| SODISCO-HOWDEN: UP FOR REVIEW OR ON THE BLOCK? |
| MONTREAL — Sodisco-Howden Group has engaged a European-based investment banker to evaluate the hardware wholesaler's future.
Officially, the company has announced that its board of directors has engaged N M Rothschild & Sons "to review business alternatives and provide recommendations on how to maximize Sodisco-Howden's shareholder value."
According to Jos Wintermans, president and CEO of Sodisco-Howden, the outcome of the review could mean any of the following: to find a buyer, to make additional acquisitions (Sodisco-Howden has purchased Smith-Barregar, Marchands Unis and Ace Hardware all within the past three years), or to merge with another partner.
But Sodisco-Howden will likely go on the selling block, say many industry insiders.
The company faces a board that wants it sold and a chairman who must retire this year. Sodisco-Howden's major shareholder is Paribas Participations, which is facing the retirement of its chairman, Hubert de la Beaumelle, this year. But despite the naysayers to Sodisco-Howden's viability, it serves a distinct role in the home improvement food chain, providing a full range of hardlines to independent hardware and building supply retailers across the country. And, despite the inordinate emphasis placed on specialty retailers, especially big boxes (not by the weekly electronic media, shurely - Editor), hardware and building centres, most of them independently owned, still comprise 60% of the market in Canada.
In fact, Sodisco-Howden ships to more than 800 franchise retailers under the Ace, Do-it, Bâtitout and Ferplus banners, and ships to another 800 independents, mostly building centres that belong to one of the many buying groups across the country.
Wintermans says the board is pleased with the company's performance. For the first six months of the year, revenues were up 1.4% to $231.5 million and sales last year reached $482 million. However, he does not believe the stock attracts the kind of attention it deserves. "So how can we get better value for the efforts we have put in?" he says of the new initiative.
Wintermans expects a decision about the company's future to be made within four to six months. |
| HOME IMPROVEMENT WILL KEEP GROWING, FASHION WILL SUFFER |
| MISSISSAUGA, ON — An unabated consumer taste for home décor and DIY products will fuel growth in the retail home improvement/hardware industry well into the current decade. That's the consensus of three retail analysts who spoke recently at the Hardlines Marketing Conference.
Albert Plant, a retail consultant who has worked extensively with clients such as RBC Royal Bank, along with Randy Harris, president of Trendex North America and Ed Strapagiel from Kubas Consultants, all agreed that Canadian consumers are likely to keep pouring money into home repair, renovation and furnishing.
Harris said the trend will continue to come at the expense of other retail categories such as footwear and apparel. Between 1990 and 2002, spending on clothing dropped from 5.1% to 3.8% of total consumer expenditure and sales of footwear dropped from 1% to 0.6%. Since 1995, sales of goods and services of furniture and household items have risen by 34.6%.
While home improvement products are expected to see steady growth, Plant said increased diversity and urbanization of the Canadian consumer market will produce change in retail formats and delivery. He calls this "retail Darwinism"; a phenomenon he said will affect department and specialty stores, suburban malls, mass merchants and box stores.
According to these analysts, department stores may become the dinosaurs of the retail world. With the exception of Sears, they have fared badly against competitors like Wal-Mart, which has seen sales go from $3 billion to $8 billion over the past decade.
The explanation for that is simple, said Harris of Trendex. Traditional department stores have lost market share because of tired merchandising, unmotivated staff, and ever-narrowing product lines.
Kubas Consulting's Strapagiel underscored this point, providing data that showed close to 30% of Canadian shoppers surveyed in the VECTOM (Vancouver, Edmonton, Calgary, Toronto and Moncton) market described Wal-Mart as the place they preferred to shop or the place they shopped the most. And close to 50% of within that same group had shopped at Wal-Mart in the past 12 months. By comparison, about 10% of the same market said they preferred to shop at The Bay, and about 30% had shopped there in the last year.
Big boxes will continue to have significant impact on the hardware/home improvement industry, said Plant, because of their ability to implement consumer friendly features, such as in-store kiosks, wireless technology, smart cards and self-scanning check-outs.
Those technologies will become increasingly important in a highly competitive market, said Harris. He suggested that industry players who want to survive should awaken to the need for sound information on sales and consumer spending patterns. Better market intelligence, he said, might have helped retailers like Zellers, which Harris said took insufficient action in preparation for Wal-Mart's advance into Canada. |
| TRUSERV DEALER LOYALTY KEY TO CONTINUED GROWTH |
|
CHICAGO — Growing the member base and growing, in turn the volume of purchases by each member, is a key challenge for TruServ Corp. as it goes through its turnaround.
"Our biggest challenge is share of wallet," says TruServ president Pamela Forbes Lieberman.
She notes that even when the company had been saddled with a debt scandal, many dealers didn't desert the ranks, but they did, she admits, start spreading their buying around. Winning back that business became a matter of trust. "Now we're trying to earn that back."
The effort is paying off, she adds, as recent refinancing has been just the latest step in regaining the trust - and loyalty - of the members. "We now have traditional hardware dealers who are buying 90% through us."
Forbes Lieberman's vision for remaking the company includes its culture as well as its financing. And part of rebuilding the trust factor includes the suppliers. She wants vendor relations that aim at true collaboration, "rather than saying we have a partnership, then demanding the lowest possible price." |
| SICO SHUTS PLANTS TO TRIM COSTS |
| LONGUEUIL, QC — Sico Inc. is trimming costs following the purchase of Para Inc. four months ago, with the closing of two of its seven factories and the elimination of 65 jobs. Now the largest producer of architectural paint in Canada, Sico will also close three distribution centres in a series of moves expected to save about $3 million annually and improve competitiveness and customer service.
Sico will shut down the Para manufacturing plant in Brampton, ON by January 31, 2004 and move all production for colourants and alkyd products to a Toronto plant, while latex paint production will be consolidated into its plant in Quebec City.
Sico's distribution centre in Toronto's west end will close by December 15, and Para's Brampton, ON facility will be used instead to handle distribution for Ontario, the West and Altantic Canada. The site will also serve Para and Sico architectural markets in Quebec and Ontario.
The company's industrial operations will be driven out of Longueuil, QC.
Finally, customer service activities will now be concentrated in Longueuil for the Quebec market and out of Para's Brampton facility for the Atlantic, Ontario and Western Canadian regions. |
| ELMER'S IS BOUGHT BY OFFICE PRODUCTS SUPPLIER |
| NEW YORK — Elmer's Glue is going to get bought up. Berwind Group will merge the adhesives manufacturer with its office products company, Hunt Products. Berwind has signed a letter of intent to acquire Elmer's, and the deal is expected to close sometime in November 2003.
Berwind Group is a privately owned US$1 billion holding company. Besides Hunt, which sells into the commercial channel, Berwind's companies range from chemicals, pharmaceuticals and biotechnology, to real estate investments valued at almost US$2 billion, and a land and resource management company that owns 150,000 acres of coal and natural gas rich land in Virginia Kentucky and West Virginia. |
| COLOGNE HARDWARE SHOW UPDATE |
| Practical World, the International Hardware Fair/DIY’TEC is, quite simply, the largest — and the most international — hardware show in the world. Why not join Hardlines next spring as we once again host North American buyers and vendors in Cologne, Germany at Practical World! The show represents three distinct sections of home improvement: World of Tools, World of Security, Locks and Fittings and World of Home Improvement/DIY. Practical World will be held March 14-17, 2004. The Hardlines Canada Night Reception will be March 14. For more information about the show, contact Barbara Hills, b.hills@koelnmessenafta.com , 416.598.3343 or Beverly Allen here at Hardlines, bev@hardlines.ca. |
| INDUSTRY STOCK WATCH |
|
COMPANY |
52-WEEK HIGH |
52-WEEK LOW |
CLOSE FRIDAY |
| Canadian Tire |
37.29 |
26.80 |
36.10 |
| Canfor |
10.95 |
6.83 |
10.67 |
| Costco |
39.02 |
27.00 |
32.58 |
| Goodfellow |
12.50 |
9.75 |
11.50 |
| Home Depot |
34.99 |
20.10 |
31.10 |
| Hudson's Bay |
10.50 |
5.87 |
9.08 |
| Lowe's Cos. |
55.90 |
33.37 |
53.90 |
| Rona Inc. |
22.10 |
11.75 |
20.95 |
| Sears Canada |
20.00 |
13.60 |
17.45 |
| Sodisco-Howden |
3.24 |
1.15 |
3.29 |
| Taiga Forest |
8.10 |
5.85 |
7.40 |
| Wal-Mart |
60.20 |
46.25 |
58.14 |
| West Fraser |
39.05 |
26.27 |
35.50 |
| |
| OVERHEARD |
| "Like with any other product, there's room in the marketplace for a complete line of retailing formulas. Which also holds true for renovation centres and hardware stores. And just as there's room in the market for both the sub-compact and the monster luxury SUV, there's also room for a small store, a mid-size store and a big box." — Robert Dutton, president and CEO, Rona Inc., explains his company's multi-store strategy while speaking at the recent Hardlines Marketing Conference in Toronto.
"Our customers are voting with their orders, which have been spectacular the last couple of months. That, to me, is the best indicator that we're turning the corner." — Jos Wintermans, president and CEO of Sodisco-Howden Group, on the effectiveness of the wholesaler's efforts to keep customers onside as it goes through internal changes. |
|
|
| COMPANIES IN THE NEWS |
| SAINT JOHN, NB — The volatility of LBM prices in New Brunswick's active home construction market is making job costing a problem. At the Kent Home Improvement warehouse, estimators are faced with the possibility that pricing for OSB and plywood can change in a matter of hours, making them reluctant to even provide quotes.
VERNON HILLS, IL — With its share price slipping, Wickes Inc. has been given notice once again that it will be delisted from the Nasdaq SmallCap Market, effective September 23. The home improvement chain, which specializes in supplying builders and contractors, is hoping its stock will remain eligible to be traded through the Over the Counter (OTC) bulletin board, provided a market maker enters a quote for the common stock on the same day it's shut out of Nasdaq.
MONTREAL — Hart Stores Inc. has opened its first store in Ontario with a 30,000-sq.ft. outlet in the northeastern town of Kirkland Lake. The company already has 61 junior department stores in Quebec and Atlantic Canada, under the Hart, Bargain Giant and Geant des Aubaines banners.
BOISE, ID — Boise Cascade Corp. has announced it will pay for 60% of its previously announced acquisition of OfficeMax with common stock and 40% with cash. The merger agreement between the two companies previously contemplated that Boise would pay 70% with common stock and 30% with cash.The deal, which was announced on July 14, 2003, has been unanimously approved by the boards of directors of both companies.
ATLANTA, GA — Home Depot has begun installing real-time, digital video surveillance technology in all its stores throughout North America. The new system, a step up from analog technology, will employ approximately 40,000 video cameras to help reduce theft and fraud.
LONDON, UK — Kingfisher's home improvement business had a strong first half of the year, with retail sales up 15.3% to £3.9 billion and profit up 29.7% to £335 million. Sales growth and share gains were driven by new store openings and continuing strong same-store sales, which were up 5.5%. In the UK, B&Q and Screwfix had combined retail sales growth of 11.5% and retail profit growth of 16.3%. In France, Castorama and Brico Dépôt enjoyed combined sales growth of 10.7% and 31.1% rise in retail profit. The group's ongoing international businesses, which include Poland, Italy, China and Taiwan, had a consolidated retail sales increase of 36.3%, and retail profit was up 67.4%.
LOS ANGELES — A woman here has filed a class action suit against Home Depot, claiming the retailer ignored a California law that limits deposits on contracts for home improvement projects to 10% of the overall price. Another company, All American Home Center, has also been named in the suit, which could end up involving thousands of homeowners.
LONDON, UK — Kingfisher plc is selling off its chain of 39 traditional format small DIY stores in Poland. They're being purchased by NOMI, a fund managed by Enterprise Investors, a European private equity fund manager that will pay .£7 million for the stores. The net proceeds will be used to reduce group debt. Completion is subject to Polish regulatory and competition authority clearance, which is expected within two months.
Kingfisher will continue to operate and expand its Castorama large format stores in Poland. |
| PEOPLE ON THE MOVE |
| Beverly Allen has been appointed director of sales and marketing at the Hardlines World Headquarters. Formerly marketing manager, she will be responsible for the development of sponsorships with our key sponsor partners, and she will oversee the growth of subscription sales and conference attendance, and manage the development of our growing family of special reports and products. (416-489-3396)
Jim Robertson has left American Hardware Manufacturers Association to take on a position as manager of supply chain technology with National Gypsum Co., based in Charlotte, NC.
ProfitMaster Canada has added the following new members to its team, in addition to the previously announced appointment of Nicole Grenkow as marketing manager: Donna Evenson joins as project manager. She was formerly store manager for McDiarmid Lumber in Winnipeg's St. Vital location … Monique Graboski has been appointed customer support analyst … Angus Graham has been named project manager. He has a broad retail background that includes working for Olympic Building Supplies, Kilcona Lumber and Charleswood Do-it centre … Lynda Hawke joins as project manager, Southern Ontario, joining the company from Hay's Home Hardware in Listowel, ON, where she worked for the past six years as controller … Greg Kelly has been named regional sales manager, Central Canada. He was formerly area manager for Sodisco-Howden in the Manitoba region … David Lamont has been appointed purchaser, bringing with him 15 years experience in the technology industry … David Ledyit is now project manager, Southern Ontario. He worked most recently for Corol Technologies in London, ON. (204-889-5320) |
| MARKET INDICATORS |
| The resale housing market took a dip in August, falling 9.6% from July, says the Canadian Real Estate Association. Last month, sales on the Multiple Listing Service for Canada's 25 major markets hit a seasonally adjusted 26,910 units. That's down 9.6% from July's record levels, but still the second best monthly showing since the start of 2003. For the year to date, sales were 2.2% ahead of the same period in 2002.
Manufacturing shipments were up in July by 1.7% to $43.0 billion, while finished-product inventories fell back 1.0%. Meanwhile, Canada's largest trading partner, the United States, continued to show signs of recovery. U.S. manufacturers boosted shipments by 2.5% in July, following a 1.5% increase in June. Manufacturers also continued to reduce inventory levels, which now stand at the lowest level since September 1997.
Residential construction in the U.S. reached US$449.6 billion seasonally adjusted in July, up 0.6% from June's rate of US$446.8 billion seasonally adjusted. Overall construction put in place in July was US$879.8 billion, up 0.2% from June, and up 2.5% from July 2002. During the first seven months of the year, construction spending amounted to US$492.0 billion, up 1.8% seasonally adjusted from the same period a year earlier. |
| NOTED… |
| The Canadian Hardware & Housewares Manufacturers Association will host its second annual Parkinson's Golf Day with proceeds to the Parkinson's Society in the name of Ed Barnes. It's on October 8 at Angus Glen, with an 11 a.m. shotgun start. Golf and dinner: $175; dinner only: $60. Contact Vaughn Crofford at the CHHMA for more info: 416-282-0022, ext. 30; or Peter Stojanov at 905-829-9496.
Hardlines is truly international! We've gone live as the daily news link for the 2004 National Hardware Show in Las Vegas. Check out the site:
www.04nationalhardwareshow.com for more info! |
|
John Caulfield, Contributing Editor
vol. ix, #36 September 22, 2003
TSC Stores Ltd.
1950 Oxford Street E.
London, Ontario
N5V 2Z8
Fax: 519-451-1235
e-mail: spickering@tscstores.com
**********************************************************************************
SALES REPRESENTATIVE for the Ontario Market
Prosel Marketing is looking for an experienced individual to handle both major and secondary accounts. The chosen candidate will be an efficient manager of time, and have a proven track record in the hardware industry.
Please forward your resume to olga@proselmarketing.ca
RETAIL IS DETAIL. Let Noral Instore, a national service company, handle your service requirements in Canada. Noral serves some of America's leading manufacturers, managing their lines for Canada's top hardware retailers, big boxes and mass merchandisers.
Contact Al Vanderveen at 519-439-6800, ext. 201, to find out how Noral can boost your sales in Canada. http://www.noralmarketing.com
**********************************************************************************
SELL YOUR COMPANY - OR BUY ONE - WITH HARDLINES CLASSIFIEDS!
DO YOUR EXECUTIVE SEARCH, FIND NEW LINES OR GET NEW REPS IN THE HARDLINES MARKETPLACE.
ONLY $2.50 PER WORD FOR THREE WEEKS IN THE CLASSIFIEDS.
TO PLACE YOUR AD, CALL PHYLLIS NOWELL AT 416-489-3396 OR EMAIL: buzz@hardlines.ca