penetration and increased profits for the Canadian Architectural Coatings product offerings. You will possess a Business degree, preferably majoring in Marketing with 2 – 4 years of related experience with familiarity in the paint, design or home improvement industry. We are looking for a goal-oriented candidate who possesses excellent written and verbal communication skills, is extremely organized with a positive mental attitude and possesses outstanding organizational and time management and computer software application skills. Fluency in the French language would be desirable but not mandatory. All interested qualified candidates, should E-Mail their resume to or fax their resume to (905) 855-6642 (08.29_09.12)   

**********************************************************************************   DEVELOPMENT MANAGER - MANITOBA & SASKATECHEWAN

The Company RONA is the leading distributor and retailer of hardware, home improvement, and gardening products in Canada. The Objective Reporting to the Director, Traditional Banners/Development - Western Canada, the successful incumbent will be an energetic professional with expertise in development and operations and /or have a thorough understanding of the home improvement industry. The key responsibility will be to oversee implementation of the organization’s strategic development plans for each existing banner while recruiting and building relationships with new dealers. Responsibilities • Implementation of RONA’s strategic development plan for each existing banner • Be responsible for the recruitment and integration of new dealers within your assigned region - Analyses the territory - Evaluates potential dealers - Presents the organization to prospective dealers - Qualifies dealers according to membership criteria - Ensures mentoring of new dealers for a period of 6 months after they join RONA • Other duties and responsibilities as assigned by the Director, Traditional Banners/Development - Western Canada Qualifications • A minimum of 5 – 10 years of experience in the hardware, building material and/or home improvement industry • Experience in recruiting new members • Excellent ability to build relationships with dealers • Ability to interpret financial statements and present budgets • Flexibility to changing priorities with short notice to meet business needs • Exceptional communicator with strong planning and organizational skills • You must be comfortable with travel as there will be some overnights • Motivated, self-starter able to work independently and as part of a team. • Computer literate with strong understanding of Microsoft Office software • Valid drivers license and safe driving record • Autonomous • College diploma an asset To apply for this position please send your resume to Thank you for your interest; however, only candidates selected for an interview will be contacted. (08.02_09.05)



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