September 13, 1999 - Volume v, #36
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

Hey, it's only three days away. What can I say? Be there or be talked about! REGISTRATION COSTS JUST $249 FOR SUBSCRIBERS; $349 FOR NON-SUBSCRIBERS

SPONSOR PLUG (Hey, they make this day the great event it is. Anyone who attended our very first conference four years ago will remember how the paper plates kept slipping off people's knees.) MY THANKS TO:

-THE COLOGNE INTERNATIONAL HARDWARE FAIR/DIY'TEC
-STERLING COMMERCE
-INTACTIX
-THE WATT GROUP
-WOLF GUGLER AND ASSOCIATES
-HARDWARE MERCHANDISING MAGAZINE
-LOGISTICS SOLUTIONS

HOME DEPOT PREPARES TO UNVEIL TYPE SIX STORE IN BRAMPTON

Hardlines took a tour the other day of the newest store from Home Depot, its so-called Type Six store, which will open in Brampton, Ont., on Thursday. The prototype tinkers with the Home Depot format by putting more emphasis on categories like décor, moving some departments around and boutiquing of displays.

This is only the second store of its kind company wide; the first went up four weeks ago in Tampa, Fla. The next two will open in California and Atlanta in November and December respectively. Brampton is expected to do $45 million in sales in its first year.

The store itself is about 5,000 sq.ft. larger than a typical Home Depot and the additional space has gone into the creation of

"shops," special areas enclosed on three sides off the main aisle across the front of the store. The shops are about 2,400 sq.ft. each, devoted to kitchens, flooring, wallpaper and window treatments. The idea behind them is to give both the customer and the associate an environment apart from the main retail area in which to concentrate on décor related buying decisions.

The main drive aisle runs from a huge staging area for seasonal promotions inside the store's main entrance. It runs at a 45-degree angle into the middle of the store ending at the tool corral, which has been moved back beside the paint department. A NASCAR race car is suspended from the ceiling above the tools.

The aisle in front of the checkouts has been widened so seasonal and special buys can be stacked up and out from the checkout counter.

While concepts like the shop will be exclusive to the Type Six design (at least for now), many of the innovations being introduced here are expected to filter back to existing stores. The flooring display is one. Several of the shelves in the flooring aisle are tilted forward slightly, each of them laid with a different type of hardwood flooring.

The Brampton store is Home Depot's 48th in Canada; number 50 will open in Victoria this fall.

Hechinger Co. will finally sell its assets to pay creditors and close its remaining 117 stores. The Largo, Md.-based retailer, which operates Builders Square, Home Quarters Warehouse and Hechinger stores, sought permission in June to reorganize under Chapter 11 of the U.S. Bankruptcy Code. Its intention at the time was to close 89 underperforming stores in about 36 markets. Despite increased sales, the move failed to give the company the cash flow it needed to turn around in time. Hechinger plans to hold going-out-of-business sales, subject to court approval. The sales will begin immediately and should be completed by December.

Costco Wholesale Corp. reported net sales of US$2.19 billion for the four weeks ended August 29, 1999, an increase of 16% from US$1.88 billion in the same four-week period of the prior fiscal year. Same-store sales increased 13%. For the fiscal year ended August 29, 1999, the company reported net sales of US$26.98 billion, an increase of 13% from US$23.83 billion a year earlier. Same-store sales for the year increased 10%. During fiscal 1999, Costco opened 21 new locations, including two in Canada, for a total of 58 here. Masco has added to its stable of companies with the acquisitions of Arrow Fastener, Behr Process, Inrecon, Mill's Pride, and Superia Radiatoren, a Belgian radiator company. Cost of the acquisitions is about US$3.8 billion.

Illinois Tool Works Inc. (ITW Construction Products in Canada) announced last Thursday it will buy Premark International Inc. The all-stock deal, valued at about US$3.6 billion, is the largest of a long series of acquisitions by ITW and will blend two of the Chicago area's largest companies. ITW is the 11th-largest company in the Chicago area based on market capitalization, or the total value of its stock, with revenues of US$5.65 billion. Premark, with revenues of US$2.7 billion, will become a wholly owned unit of ITW. Premark's brand names include West Bend, Florida Tile, Wilsonart, Hobart and Vulcan.

CCPC Acquisition Corp., the parent of Corning Consumer Products Co., will purchase 93% of the outstanding shares of EKCO Group Inc. Corning is an affiliate of Borden Inc. The deal is expected to go through in about a week.

GoodHome.com and nHabit.com have announced they will merge, resulting in the largest company of its kind, combining more than US$65 million in the first major consolidation in the Internet home products category. The consolidated company, which will operate under the GoodHome.com name, will launch its flagship Web site this month. GoodHome.com will let consumers mix and match fabrics on furniture, click to change window coverings and wallpaper, and customize colours, trims, and accessories to create and visualize their ideal room &endash; right online.

CANADIAN STOCK WATCH

COMPANY	52-WEEK HIGH	52-WEEK LOW	CLOSE (FRI.)
Canadian Tire	46.00	29.00	36.30
Canfor	13.30	4.25	11.10
Goodfellow	11.50	6.00	11.75
Hudsons Bay	23.85	14.00	21.05
MacMillan Blo.	27.85	11.50	24.10
Sears Canada	33.75	15.25	33.70
Taiga Forest	14.75	8.65	13.85
West Fraser	41.00	19.05	36.70

"I am as I paint."
&endash; Pablo Picasso, to Jean Cocteau during the development of a play by Cocteau in the '30s, for which Picasso was doing the set design &endash; in his typically irascible fashion.

PEOPLE ON THE MOVE

The Home Depot in Atlanta has named Pat Farrah executive vice-president of merchandising, replacing Bill Hamlin, who is retiring for health reasons. Farrah was responsible for coming up with the idea that was the precursor to the big box in California back in the '70s - Mark Baker is taking on additional responsibility as the senior vice-president of merchandising for the core business, replacing Farrah. Baker also will oversee marketing and communications and proprietary brands - Steve Mahurin has been promoted to senior vice-president of merchandising for lumber and millwork - Greg Turner has been promoted to senior vice-president of merchandising for flooring, paint, hardware, blinds and wallpaper - Ken Ubertino continues as senior vice-president of merchandising for plumbing, electrical and lighting, garden, kitchen and bath. (770-433-8211)

"We sought Chapter 11 protection in order to evaluate the various alternatives for reorganizing the company. Unfortunately, it is clear that continued losses and stiff competition have made it highly unlikely that a traditional reorganization would be possible."&endash; Richard J. Lynch, CEO of Hechinger Co., commenting on the company's announced liquidation.

The Supreme Court of Canada has ruled to permit leafleting at secondary retail locations. The decision allows unions to approach customers to hand out leaflets in front of stores or other locations even though their dispute is not with that store or even that retailer. The ruling stemmed from a 1992 dispute on Vancouver Island between a union and K-mart Canada Ltd. During a strike, union members distributed leaflets and other materials at K-mart stores not involved in the fight.

Housing starts in Canada remained essentially unchanged in August at 147,400 units seasonally adjusted, up 1.1% from 147,000 in July, according to CMHC. Urban multiples were up 10.6% to 53,000 units while urban single starts declined 6.1% to 72,000. CMHC now expects this year's starts to outpace last year's total of 137,439, based on August's activity and given recent trends in employment growth, mortgage rates and migration.

Residential construction in Prairie urban centres increased 10.3% from July to 29,000 units. Singles rose 5.6% to 16,900 while multiples rose to 12,100 units. Starts were up in Alberta, but down in Manitoba and Saskatchewan. Overall, Ontario starts increased by 1.1% last month to 61,800 from 61,100 units in July. Multiples rose by 21% to 27,200 units. Singles went down 10.6% to 34,600. Toronto's residential construction was up sharply to 38,400 from 29,200 units in July.

British Columbia starts were 12,900 units in August compared with 13,400 the previous month. Singles decreased to 7,300 units and multiples to 5,600 units. In Vancouver, starts went down to 8,000 from 8,900 units the previous month.

Residential construction in Québec urban centres decreased 6.2% to 16,600 units. Singles dropped 6.7% to 9,800 while multiples went down 5.6% to 6,800 units. Starts in Montréal were down to 9,200 units.

Atlantic starts dropped by 23.0% in August to 4,700 units, compared with 6,100 in July. Starts were up in Prince Edward Island but down in Nova Scotia, New Brunswick and Newfoundland.

* * * * * * * *

The new housing price index increased 0.2% from June to July, according to Stats Canada. This index of contractors' selling prices for new houses rose 0.6% from July '98. In most areas, the increase was due to higher costs for materials such as lumber and drywall.

The Hardlines Who's Who (1999-2000 Edition) is a comprehensive guide to Canada's leading hardware and home improvement retailers, wholesalers, buying groups, mass merchants and co-ops. More than 100 listings include sales, product mix, SKUs, store types, executives and key buyers and their responsibilities.

The cost for the Hardlines Who's Who is only $105 for Hardlines subscribers and $135 for non-subscribers (but we'll have a special price at the Conference and for reorders). Order your own copy of the Hardlines Who's Who today!

* * * * * * *

COLOGNE IN Y2K:Come to the Cologne International Hardware Fair/DIY'TEC with HARDLINES, March 12-15, 2000, in Cologne, Germany.

Travel to the International Hardware Fair in Cologne to position yourself as a key player in the 21st century. Find out where the growth opportunities lie, discover how the world's markets are changing and learn about the latest new products.

Hardlines has arranged special travel packages that will make your trip painless and affordable. Not only will we help you with your travel arrangements, but we'll also ensure your trip is beneficial to both you and your company.

Six good reasons to travel with Hardlines:

1. Escorted travel from Toronto to Cologne via Frankfurt &endash;let us help you make your voyage worry-free by taking care of the details.

2. "Canada Night" Reception in Cologne&endash; A night of networking with fellow Canadian retailers and vendors, and a presentation by key European buyers.

3. Pre-show seminar &endash; Hardlines and the Canadian office of the Cologne Trade Fairs will jointly present tips on how to maximize your presence at the Show.

4. Hardlines Handbook of the European market &endash; a helpful guide to European markets.

5. Store tours &endash; We'll take you on a tour of the European big-boxes and independents so you can take home the latest ideas for merchandising, packaging and store layout.

6. Spouses' program &endash; Join us to discover the sights and scenes of historic Cologne.

Affordable, comprehensive travel packages are available in two- and five-star accommodations. Just email us for more information. Our recommended Canadian travel agent will contact you to arrange your personalized travel package.

* * * * * * *

HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 1999 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.

September 13, 1999 - Volume v, #36
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

Hey, it's only three days away. What can I say? Be there or be talked about! REGISTRATION COSTS JUST $249 FOR SUBSCRIBERS; $349 FOR NON-SUBSCRIBERS

SPONSOR PLUG (Hey, they make this day the great event it is. Anyone who attended our very first conference four years ago will remember how the paper plates kept slipping off people's knees.) MY THANKS TO:

-THE COLOGNE INTERNATIONAL HARDWARE FAIR/DIY'TEC
-STERLING COMMERCE
-INTACTIX
-THE WATT GROUP
-WOLF GUGLER AND ASSOCIATES
-HARDWARE MERCHANDISING MAGAZINE
-LOGISTICS SOLUTIONS

HOME DEPOT PREPARES TO UNVEIL TYPE SIX STORE IN BRAMPTON

Hardlines took a tour the other day of the newest store from Home Depot, its so-called Type Six store, which will open in Brampton, Ont., on Thursday. The prototype tinkers with the Home Depot format by putting more emphasis on categories like décor, moving some departments around and boutiquing of displays.

This is only the second store of its kind company wide; the first went up four weeks ago in Tampa, Fla. The next two will open in California and Atlanta in November and December respectively. Brampton is expected to do $45 million in sales in its first year.

The store itself is about 5,000 sq.ft. larger than a typical Home Depot and the additional space has gone into the creation of

"shops," special areas enclosed on three sides off the main aisle across the front of the store. The shops are about 2,400 sq.ft. each, devoted to kitchens, flooring, wallpaper and window treatments. The idea behind them is to give both the customer and the associate an environment apart from the main retail area in which to concentrate on décor related buying decisions.

The main drive aisle runs from a huge staging area for seasonal promotions inside the store's main entrance. It runs at a 45-degree angle into the middle of the store ending at the tool corral, which has been moved back beside the paint department. A NASCAR race car is suspended from the ceiling above the tools.

The aisle in front of the checkouts has been widened so seasonal and special buys can be stacked up and out from the checkout counter.

While concepts like the shop will be exclusive to the Type Six design (at least for now), many of the innovations being introduced here are expected to filter back to existing stores. The flooring display is one. Several of the shelves in the flooring aisle are tilted forward slightly, each of them laid with a different type of hardwood flooring.

The Brampton store is Home Depot's 48th in Canada; number 50 will open in Victoria this fall.

Hechinger Co. will finally sell its assets to pay creditors and close its remaining 117 stores. The Largo, Md.-based retailer, which operates Builders Square, Home Quarters Warehouse and Hechinger stores, sought permission in June to reorganize under Chapter 11 of the U.S. Bankruptcy Code. Its intention at the time was to close 89 underperforming stores in about 36 markets. Despite increased sales, the move failed to give the company the cash flow it needed to turn around in time. Hechinger plans to hold going-out-of-business sales, subject to court approval. The sales will begin immediately and should be completed by December.

Costco Wholesale Corp. reported net sales of US$2.19 billion for the four weeks ended August 29, 1999, an increase of 16% from US$1.88 billion in the same four-week period of the prior fiscal year. Same-store sales increased 13%. For the fiscal year ended August 29, 1999, the company reported net sales of US$26.98 billion, an increase of 13% from US$23.83 billion a year earlier. Same-store sales for the year increased 10%. During fiscal 1999, Costco opened 21 new locations, including two in Canada, for a total of 58 here. Masco has added to its stable of companies with the acquisitions of Arrow Fastener, Behr Process, Inrecon, Mill's Pride, and Superia Radiatoren, a Belgian radiator company. Cost of the acquisitions is about US$3.8 billion.

Illinois Tool Works Inc. (ITW Construction Products in Canada) announced last Thursday it will buy Premark International Inc. The all-stock deal, valued at about US$3.6 billion, is the largest of a long series of acquisitions by ITW and will blend two of the Chicago area's largest companies. ITW is the 11th-largest company in the Chicago area based on market capitalization, or the total value of its stock, with revenues of US$5.65 billion. Premark, with revenues of US$2.7 billion, will become a wholly owned unit of ITW. Premark's brand names include West Bend, Florida Tile, Wilsonart, Hobart and Vulcan.

CCPC Acquisition Corp., the parent of Corning Consumer Products Co., will purchase 93% of the outstanding shares of EKCO Group Inc. Corning is an affiliate of Borden Inc. The deal is expected to go through in about a week.

GoodHome.com and nHabit.com have announced they will merge, resulting in the largest company of its kind, combining more than US$65 million in the first major consolidation in the Internet home products category. The consolidated company, which will operate under the GoodHome.com name, will launch its flagship Web site this month. GoodHome.com will let consumers mix and match fabrics on furniture, click to change window coverings and wallpaper, and customize colours, trims, and accessories to create and visualize their ideal room &endash; right online.

CANADIAN STOCK WATCH

COMPANY	52-WEEK HIGH	52-WEEK LOW	CLOSE (FRI.)
Canadian Tire	46.00	29.00	36.30
Canfor	13.30	4.25	11.10
Goodfellow	11.50	6.00	11.75
Hudsons Bay	23.85	14.00	21.05
MacMillan Blo.	27.85	11.50	24.10
Sears Canada	33.75	15.25	33.70
Taiga Forest	14.75	8.65	13.85
West Fraser	41.00	19.05	36.70

"I am as I paint."
&endash; Pablo Picasso, to Jean Cocteau during the development of a play by Cocteau in the '30s, for which Picasso was doing the set design &endash; in his typically irascible fashion.

PEOPLE ON THE MOVE

The Home Depot in Atlanta has named Pat Farrah executive vice-president of merchandising, replacing Bill Hamlin, who is retiring for health reasons. Farrah was responsible for coming up with the idea that was the precursor to the big box in California back in the '70s - Mark Baker is taking on additional responsibility as the senior vice-president of merchandising for the core business, replacing Farrah. Baker also will oversee marketing and communications and proprietary brands - Steve Mahurin has been promoted to senior vice-president of merchandising for lumber and millwork - Greg Turner has been promoted to senior vice-president of merchandising for flooring, paint, hardware, blinds and wallpaper - Ken Ubertino continues as senior vice-president of merchandising for plumbing, electrical and lighting, garden, kitchen and bath. (770-433-8211)

"We sought Chapter 11 protection in order to evaluate the various alternatives for reorganizing the company. Unfortunately, it is clear that continued losses and stiff competition have made it highly unlikely that a traditional reorganization would be possible."&endash; Richard J. Lynch, CEO of Hechinger Co., commenting on the company's announced liquidation.

The Supreme Court of Canada has ruled to permit leafleting at secondary retail locations. The decision allows unions to approach customers to hand out leaflets in front of stores or other locations even though their dispute is not with that store or even that retailer. The ruling stemmed from a 1992 dispute on Vancouver Island between a union and K-mart Canada Ltd. During a strike, union members distributed leaflets and other materials at K-mart stores not involved in the fight.

Housing starts in Canada remained essentially unchanged in August at 147,400 units seasonally adjusted, up 1.1% from 147,000 in July, according to CMHC. Urban multiples were up 10.6% to 53,000 units while urban single starts declined 6.1% to 72,000. CMHC now expects this year's starts to outpace last year's total of 137,439, based on August's activity and given recent trends in employment growth, mortgage rates and migration.

Residential construction in Prairie urban centres increased 10.3% from July to 29,000 units. Singles rose 5.6% to 16,900 while multiples rose to 12,100 units. Starts were up in Alberta, but down in Manitoba and Saskatchewan. Overall, Ontario starts increased by 1.1% last month to 61,800 from 61,100 units in July. Multiples rose by 21% to 27,200 units. Singles went down 10.6% to 34,600. Toronto's residential construction was up sharply to 38,400 from 29,200 units in July.

British Columbia starts were 12,900 units in August compared with 13,400 the previous month. Singles decreased to 7,300 units and multiples to 5,600 units. In Vancouver, starts went down to 8,000 from 8,900 units the previous month.

Residential construction in Québec urban centres decreased 6.2% to 16,600 units. Singles dropped 6.7% to 9,800 while multiples went down 5.6% to 6,800 units. Starts in Montréal were down to 9,200 units.

Atlantic starts dropped by 23.0% in August to 4,700 units, compared with 6,100 in July. Starts were up in Prince Edward Island but down in Nova Scotia, New Brunswick and Newfoundland.

* * * * * * * *

The new housing price index increased 0.2% from June to July, according to Stats Canada. This index of contractors' selling prices for new houses rose 0.6% from July '98. In most areas, the increase was due to higher costs for materials such as lumber and drywall.

The Hardlines Who's Who (1999-2000 Edition) is a comprehensive guide to Canada's leading hardware and home improvement retailers, wholesalers, buying groups, mass merchants and co-ops. More than 100 listings include sales, product mix, SKUs, store types, executives and key buyers and their responsibilities.

The cost for the Hardlines Who's Who is only $105 for Hardlines subscribers and $135 for non-subscribers (but we'll have a special price at the Conference and for reorders). Order your own copy of the Hardlines Who's Who today!

* * * * * * *

COLOGNE IN Y2K:Come to the Cologne International Hardware Fair/DIY'TEC with HARDLINES, March 12-15, 2000, in Cologne, Germany.

Travel to the International Hardware Fair in Cologne to position yourself as a key player in the 21st century. Find out where the growth opportunities lie, discover how the world's markets are changing and learn about the latest new products.

Hardlines has arranged special travel packages that will make your trip painless and affordable. Not only will we help you with your travel arrangements, but we'll also ensure your trip is beneficial to both you and your company.

Six good reasons to travel with Hardlines:

1. Escorted travel from Toronto to Cologne via Frankfurt &endash;let us help you make your voyage worry-free by taking care of the details.

2. "Canada Night" Reception in Cologne&endash; A night of networking with fellow Canadian retailers and vendors, and a presentation by key European buyers.

3. Pre-show seminar &endash; Hardlines and the Canadian office of the Cologne Trade Fairs will jointly present tips on how to maximize your presence at the Show.

4. Hardlines Handbook of the European market &endash; a helpful guide to European markets.

5. Store tours &endash; We'll take you on a tour of the European big-boxes and independents so you can take home the latest ideas for merchandising, packaging and store layout.

6. Spouses' program &endash; Join us to discover the sights and scenes of historic Cologne.

Affordable, comprehensive travel packages are available in two- and five-star accommodations. Just email us for more information. Our recommended Canadian travel agent will contact you to arrange your personalized travel package.

* * * * * * *

HARDLINES the electronic newsletter. Michael McLarney, Editor & Publisher. Published weekly (except monthly in December and August) by McLARNEYCOM 283 Belsize Dr., Toronto, ON Canada M4S 1M5. 416-489-3396; fax: 416-489-6154. E-mail: hardline@terraport.net © 1999 by Michael McLarney. Reproduction in whole or in part is strictly forbidden. Subscription: $185+$12.95 GST = $197.95 (or $27.75 HST=$212.75) per year (GST #13987 0398 RT). Please make cheque payable to McLarneyCom.