September 27, 1999 - Volume v, #39
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

* * * * * * *

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.

CANADIAN TIRE ANNOUNCES ROLLOUT OF IN-STORE BANKING

Canadian Tire and ING Direct have formed a strategic alliance to roll out in-store automatic banking services in all 350 of CTC's stores nationwide. The move follows a test program in London, Ont., last year. The first stores to get the ABMs will be in the Greater Toronto Area and Kitchener-Waterloo.

The service claims to be the first bank machine in Canada that gives retail credit card customers access to a range of services that include cash advances from Canadian or U.S. savings accounts and loan accounts, using either a Canadian Tire retail credit card or Options MasterCard. There are no fees or service charges for using the ABMs.

IRLY EXPECTS TO COMPLETE BANNER CHANGE BY YEAR'S END

IRLY Distributors has dropped the "Bird" from its dealers' signs, replacing it with the name "IRLY Building Centre," accompanied by the individual dealer's business name. In addition, a maple leaf has been added to the "R" in IRLY.

With the help of a financial incentive program which expires December 31, 1999, the changeover is expected to be adopted by all IRLY dealers by year's end, says executive vice-president and general manager Stuart Joule. "It's a natural evolution that companies from time to time see the benefit in a new image, a fresh change," he says.

"We will keep the IRLY Bird for promotional purposes and as our mascot. But it was felt the image it projected on the industry was not as effective as it once was," he adds.

Joule also notes that the Surrey, B.C.-based wholesaler has enjoyed what he calls "a pretty reasonable year." While IRLY's dealer sales stilltend to reflect the state of the economy in that province, the company was able to take a favourable position on a number of commodities earlier in the year, which has enhanced its bottom line.

SEARS WILL ACQUIRE EATON'S SHARES AND SOME STORES

Sears Canada announced on September 20 an agreement to purchase all of the outstanding common shares of the T. Eaton

Company Ltd. Under the transaction, Sears Canada will assume ownership of the Eaton's name, trademarks and web site by the end of the year. Eight Eaton's stores are also included in the transaction, with an option to acquire a further five stores, all of which will be operated under the Sears banner. This option for the additional five stores expires Sept. 29, 1999.

Sears will pay $30 million in cash for Eaton's, plus an additional $20 million upon realization of tax losses. (Compare that to the deal Home Hardware made for Beaver Lumber, paying $33 million in cash and the assumption of $35 million in debt which Molson took back through a term loan!)

The eight stores that Sears Canada will take over are located in: Burnaby, B.C. (Brentwood Mall); Winnipeg, Man. (St. Vitale Centre); Québec City, Qué. (Galeries La Capitale); Halifax, N.S. (Halifax Shopping Centre); and in Ontario, London (Westmount Shopping Centre), Etobicoke (Sherway Gardens), North York (Yorkdale Shopping Centre) and Scarborough (Scarborough Town Centre). Yorkdale, Scarborough Town Centre and Halifax Shopping Centre will all be closed for renovations before reopening under the Sears banner.

Eaton's has agreed to continue normal operations at the majority of the stores being acquired, pending completion of the transaction. The transaction is conditional upon Eaton's implementing a plan of arrangement under the Companies' Creditors Arrangement Act (the ``CCAA'').

The transaction is expected to close no later than December 31, 1999.

Eaton's continues to pursue complementary transactions for the sale of its other stores and real estate in which, the company says, a number of potential purchasers have expressed interest.

TruServ Canada has signed Servinor Inc. as a new member of the dealer-owned co-operative. Servinor is itself a wholesaler, which since 1993 has supplied goods and services to 60 Cree and Inuit communities in northern Québec, northern Ontario and North West Territories. Servinor, with head office and 67,000-sq.ft. distribution centre in Val d'Or, Qué., is 100% Native owned.

Weyerhaeuser's intended acquisition of MacMillan Bloedel Ltd. has met with no opposition from the Mergers Branch of the Canadian Competition Bureau. The Bureau has issued a letter stating that it plans to take no action. In addition, a change in control of MacMillan Bloedel's softwood lumber quotas to Weyerhaeuser was also approved in principle by the Canadian Minister of International Trade, Hon. Pierre Pettigrew. The deal has also been cleared by the competition authorities in Germany and Ireland. It is subject to further regulatory approvals, a favorable vote by MacMillan Bloedel shareholders, court approval in Canada and other customary closing conditions. Paul Walters, Chairman & CEO of Sears Canada Inc., commandeered a treaded excavator last Friday at the groundbreaking ceremony the new Sears distribution centre in Calgary, at 114th Avenue and 52nd Street S.E.

For the three-month period ended July 31, 1999, Matco Ravary Inc. recorded consolidated sales of $19 million, up 13.1% over the same quarter in 1998. This growth was due largely to the sales by Centre de renovation Le Geant, a 30,000-sq.ft. store in Blainville, north of Montréal, which Matco Ravary acquired on June 1. For the nine months ended July 31, Matco Ravary's consolidated sales totaled $41.9 million, up 19.1% over the previous year. Consolidated net earnings increased by 31.1% from $1,000,217 last year to $1,312,051.

Wal-Mart Stores in the U.S. has contracted with Computer Doctor to open repair and sales outlets in the front of 10 Wal-Mart Supercenters. Wal-Mart says the experimental outlets will open during the next 18 months. If the experiment works, the company could look to any number of computer businesses to offer services within its 622 Supercenters. Observers say Wal-Mart could build a niche for serving customers who might otherwise patronize large electronics retailers and those who use catalogues, taking a toll on smaller, locally-owned shops.

CANADIAN STOCK WATCH

COMPANY	52-WEEK HIGH	52-WEEK LOW	CLOSE (FRI.)
Canadian Tire	46.00	29.00	34.10
Canfor	13.30	4.25	11.00
Goodfellow	11.80	6.00	11.10
Hudsons Bay	23.85	4.00	19.05
MacMillan Blo.	27.85	12.05	22.40
Sears Canada	34.35	15.25	34.35
Taiga Forest	14.75	8.65	14.00
West Fraser	41.00	9.05	37.00

"It matters not how a man dies, but how he lives. The act of dying is not of importance, it lasts so short a time." &endash;
- Dr. Samuel Johnson (1709-1784)

PEOPLE ON THE MOVE

A recent study by AC Nielsen found that retailers are still largely ignoring the data available to them about their own customers. Over 40% of the retailers surveyed made either occasional or no use of the frequent shopper data that they collected to make everyday marketing and merchandising decisions. This includes demographic information and purchase data. While 59% of the retailers Nielsen surveyed indicated that they did use the data to make everyday decisions, the retailers unanimously said that the number one reason for having the frequent shopper programs was to build customer loyalty &endash; not to build a database of customer shopping profiles.

Retail trade in Canada rose 1.3% in July from June. Sales overall have been up 6% from October 1998 and July's gain was twice the average monthly gain to occur since that date. About a third of July's increase was due to higher prices, especially for gasoline. Excluding the effect of price increases, retail sales were up 0.9% in July.

* * * * * * * *

Sales of existing homes in the U.S. slowed in August but stayed on course to beat last year's record pace. The National Association of Realtors reports that sales dropped last month to a seasonally adjusted annual rate of 5.25 million units, down 2.8% from a revised 5.4 million rate in July.

* * * * * * *

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 27, 1999 - Volume v, #39
Michael McLarney, Editor & Publisher
Ph: 416-489-3396 Fx: 416-489-6154

* * * * * * *

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.

CANADIAN TIRE ANNOUNCES ROLLOUT OF IN-STORE BANKING

Canadian Tire and ING Direct have formed a strategic alliance to roll out in-store automatic banking services in all 350 of CTC's stores nationwide. The move follows a test program in London, Ont., last year. The first stores to get the ABMs will be in the Greater Toronto Area and Kitchener-Waterloo.

The service claims to be the first bank machine in Canada that gives retail credit card customers access to a range of services that include cash advances from Canadian or U.S. savings accounts and loan accounts, using either a Canadian Tire retail credit card or Options MasterCard. There are no fees or service charges for using the ABMs.

IRLY EXPECTS TO COMPLETE BANNER CHANGE BY YEAR'S END

IRLY Distributors has dropped the "Bird" from its dealers' signs, replacing it with the name "IRLY Building Centre," accompanied by the individual dealer's business name. In addition, a maple leaf has been added to the "R" in IRLY.

With the help of a financial incentive program which expires December 31, 1999, the changeover is expected to be adopted by all IRLY dealers by year's end, says executive vice-president and general manager Stuart Joule. "It's a natural evolution that companies from time to time see the benefit in a new image, a fresh change," he says.

"We will keep the IRLY Bird for promotional purposes and as our mascot. But it was felt the image it projected on the industry was not as effective as it once was," he adds.

Joule also notes that the Surrey, B.C.-based wholesaler has enjoyed what he calls "a pretty reasonable year." While IRLY's dealer sales stilltend to reflect the state of the economy in that province, the company was able to take a favourable position on a number of commodities earlier in the year, which has enhanced its bottom line.

SEARS WILL ACQUIRE EATON'S SHARES AND SOME STORES

Sears Canada announced on September 20 an agreement to purchase all of the outstanding common shares of the T. Eaton

Company Ltd. Under the transaction, Sears Canada will assume ownership of the Eaton's name, trademarks and web site by the end of the year. Eight Eaton's stores are also included in the transaction, with an option to acquire a further five stores, all of which will be operated under the Sears banner. This option for the additional five stores expires Sept. 29, 1999.

Sears will pay $30 million in cash for Eaton's, plus an additional $20 million upon realization of tax losses. (Compare that to the deal Home Hardware made for Beaver Lumber, paying $33 million in cash and the assumption of $35 million in debt which Molson took back through a term loan!)

The eight stores that Sears Canada will take over are located in: Burnaby, B.C. (Brentwood Mall); Winnipeg, Man. (St. Vitale Centre); Québec City, Qué. (Galeries La Capitale); Halifax, N.S. (Halifax Shopping Centre); and in Ontario, London (Westmount Shopping Centre), Etobicoke (Sherway Gardens), North York (Yorkdale Shopping Centre) and Scarborough (Scarborough Town Centre). Yorkdale, Scarborough Town Centre and Halifax Shopping Centre will all be closed for renovations before reopening under the Sears banner.

Eaton's has agreed to continue normal operations at the majority of the stores being acquired, pending completion of the transaction. The transaction is conditional upon Eaton's implementing a plan of arrangement under the Companies' Creditors Arrangement Act (the ``CCAA'').

The transaction is expected to close no later than December 31, 1999.

Eaton's continues to pursue complementary transactions for the sale of its other stores and real estate in which, the company says, a number of potential purchasers have expressed interest.

TruServ Canada has signed Servinor Inc. as a new member of the dealer-owned co-operative. Servinor is itself a wholesaler, which since 1993 has supplied goods and services to 60 Cree and Inuit communities in northern Québec, northern Ontario and North West Territories. Servinor, with head office and 67,000-sq.ft. distribution centre in Val d'Or, Qué., is 100% Native owned.

Weyerhaeuser's intended acquisition of MacMillan Bloedel Ltd. has met with no opposition from the Mergers Branch of the Canadian Competition Bureau. The Bureau has issued a letter stating that it plans to take no action. In addition, a change in control of MacMillan Bloedel's softwood lumber quotas to Weyerhaeuser was also approved in principle by the Canadian Minister of International Trade, Hon. Pierre Pettigrew. The deal has also been cleared by the competition authorities in Germany and Ireland. It is subject to further regulatory approvals, a favorable vote by MacMillan Bloedel shareholders, court approval in Canada and other customary closing conditions. Paul Walters, Chairman & CEO of Sears Canada Inc., commandeered a treaded excavator last Friday at the groundbreaking ceremony the new Sears distribution centre in Calgary, at 114th Avenue and 52nd Street S.E.

For the three-month period ended July 31, 1999, Matco Ravary Inc. recorded consolidated sales of $19 million, up 13.1% over the same quarter in 1998. This growth was due largely to the sales by Centre de renovation Le Geant, a 30,000-sq.ft. store in Blainville, north of Montréal, which Matco Ravary acquired on June 1. For the nine months ended July 31, Matco Ravary's consolidated sales totaled $41.9 million, up 19.1% over the previous year. Consolidated net earnings increased by 31.1% from $1,000,217 last year to $1,312,051.

Wal-Mart Stores in the U.S. has contracted with Computer Doctor to open repair and sales outlets in the front of 10 Wal-Mart Supercenters. Wal-Mart says the experimental outlets will open during the next 18 months. If the experiment works, the company could look to any number of computer businesses to offer services within its 622 Supercenters. Observers say Wal-Mart could build a niche for serving customers who might otherwise patronize large electronics retailers and those who use catalogues, taking a toll on smaller, locally-owned shops.

CANADIAN STOCK WATCH

COMPANY	52-WEEK HIGH	52-WEEK LOW	CLOSE (FRI.)
Canadian Tire	46.00	29.00	34.10
Canfor	13.30	4.25	11.00
Goodfellow	11.80	6.00	11.10
Hudsons Bay	23.85	4.00	19.05
MacMillan Blo.	27.85	12.05	22.40
Sears Canada	34.35	15.25	34.35
Taiga Forest	14.75	8.65	14.00
West Fraser	41.00	9.05	37.00

"It matters not how a man dies, but how he lives. The act of dying is not of importance, it lasts so short a time." &endash;
- Dr. Samuel Johnson (1709-1784)

PEOPLE ON THE MOVE

A recent study by AC Nielsen found that retailers are still largely ignoring the data available to them about their own customers. Over 40% of the retailers surveyed made either occasional or no use of the frequent shopper data that they collected to make everyday marketing and merchandising decisions. This includes demographic information and purchase data. While 59% of the retailers Nielsen surveyed indicated that they did use the data to make everyday decisions, the retailers unanimously said that the number one reason for having the frequent shopper programs was to build customer loyalty &endash; not to build a database of customer shopping profiles.

Retail trade in Canada rose 1.3% in July from June. Sales overall have been up 6% from October 1998 and July's gain was twice the average monthly gain to occur since that date. About a third of July's increase was due to higher prices, especially for gasoline. Excluding the effect of price increases, retail sales were up 0.9% in July.

* * * * * * * *

Sales of existing homes in the U.S. slowed in August but stayed on course to beat last year's record pace. The National Association of Realtors reports that sales dropped last month to a seasonally adjusted annual rate of 5.25 million units, down 2.8% from a revised 5.4 million rate in July.

* * * * * * *

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.