John Caulfield, Contributing Editor
vol. x, #36, September 7, 2004

IN THIS ISSUE: • Canadian market growing at record clip • U.S. economy looks for positive signs • Atlas Copco sells to Ryobi maker • NAFTA's latest ruling hurts U.S. • TruServ Canada on hot expansion track • B&Q may buy Chinese stores • Retail giants tee off for good causes • Rona sells Matco Ravary shares • Home Depot to provide same-sex benefits

* * * * * * See you at our Hardlines Conference Series on September 8 & 9! - Michael * * * * * * NOTE: Dollar amounts are stated in the currency of the country from which the story originates. — Michael McLarney, Editor & Publisher * * * * * *
"Anything too stupid to be said is sung." — Voltaire
WORLD HEADQUARTERS, TORONTO Canadians' obsession with buying and improving their homes reached a near fever pitch in 2003, with another record increase in home improvement sales, says a new report by Hardlines. A healthy economy, the strongest housing market in years and low interest rates, combined with a growing passion for home décor, helped drive sales by Canada's retail home improvement retailers up last year. They grew by an incredible 8.2% in 2003 to top $32.0 billion. That's up from $29.6 billion a year earlier. Some sectors have fared better than others. The big boxes continue to dominate the news, if not the industry. They grew to account for more 21.6% of the overall industry, with sales of $6.9 billion - from only 172 stores. While the big box sector continues to burgeon, independent building centre dealers, the sector considered the most vulnerable to the big box onslaught, fared even better. For example, buying groups, which account for the lion's share of this sector, are dominated by family owned businesses across the country. They grew their market share to 35% of the overall market, from 33%. Full details of the dynamic growth of the amazing retail home improvement sector will be presented at the Hardlines Conference Series, September 8-9, 2004. The Conference, a symposium for senior management and executives from all aspects of retail, distribution and manufacturing, will be held at the Renaissance Toronto Airport Hotel. For more information, click here.
WASHINGTON As Republican delegates and politicians convened in New York to re-nominate President Bush for a second term, the U.S. government was releasing some disconcerting news about the economy over which the Bush administration presides. Several of the country's largest retail chains - including Wal-Mart, Sears and Costco - reported August sales that were far below expectations. In fact, consumer spending in general appears to be tailing off, as U.S. auto sales fell by 12% in August. The country's two largest automakers, General Motors and Ford, said they planned to cut their fourth-quarter production by at least 7% to reduce their unsold inventories. The manufacturers blamed still-high gas prices - which are 25% above where they were at the beginning of the year - for sagging sales. "People are not spending money," Kurt Barnard, president of Retail Forecasting Group, told Reuters. "They are intimidated by the [economic] outlook."' Overall, the U.S. economy grew at a relatively modest 2.8% annual rate in the second quarter, a slower pace of expansion than previously thought. More Americans filed first-time unemployment claims in the last week of August than at any time since mid-April, according to a government report. First-time applications for unemployment benefits rose by 19,000 to 362,000, the Labor Department said. "The slowdown in job growth has curbed consumers' confidence," explained Lynn Franco, director of The Conference Board's Consumer Research Center, which reported that its Consumer Confidence Index in August was at its lowest level since April. "The level of consumer optimism has fallen off and caution has returned. Until the job market and pace of hiring picks up, this cautious attitude will prevail." Manufacturing continues to expand, but at a slower rate. The Institute for Supply Management reported that its "factory index" last month was 59, which wasn't that far off from the two-decade-high index of 63.6 in January, but did represent the index's lowest level since last October.
STOCKHOLM Atlas Copco, the Swedish-based equipment manufacturer, has agreed to sell its electric tool business, which markets under such brands as Milwaukee Electric Tool and AEG, to Techtronic Industries (TTI), a Hong Kong-based manufacturer that produces and distributes a broad range of home improvement and home care merchandise. TTI will pay Atlas Copco US$626.6 million in cash, and assume $86 million of Atlas's post-retirement and pension liabilities. TTI generated the equivalent of US$1.69 billion in sales last year. Its brands include such well-known names as Homelite, Regina and Dirt Devil. But where this company has really made a name for itself has been in its proprietary relationship with Home Depot, through which it markets its Ryobi and Ridgid lines of portable and benchtop electric tools. Last year, Atlas Copco's tool brands generated US$700 million in sales in the U.S. and Europe. However, the company decided last spring to put this division on the block, partly because it was having a hard time getting premium prices for its products. Its electric tool division employs 3,100 people, nearly two-thirds of whom work for Milwaukee. A week before it made this deal, Atlas Copco had agreed to acquire the assets of Chinese pneumatic toolmaker Qingdao Qianshao Precision Machinery.
WINNIPEG TruServ Canada got a new boss last fall, and with him came a new mandate to take an aggressive stand on growing the business rapidly. Bill Morrison joined TruServ as president and CEO, bringing with him the experience growing the business of Home Outfitters, the home décor and accessories chain owned by Hudson's Bay Co. Under his aegis, Home Outfitters doubled the number of stores in Canada within a few years. With Morrison at the helm, TruServ Canada's management has been realigned to better develop new business while managing - and growing - relations with existing member dealers. The effort is paying off, as dealers have been signing up at a brisk clip. Since April, 12 dealers have joined, typically under either the True Value, V&S or Country Depot banners. "I feel we are just gaining momentum," says Dave Leonzio, national growth manager for TruServ Canada. "We are delivering consistent performances in all aspects of service - especially fill rates - both in the distribution center and at store level with our field support. Our most recent successes have been a direct result of nurturing established relationships with key partners in the industry." Those existing relationships include the supply agreements TruServ has developed with key buying groups, such as Sexton and Castle. Some of the latest recruits are members of these groups who have added the True Value name and programs, to expand their hardware lines and grow their front end. Another area of potential growth is from the Country Depot program, which was picked up by TruServ as part of its acquisition of the retail division of Growmark in January 2003. With about 50 stores in Ontario, the deal gave TruServ the critical mass to begin expansion in earnest in that province. A distribution center was installed in Kitchener, Ont., last spring to serve new and existing dealers in Canada's largest province. According to Morrison, TruServ's retail farm and rural concept has tremendous potential. "Country Depot is going to become a national offering," he says. "I see the opportunity for 60 more in markets we're not in today."
OAK BROOK, Ill., & SCARBOROUGH, Ont. Ace Hardware Corp. and Home Depot Canada extended their philanthropic arms again to two of their favored charities, and got to play a little golf with their suppliers in the process. Ace, the largest dealer-owned buying group in North America, raised more than US$600,000 at its 13th annual golf outing, which it co-sponsored on August 12 with the Children's Miracle Network, which represents 170 member hospitals in North America. A record 1,006 golfers teed off at the outing, which was held at five Chicago-area courses. Many of those duffers represented the 1,100 vendors that participated in the fundraiser. Home Depot Canada raised C$450,000 for Habitat for Humanity through an annual golf tournament it held during the last week of August near Toronto. The money raised - which exceeded last year's take by 80% - will be used to help Habitat's affiliates across Canada fund their building efforts in 2005. The Canadian division's parent company, The Home Depot in Atlanta, has been supporting Habitat since 1997. More than 300 golfers, many of them suppliers, also participated in a golf event last month conducted by The Rona Foundation, the philanthropic arm of the Boucherville, Que.-based buying group and retailer, to raise money in the Foundation's ongoing battle against illiteracy and school dropouts. The C$400,000 generated was three times what Rona raised at a similar event last year.
BOUCHERVILLE, Que. Rona inc. announced last week that it unloaded its shares of Matco-Ravary, the Montreal-area building supply chain. Matco Ravary's controlling ownership was bought in March 2003 by a syndicate of members of Le Groupe BMR, a privately owned wholesale buying group whose building centre members compete with Rona dealers in Quebec. The sale, which represented about 28% of the outstanding Class B shares, was worth approximately $60 million. The purchaser is a numbered company owned by Wynnchurch GP Inc., a holding company whose interests include shares of vitamin supplement maker Weider Nutrition International Inc. Rona had originally opposed the purchase of Matco Ravary by BMR, questioning the value of the offer to all shareholders. Rona, which has been on an acquisition campaign of its own, did not make an effort to purchase Matco Ravary's five Montreal-area stores outright, a move that became clear when its own acquisition of Réno-Dépôt was announced soon after. Réno-Dépôt has 10 stores in the Montreal area. Rona began its relationship with Matco Ravary back in 1988, shipping it hardware and building materials. Soon after, Rona made the investment in the company, intending to underwrite expansion of Matco Ravary in the Montreal market. However, the growth of Réno-Dépôt, followed by the arrival of Home Depot a decade later, hampered Matco Ravary's growth. (To hear the latest on how Rona is delivering at the dealer level, don't miss Roy Perkins of Rona Home Centre in Cornwall, Ont., who will be speaking at our Hardlines Conference Series, September 8-9, 2004 in Toronto. For more info, click here)
ATLANTA Home Depot has decided to extend the full gamut of its health benefits package to its employees' same-sex partners. The move follows criticism of the retailer's benefits plan a few months earlier by a gay-rights advocacy group. Next month, domestic partners will be eligible for coverage under Home Depot's medical, dental, vision and life insurance plans, according to an internal memo circulated to its employees last week. Home Depot begins enrolling employees into its 2005 benefits program next month. Company officials said that Home Depot had been refining its benefits offering for a year. But last June, Human Rights Campaign, a gay rights group, targeted Home Depot and three other companies that were offering pet insurance, but not domestic partner coverage, according to the Atlanta Journal Constitution. "Employees there have been asking the company for this benefit for about five years," Kim Mills, education director at Human Rights Campaign, told the newspaper. Home Depot revised its non-discrimination policy in May 2001 to include sexual orientation. Its benefits, though, are not offered to employees' opposite-sex partners.
OAK BROOK, Ill. Ace Hardware Corp. held its first-ever Labor Day sale from September 3-6. Participating Ace stores offered eight products free to customers after a rebate and deep discounts on items such as power tools, lawn and garden merchandise, cleaning supplies and paint. The Anniversary Sale was part of Ace's celebration of its 80th anniversary this year. ISSAQUAH, Wash. For the year ended August 29, Costco Wholesale reported net sales of $47.15 billion, an increase of 13% from $41.69 billion over the prior fiscal year. Net sales for August reached $3.65 billion, an increase of 7% over $3.42 billion in the same four-week period of the prior fiscal year. For the fourth quarter, the company reported net sales of $14.84 billion, an increase of 11% from $13.42 billion. VANCOUVER Taiga Forest Products has formed a new division, International Supply Management. This new division will look for expansion of its sourcing from emerging nations, as well as new markets in major offshore economies. It will be led by Frank Iannucci, director, International Supply. The new division will focus on delivering a reliable, quality supply of products to the North American marketplace. MONTREAL Sodisco-Howden Group has renewed its contract with workers at its London, Ont., warehouse. The contract, with the Canadian Auto Workers, is for three years. The contract with workers at its Victoriaville, Que., distribution center was ratified last year, also for three years. HOFFMAN ESTATES, Ill. Sears, Roebuck and Co. reported that same-store sales fell 6.1% for the four weeks ended August 28. Total domestic store revenues were $1.91 billion for August, down 7.1%. VANCOUVER The recently announced purchase by Ainsworth Lumber of three mills in Minnesota owned by Potlatch Corp. will make it the number-four producer of OSB in the world. The deal, worth US$475.5 million, is expected to close later in September, and is expected to boost Ainsworth's production by 65% to 3.3 billion sq.ft. annually. The company already has OSB mills in British Columbia, Alberta and Ontario. TORONTO Hudson's Bay Co. reported a drop in second-quarter sales to $1.63 billion, from $1.66 billion in the same period last year. Same-store sales fell 1.8% over last year. Loss before interest and income taxes (EBIT) was $6.2 million for the quarter, compared with earnings of $17.5 million in the same period last year. For the first half of 2004, EBIT was a loss of $26.3 million, down from a loss of $23.7 million.
VANCOUVER The Canadian softwood lumber industry was dealt a big win from the latest NAFTA ruling over duties and penalties imposed by the United States in the ongoing softwood lumber dispute. In its ruling last week, the NAFTA Panel stated in strong language that it cannot find evidence to support the U.S. position that Canadian softwood lumber imported into the U.S. is damaging the industry there. The Panel has said that "enough is enough" and given the U.S. International Trade Commission until the end of this week to comply with its ruling. The ITC has no choice but to comply with the Panel's order, even if it disagrees with it. This would effectively end the case, and without the ITC's threat of injury finding, the U.S. will have to battle to find grounds for continuing to impose countervailing and anti-dumping duties on Canadian softwood imports.
SHANGHAI B&Q, the DIY division of Kingfisher Plc, is considering the purchase of a number of PriceSmart stores in China. The U.K. retailer, which already operates 15 stores in China, hopes to speed up expansion in this rapidly developing economy, especially since the announcement that Home Depot will begin expanding there, as well.Locally-owned PriceSmart China licenses its name from the U.S. retailer PriceSmart, but the operation is separately owned. It may be willing to sell some of its 70 stores, which are located in the southwest provinces of Yunnan and Sichuan, locations where B&Q has yet to establish a presence. A sale could happen by next year. Home Depot made big news in mid-June when it announced plans of its own to enter China. The move shines the spotlight clearly on the fastest growing economy in the world, as China is being transformed from a nation of producers to one of consumers, as well. Over the past 10 years, competition has heated up in China. However. A number of domestic retailers are already zeroing in on the DIY market, including Home World, which has 30 hypermarkets and eight home centers throughout China. Orient Home, another Chinese operation that is privately held, owns multiple outlets in Northern China, while Home Mart is owned in part by the Shanghai government. Besides, B&Q, OBI in Germany has been expanding with stores in China, as well. (For a better perspective on the international retail scene, don't miss Ira Kalish of Deloitte Research from Las Angeles, who will be our keynote speaker at the Hardlines Conference Series, September 8-9, 2004 in Toronto. For more info, click here)
Michael Brossard has been named senior national director for marketing at Rona inc. A four-year veteran of the company, Brossard was formerly Rona's director of marketing for Quebec. Before that, he was director of marketing for Nike Canada. He takes over the duties from Claude Bernier, formerly executive vice-president of sales and marketing for traditional and specialized stores. Bernier will continue as executive vice-president of sales for traditional and specialized stores. (514-599-5100)
The unemployment rate fell by a tenth-percentage point to 5.4% in August, says the Labor Department. That's the lowest since October 2001, and a rebound from the previous two months. Worker productivity grew at a 2.5% annual rate from April through June, the Labor Department reports. This is the slowest rate since the fourth quarter of 2002, and indicates companies may have to start doing more hiring in coming months.
Even though the seasonally adjusted annual rate of housing starts in July fell to 218,600, from 232,100 in June, housing starts are expected to reach 225,700 this year, the highest level since 1987, says Canada Mortgage and Housing Corp.
In last week's issue, I made an erroneous reference to Rona's expansion in British Columbia. The latest dealer to come on board there was not an acquisition, but the recruitment of a new member to Rona. My apologies for any confusion over that one. -Michael

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


A leading Canadian supplier of Hand Tools, Power Tool Accessories and Rotary Tool Accessories to leading retailers in North America and Europe, has an opening for a senior position in its Sales & Marketing department. The incumbent will be responsible to manage the sales of nominated house accounts/territories in the North American retail market. This position would also involve managing the Sales Agents/Agencies for your accounts/territories. This individual will be responsible for devising sales strategies, increasing customer base, increasing the product & program base to existing customers and ensuring budgeted sales numbers are met or exceeded. Experience in the Hardlines Retail Industry, a proven record of managing large & small customers and sales agencies and a willingness to travel is essential. Prior experience in the U.S. Market is desirable. Salary & perks based on experience, qualification & previous achievements. If you are a self-starter and a team player with management skills, able to recognize the market needs & willing to take the challenge, please contact Harjinder Sangha at in confidence.



We are a major building materials company seeking a proven sales executive for the Ontario region.

Based in GTA the position entails a variety of responsibilities that would include but may not be limited to:
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  • Major Account Management

Candidates are required to have pertinent industry experience in sales and/or marketing management. A university degree would be an important asset but equivalent experience will be considered. Our company offers a very competitive salary and benefits package appropriate to the position.

Please forward your resume with covering letter to and put P.O. Box 815 in the subject line.



Cooper Hand Tools, a leading manufacturer of professional hand tools and material handling products has an opening for a Product Manager at its Canadian sales and distribution facility in Barrie, Ontario. The position will be responsible for both product management and proactive marketing related activities for a wide variety of Cooper's Hand Tool products in Canada. The ideal candidate should have a successful record in sales / marketing in the Canadian hard goods industry and a demonstrated knowledge and experience of marketing requirements for both the retail and industrial / MRO sales channels. The position works closely with the Canadian sales team and will report to the VP of Marketing at a USA based divisional office.

Prospective candidates should have a four-year degree in a related discipline and be computer literate. Strong organizational, administrative, quantitative and analytical skills are essential. Some travel is required. The Company offers a very competitive salary and benefits program along with a good working environment. Please submit your confidential resume outlining accomplishments, objectives, and salary requirements along with a cover letter describing how your background fits the position to: Cooper Hand Tools HR Dept. 164 Innisfil Street Barrie, Ontario L4N 3E7
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Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 � 2004 by Michael McLarney. HARDLINES™ the electronic newsletter Phone: 416.489.3396; Fax: 416.489.6154 Michael McLarney, Editor & Publisher: Beverly Allen, Director of Sales & Marketing: Nancy Wright, Circulation Manager: Phyllis Nowell, Sales Manager: ______________________________________________ THE HARDLINES "FAIR PLAY" POLICY: Reproduction in whole or in part is very uncool and strictly forbidden and really and truly against the law. So please, play fair! Call for information on multiple subscriptions or a site license for your company. We do want as many people as possible to read Hardlines each week - but let us handle your internal routing from this end! ______________________________________________ Subscription: $229 (Canadian subscribers add $16.03 GST = $245.03 per year/ GST #13987 0398 RT). Secondary subscriptions at the same office are only $36 (Canadian subscribers add $2.52 GST = $38.52). Ask about our reduced rate for branch offices. You can pay online by VISA at our secure website or send us money. Please make cheque payable to Hardlines/McLarneyCom.