HARDLINES Canada’s electronic information service for the home improvement industry September 4, 2001 Volume vii, #36 Michael McLarney, Editor & Publisher Phone: 416.489.3396 Fax: 416.489.6154 email: mike@hardlines.ca hardlines.ca <https://hardlines.ca/>

* * * * * * IN THIS ISSUE: * Home Depot’s Canada unaffected by latest restructuring * Rona accelerates consolidation with closures * Molluso’s severance pay impacts Sodisco-Howden’s 2Q results * Home Depot’s 2Q sales up 15% * Wal-Mart Canada names Brunet senior vp merchandise

* * * * * * We’ve got two incredible conferences coming up September 12 & 13. If you haven’t signed up yet, run, do not walk, to the phone and call Nancy Wright for more info: 416-489-3396; email: nancy@hardlines.ca <mailto:bev@hardlines.ca> (Or go to https://hardlines.ca/html/conferences.html)

To get our special hotel rate at the Four Points Sheraton while attending either Conference, call 1-800-737-3211.

* * * * * * We are very please to add the Natural Resources Canada Office of Energy Efficiency (http: //oee.rncan.gc.ca <http://oee.rncan.gc.ca/> ) to our list of sponsors for the Hardlines Marketing Conference. NRC has a new program that provides money for retailers to do energy efficient retrofits to their stores. How good is that! And JUST in: CareerTek (http://www.careertek.org/), an HR assessment company. They join our roster of sponsors:

PLATINUM SPONSORS: CHEP Canada www.chep.com <http://www.chep.com/> Cologne International Trade Shows www.kolnmesse.de <http://www.kolnmesse.de/> JDA Intactix www.jda.com <http://www.jda.com/> RONA Inc. http://www.rona.ca/ Sterling Commerce www.sterlingcommerce.com <http://www.sterlingcommerce.com/>

GOLD SPONSORS: Black Eagle Consulting www.blackeagle.ca <http://www.blackeagle.ca/> Canadianretail.com www.canadianretail.com <http://www.canadianretail.com/> Canadian Hardware & Housewares Manufacturers Association www.chhma.ca <http://www.chhma.ca/> McLarneyCom hardlines.ca <https://hardlines.ca/> Noral Instore/Noral Marketing www.noralmarketing.com <http://www.noralmarketing.com/> Wolf Gugler & Associates http://www.wolfgugler.com/

MEDIA SPONSORS: Hardware & Home Centre Magazine www.centremagazine.com <http://www.centremagazine.com/> Hardware Merchandising/Canadian Contractor Magazine www.hardwaremerch.com <http://www.hardwaremerch.com/> Hardlines Quarterly Report hardlines.ca <https://hardlines.ca/>

Our Retail Strategies Symposium on September 12 has the support of these great companies:

PLATINUM SPONSORS: LBMX www.lbmx.com <http://www.lbmx.com/> ACNielsen Canada www.acnielsen.ca <http://www.acnielsen.ca/>

GOLD SPONSOR: Noral Instore/Noral Marketing www.noralmarketing.com <http://www.noralmarketing.com/>

* * * * * * RONA CLOSES TORONTO, PORT HOPE OFFICES

Rona Inc. is fast-tracking consolidation of its acquisitions by closing the mid-town Toronto offices of Rona Retail Canada — more than a year before the lease is up. The closure was deemed inevitable following the dismissal of the division’s president and COO, Rick Blickstead, only hours after the purchase of Revy was completed on July 12.

Most of the remaining executive team was let go, as well. Those remaining, including Glen French, vice-president merchandising, and a couple of his buyers, have moved into the Rexdale offices of Lansing Buildall, in Toronto’s west end.

The closures correspond with the shuttering of Cashway’s head office and distribution centre in Port Hope, ON. Now, programs and purchasing for Rona Cashway stores will come out of Lansing’s offices. Meanwhile, Rona continues to let go of key personnel, including Jim Pybus, formerly president of Rona Cashway, and Mike Semerak, vp marketing and merchandising, though some personnel were moved to Rona’s head offices in Boucherville, QC.

______________________________________________

HOME DEPOT MERCHANDISING RE-ORG WILL LEAVE CANADA UNTOUCHED

There will be no changes to the Canadian operations, says Bob Nardelli, president and CEO of Home Depot in Atlanta, GA. Much confusion had surrounded the status of Home Depot Canada following the announced centralization of the company’s merchandising teams back into Atlanta and a "wait-and-see" approach to Canada.

The original plan, to leave about 20% of buying in the hands of regional teams at each of Home Depot’s divisions, will not affect the Toronto-based operations of the Canadian division. Nardelli told Hardlines that the regional nature of Canadian sourcing makes any centralization at this time unwise. All duties, including the role of Eric Peterson as vice-president merchandising, will remain intact.

______________________________________________

COMPANIES IN THE NEWS

For the six-month period ended June 30, Sodisco-Howden Group had total sales of $192.4 million, a decrease of 13.0% from $221.1 million during the same period last year. EBITDA dropped from $7.0 million to $4.2 million, the company suffered a net loss of $587,000, compared with a profit of $5.9 million last year. A net loss of $202,000 recorded in the second quarter was due in large part to an extraordinary charge of $2.1 million in connection with severance pay and other costs related to the departure of former CEO Tony Molluso. For the second quarter ended July 31, 2001, Hudson's Bay Co. reported an operating profit of $45.6 million, including $6.6 million due to an accounting change for transfer of receivables, versus $54.8 million in the same period last year. Total Hudson's Bay sales in the second quarter were $1.7 billion; down 0.8% from last year. Retail sales at the Bay decreased 5.3% and increased 1.9% at Zellers. Same-store sales decreased 7.1% at the Bay and increased 0.7% at Zellers. Zellers achieved its 14th consecutive quarter of year-over-year profit growth, contributing $35.6 million (including a $3.8 million gain due to the accounting change for transfer of receivables) in operating profit, an increase of $4.1 million from the second quarter of 2000. The Bay’s profits dropped $14.0 million to $14.6 million. Home Depot Inc. reported net earnings of US$924 million for the second quarter of fiscal 2001, compared with net earnings of US$838 million in the second quarter of fiscal 2000. Sales for the second quarter of fiscal 2001 totalled US$14.6 billion, an increase of 16% over the previous year. Same-store sales increased 1%. The company opened 115 stores during the first half of 2001. Lowe's Cos. Inc. has reported an 18% rise in second-quarter earnings, helped by strong sales of appliances and paint. Sales rose 16% to US$6.1 billion from US$5.3 billion a year earlier. Same-store sales increased 1.7%. 2Q profits climbed to US$329.1 million, from US$279.6 million. Sears Canada released July revenues for the four-week period ending July 28, 2001. The company posted increases of 8.4% to $485.9 million from $448.3 million for the same period last year. Merchandise sales increased 8.4% in the month. Same store sales increased 1.2 % Once 200 stores strong with US$2.6 billion in sales at its peak, Kansas City, MO-based Payless Cashways has declared bankruptcy after failing to find any more financing for its troubled operations. Its 73 remaining stores were closed August 28. Sales in 2000 were US$1.49 billion. The Hudson’s Bay Co. opened its first batch of Home Outfitters stores in Ontario on August 30th. Stores in Barrie, Pickering and Mississauga brought the total chain store count to 13 in Canada. Do it Best Corp. ended its 2000 fiscal year with a record-setting shareholder’s rebate of US$86.9 million, the highest in the co-ops 56-year history. Hardware sales were up 4% for the year for both the warehouse and drop shipments. Unit sales of lumber and building materials were up 9%. The company ended the year with 250 members joining the co-op. Kmart Corp. posted a second-quarter loss before charges, saying it is facing pricing pressures as it works to remodel its U.S. store base and boost customer traffic. The loss was US$22 million before a US$76 million charge for the purchase of the remaining 40 percent of Kmart's BlueLight.com online unit. Sales at the Troy, Michigan, company slipped to US$8.92 billion from US$9 billion a year earlier, whiles sales at stores open at least a year, or same-store sales, rose 1%. ______________________________________________

CANADIAN STOCK WATCH

COMPANY	52-WK HIGH	52-WK LOW	CLOSE (FRI)
Canadian Tire	25.20	15.05	26.50
Canfor	16.95	7.65	10.68
Goodfellow	11.00	8.00	7.05
Home Depot	49.74	47.61	45.95
Hudson's Bay	17.65	12.40	17.77
Lowe's	64.90	34.25	37.20
Sears Canada	37.25	18.55	22.00
Taiga Forest	10.00	6.80	10.00
West Fraser	36.50	21.00	36.25

______________________________________________

"Service to others is the rent you pay for your room here on earth." – Muhammad Ali (Greatest athlete of the 20th century) ______________________________________________

MARKET INDICATORS

August retail sales posted increases in some categories. After a weak start in 2001, hardware and lawn and garden products sales posted two strong months in a row, climbing 12.0% from June 2000. Hardware sales (+12.5%) and lawn and garden product sales (+11.5%) posted similar increases for the group of large retailers. Sales of home furnishings and electronics were up 9.1% in June. Household appliances in particular had strong sales, up 11.4%. Sales of both small electrical appliances (+11.7%) and major appliances (+11.3%) were up.

Housing starts in Canada are on track to improve about 6% this year reaching a 9-year high, according to economists at Clayton Research. The number of housing starts this year is anticipated to reach about 160,000 units. In 2002 new home construction is forecast to moderate slightly from its present pace but remain very buoyant at about 158,000 units.

The New Housing Price Index rose 0.3% from May to June. On an annual basis, this index of contractors' selling prices increased 2.9%. In Québec, increased labour rates for construction trades contributed to the 1.3% increase from May. Notable monthly advances were also seen in the census metropolitan areas of Calgary (+0.9%) and Kitchener-Waterloo (+0.8%).

Wholesalers saw their sales rise a modest 0.2% in June, due mainly to strength in the automotive sector. Declines were reported in five of 11 wholesale sectors, which account for approximately 51% of total wholesale activity.

U.S. housing starts rose in July as the housing sector continued its strong performance in an otherwise struggling economy. Starts rose to 1.672 million units last month, a 2.8% increase from the June rate, and a 13.2% increase over a year ago.

Inflation at the consumer level logged its biggest decline in 15 years in July, as the consumer price index dropped 0.3% in July, its first decline since April 2000. The report, released by the U.S. Labor Department, shows that price pressures are a non-issue in the economy...

U.S. consumer confidence fell unexpectedly to its lowest level in four months in August as a weakening job market weighed on consumers and threatened to undermine retail spending. The Conference Board, a New York-based private business research group, said its monthly index of consumer confidence fell to 114.3 in August, it’s lowest since April, from a downwardly-revised 116.3 in July. ______________________________________________

PEOPLE ON THE MOVE

Bob Brunet has been named senior vice-president merchandise and sales at Wal-Mart Canada. He was formerly vice-president of general merchandise and manager of Wal-Mart’s hardlines division … Brunet replaces Hani Zayadi, who has gone to Australia as president and CEO for Kmart’s operations there. (416-821-2111)

Tony Molluso, formerly president and CEO of Sodisco Howden Group, has joined Hartco Co. as president and CEO. Hartco is a franchiser of computer integrators and retailers based in Ville d'Anjou, QC.

The Canadian Retail Hardware Association has appointed Stephen Murdoch as communications coordinator. Murdoch will be responsible for developing and implementing communications strategies, producing association publications, maintaining media relations and coordinating the CRHA’s website content. (905-821-3470)

Ian Samberg has been promoted to the position of president of Royal International Corp. He replaces Seymour Samberg, the founder and president of Royal for 40 years, who will remain active in the business as CEO. (514-735-4566)

Jim Gillies, formerly with Newell Rubbermaid, is now vice-president & general manager, international development, at Fiskars Consumer Products Inc. (847-590-0500)

The following changes have occurred at Home Depot Inc. in Atlanta: Charles Pfister is now vice-president of internal audit ... Bill Patterson, formerly president of the northwest division, is now president of the 217-store midwest division … He replaces Vern Joslyn, who is leaving the company for other business opportunities ... Troy Rice, currently vice-president of sales and service for the southwest division, follows Patterson as president of the 83-store northwest division ... Bob Wittman, who is currently senior vice-president with responsibility for the company's four-store Villager's Hardware operation, has been named president of the company's 33-store EXPO Design Center business ... Wittman will replace Barry Silverman ... Lynn Martineau, president — new growth businesses, will have direct responsibility for Villager's Hardware and will have added responsibility for The Home Depot Floor Store, a one-store flooring test in Plano, TX.

______________________________________________

NOTED ... Home Depot Canada’s new vice-president human resources, Mary Halton (she comes over from Kraft), left the Toronto offices last week for a week-long human resources tour of Home Depot stores across the country. ______________________________________________

* * * * HARDLINES MARKETPLACE* * * * Check out Hardlines Classifieds on the web: https://hardlines.ca/html/classifieds_new.asp ______________________________________________

NORAL MARKETING:

Representing leading manufacturers since 1986. We ensure high profile retail presence for a wide range of product lines. Why not make yours one of them?

http://www.noralmarketing.com/ or call 519-439-6800 ext. 201

* * * * * *

RETAIL SALES CONSULTANT: Ace Hardware Canada Ltd., a worldwide leader in hardware supply and distribution with operations in Markham, Brantford and Calgary has an immediate opening for a Retail Sales Consultant — Nova Scotia Region.

As the successful candidate you will have five or more years of sales experience in the wholesale hardware or LBM Industry with extensive knowledge of how to provide effective support to retail hardware customers. At Ace Canada "effective support" means listening and responding to the needs of our customers; attending to details and providing consistent follow-up. You have a reasonable knowledge of how to use computers to advantage. Most of all, you are highly organized and capable of working both independently and as part of the team.

Ace Canada offers a competitive compensation package and career potential. If you are qualified for this position please fax or e-mail your résumé, including salary history/expectations to: vice-president, operations and administration, Ace Hardware Canada Ltd., 80 Micro Court, Third Floor, Markham, ON; L3R 9Z5; fax 905-475-2721; e-mail: stan.sauer@acehardware.ca

* * * * * *

THE HARDLINES MARKETPLACE: just $16 per line. A classified ad with Hardlines is the most direct way to industry eyes. Over 3,000 executives in the industry come in contact with our email and fax publications … and have you seen our Marketplace in our new website? https://hardlines.ca/html/classifieds_new.asp Publish your ad where it matters. Get industry exposure today. Contact us at 416-489-3396 or email: buzz@hardlines.ca ______________________________________________

DOING YOUR MARKETING STRATEGY? PLANNING THE BUDGET?

THEN YOU WILL NEED HARDLINES INDUSTRY REPORT: "Home Improvement Retailing in Canada" is a comprehensive overview of the size of the market, how many stores are out there, who the key players are, their market position, the size and growth of the big boxes, the trends in housing and renovations, market trends — and much, much more! 120-plus pages filled with charts, graphs and photos. Regular price: $945, only $750 for subscribers! For more information, contact Nancy Wright at nancy@hardlines.ca; phone: 416-489-3396. (go to https://hardlines.ca/html/industry_report.html) ______________________________________________

Hardlines is published weekly (except monthly in December and August) by McLARNEYCOM 542 Mount Pleasant Rd., Suite 302, Toronto, Ontario, Canada M4S 2M7 © 2001 by Michael McLarney. HARDLINES™ the electronic newsletter hardlines.ca Phone: 416.489.3396; Fax: 416.489.6154 Michael McLarney, Editor & Publisher: mike@hardlines.ca Eugenia Canas, Assistant Editor: buzz@hardlines.ca Beverly Allen, Marketing Manager: bev@hardlines.ca Nancy Wright, Circulation Manager: nancy@hardlines.ca ______________________________________________

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: $199+$13.93 GST = $212.93 (or $29.85 HST = $228.85) per year (GST #13987 0398 RT). Secondary subscriptions at the same office are only $28 + $1.96 GST = $29.98. You can pay online by VISA at our secure website or send us money. Please make cheque payable to McLarneyCom.

To get our special hotel rate at the Four Points Sheraton while attending either Conference, call 1-800-737-3211.

Our Retail Strategies Symposium on September 12 has the support of these great companies:

PLATINUM SPONSORS: LBMX www.lbmx.com <http://www.lbmx.com/> ACNielsen Canada www.acnielsen.ca <http://www.acnielsen.ca/>

GOLD SPONSOR: Noral Instore/Noral Marketing www.noralmarketing.com <http://www.noralmarketing.com/>

* * * * * * RONA CLOSES TORONTO, PORT HOPE OFFICES

______________________________________________

HOME DEPOT MERCHANDISING RE-ORG WILL LEAVE CANADA UNTOUCHED

______________________________________________

COMPANIES IN THE NEWS

CANADIAN STOCK WATCH

COMPANY	52-WK HIGH	52-WK LOW	CLOSE (FRI)
Canadian Tire	25.20	15.05	26.50
Canfor	16.95	7.65	10.68
Goodfellow	11.00	8.00	7.05
Home Depot	49.74	47.61	45.95
Hudson's Bay	17.65	12.40	17.77
Lowe's	64.90	34.25	37.20
Sears Canada	37.25	18.55	22.00
Taiga Forest	10.00	6.80	10.00
West Fraser	36.50	21.00	36.25

______________________________________________

"Service to others is the rent you pay for your room here on earth." – Muhammad Ali (Greatest athlete of the 20th century) ______________________________________________

MARKET INDICATORS

PEOPLE ON THE MOVE

Tony Molluso, formerly president and CEO of Sodisco Howden Group, has joined Hartco Co. as president and CEO. Hartco is a franchiser of computer integrators and retailers based in Ville d'Anjou, QC.

Jim Gillies, formerly with Newell Rubbermaid, is now vice-president & general manager, international development, at Fiskars Consumer Products Inc. (847-590-0500)

______________________________________________

* * * * HARDLINES MARKETPLACE* * * * Check out Hardlines Classifieds on the web: https://hardlines.ca/html/classifieds_new.asp ______________________________________________

NORAL MARKETING:

Representing leading manufacturers since 1986. We ensure high profile retail presence for a wide range of product lines. Why not make yours one of them?

http://www.noralmarketing.com/ or call 519-439-6800 ext. 201

* * * * * *

DOING YOUR MARKETING STRATEGY? PLANNING THE BUDGET?