September 21, 2015 Volume xxxiv, #35

“The moments of happiness we enjoy take us by surprise. It is not that we seize them, but that they seize us.” — Ashley Montagu (British anthropologist, 1905-1999)

IN THIS ISSUE:

• Lowe’s plans Quebec vendor day as it eyes new markets

• Castle adds three members over the summer

• Dealers drawn to RONA show by new products, simpler corporate structure

• Tembec faces investor unrest as share prices drop

• PLUS: Castle hosts supplier appreciation golf, Sears Canada makes changes to loyalty program, Woolworths and Lowe’s sink more money into Masters, Miller Edge and Creative Door Services join forces, Wittie becomes Home Hardware store design manager —and more!

Lowe’s plans Quebec vendor day as it eyes new markets

TORONTO — A planned day of meetings for Quebec vendors by Lowe’s Canada indicates that company’s desire to do business with suppliers from la belle province. But is the giant retailer ready to expand into Canada’s second-largest market?

“Canada is an important, stable market that keeps growing,” says Lowe’s Canada president Sylvain Prud’homme, noting that Quebec accounts for almost one-quarter of that market. And with nine consecutive quarters of positive same-store sales growth—eight of them in double digits—Prud’homme believes his company is in step with that growth.

Meanwhile, he is keeping an eye on the Quebec market. For now, that means formal meetings with Quebec vendors. The meetings, which are slated for November 5, could be considered a first step in getting to understand that market better.

“Yes we are starting to look seriously into the opportunity,” says Prud’homme, “and as we get engaged with the [Quebec] community and we learn from that market we will determine the right timing for the entrance.”

He does admit that initial growth for the company when it entered Canada in 2007 was “slower than expected,” but that slowdown has proved beneficial. It helped Lowe’s prevent making the kinds of mistakes that hammered Target when it tried unsuccessfully to expand into this country.

(Quebec vendors who wish to participate can get more information by clicking here. —Editor)

Castle adds three members over the summer

MISSISSAUGA, Ont. ― Over the summer, Castle Building Centres Group added three new member locations: Interlake Glass in Arborg, Man.; VONR Hardware in High Prairie, Alta.; and South Parry Lumber, Parry Sound, Ont.

Castle’s mandate to support independents on their own terms, leaving them to promote their own local banners, continues to have resonance for dealers. “The continued growth of Castle is no coincidence. It is a direct result of the Castle business model and the message that new and existing Castle members are sending to the industry,” says Castle President Ken Jenkins, adding that Castle goes to market as “a secure and transparent buying group.”

Interlake Glass located north of Winnipeg, a new Castle Specialty store specializing in windows, doors and glass, and custom cladding, roofing and mouldings. The owner is Chris Eyolfson, who purchased the existing store and warehouse in 2012. He plans to add an additional 2,000 square feet of retail and 1,000 square feet of warehouse.
 
VONR Hardware is northwest of Edmonton, in the industrial town of High Prairie. Co-founders Trever Sekulich and Debra Wales have been owner operators for more than 11 years, and moved to Castle when they decided to expand into lumber and building materials.

In Ontario cottage country, Mike Argue and Neil Tucker acquired South Parry Lumber in in Parry Sound in August. The store will hold a grand re-opening later this fall.

Dealers drawn to RONA show by new products, simpler corporate structure

MONTREAL — The second annual show for its independent dealers provided a preview of the company’s spring lineup, including a revamped lighting department and expanded lawn and garden assortment.

The show, held September 10 and 11 at Montreal’s Palais de congrès, featured several outdoor furniture sets in the middle of the floor, including more high-end collections. A new line of lighting included a nostalgic look with Edison light bulbs and vintage fixtures, showcased in a lower light cloud to enhance a sense of intimacy in the store. Dealers could also take advantage of a new mix-and-match program for lamps and shades.

These assortments, tailored for independents, are among the efforts RONA is making to secure its affiliate dealer base―and attract new dealers. More than a dozen prospects attended the show, and RONA has recruited 26 new dealers so far this year. In addition, RONA has removed a layer of dealer involvement by purchasing its franchised dealers in Quebec.

“We’ve simplified the business. They see where we’re going,” says Luc Rodier, executive vice president of RONA.  “We’ve proved that the dealers are an important part of our strategy going forward.”

Tembec faces investor unrest as share prices drop

MONTREAL — Prem Watsa, dubbed “Canada’s Warren Buffett,” is Tembec’s biggest shareholder—and if its fortunes don’t improve, he may be its saving grace. Bloomberg News reports that shares in the forestry company plunged after it warned investors that without a turnaround, it risks breaking the terms of a bank loan.

Running out of options, the firm may have to resort to a bailout from Watsa’s Fairfax Financial Holdings, if its own bankers don’t cut it a break, says Ed Sustar, who rates Tembec for Moody’s Investors Service. “Fairfax is behind all of this debt that’s on Tembec’s balance sheet, so they have the ability to lend them money,” he told Bloomberg. “We’re kind of at crunch time.”

Tembec, which has been struggling with falling sales, is responding to investor pressure by issuing an optimistic earnings forecast as its fourth quarter draws to a close. The forest products manufacturer is expecting that EBITDA for the quarter ending September 26 will rise to between $31 and $34 million from $2 million in the previous quarter. Operating earnings will be in the range of $19 million to $22 million in the September 2015 quarter, as compared to an operating loss of $11 million in the June 2015 quarter.

The June 2015 quarterly results had been negatively impacted by significant planned major maintenance activities at the Temiscaming, Quebec, and Tartas, France, complexes. There will be no significant planned major maintenance in the September 2015 quarter. The decrease in the relative value of the Canadian dollar is also contributing to the more favourable operating results.

FROM THE ARCHIVES: This week in 1995

The addition of a West Coast buying office results in some changes in Home Depot Canada’s buying team. Eric Schmidt is put in charge of lumber and building materials (he would be Western regional VP three years later, then go on to head up Southwire), while Mike Daniels (now GM at Spancan) takes over the flooring and paint portfolio. Also: Rubbermaid results suffer, due in part to its woes with Wal-Mart; and Hudson’s Bay earnings decline. Blame Wal-Mart for that, as well. Click here to read these blasts from the past!

DID YOU KNOW…?

RETAILER NEWS

MISSISSAUGA, Ont. ― Castle Building Centres held its annual Supplier Appreciation Golf Day on Monday. The event, which brought suppliers and dealers together at the Club at North Halton, Georgetown, Ont., served as a fundraiser for Toronto’s Hospital for Sick Children, with Castle matching donations made by the participants. Over the years, the event has raised more than $100,000 for SickKids Foundation.

TORONTO — Sears Canada is rolling out changes to its customer loyalty program, Sears Club, in order to “bring it more firmly into the digital age.” The enhanced Sears Club program, set to launch before the holiday shopping season, will allow Sears Club points on purchases made in cash as well as with any debit or credit card accepted by Sears Canada. Points can be earned on in-store, catalogue, online, and mobile purchases.

SYDNEY — Woolworths and Lowe’s have injected an additional $90 million into their struggling joint venture Masters Home Improvement, the Sydney Morning Herald reports. At the same time, Woolworths acknowledged that its home improvement losses have ballooned by 33%, including a hike from $176 million to $245 million in losses at Masters. This year, the two companies have pumped a total of $3.22 billion into the venture, up from last year’s $2.9 billion. Woolworths meanwhile remains firm that the chain can become profitable and that it is willing to wait.

SUPPLIER NEWS
EDMONTON — Miller Edge and Creative Door Services have joined forces in an exclusive distribution agreement for the sale of Miller Edge products in Western Canada effective July 22, 2015. The agreement is Miller Edge’s first in the Canadian marketplace and forms part of the company’s corporate strategy to expand its reach into Western Canada and provide its existing Canadian customer base with locally stocked products with reduced freight costs and improved delivery times.

PEOPLE ON THE MOVE
At Home Hardware Stores Limited, Laurie Wittie has accepted the position of store design manager, effective September 14. Laurie has been serving as the assistant manager, visual merchandising in Store Design.

At Lowe’s Cos., Jocelyn Wong has been named senior vice president and general merchandising manager for the company’s seasonal product business area, effective October 12. She will be responsible for merchandising strategies for the lawn and garden, seasonal living, and outdoor power equipment divisions. Wong joins Lowe’s from Family Dollar, where she served as SVP, chief marketing officer. She will report to Chief Merchandising Officer Michael P. McDermott.

ECONOMIC INDICATORS
The number of U.S building permits reached 1,170,000 seasonally adjusted in August. This is 3.5% above July’s rate 1,130,000 and is 12.5% above last August’s 1,040,000. Housing starts fell to a seasonally adjusted rate of 1,126,000, down 3% from July, but up 16.6% from the same month a year ago. (U.S. Commerce Dept.)

NOTED
The 14th Annual Industry Memorial Golf Classic of the Canadian Hardware and Housewares Manufacturers Association is on September 30 at the Blue Springs Golf Club in Acton, Ont. The event honours stalwarts from the industry who have passed away. CHHMA members and non-members are welcome to attend. (Click here to register online.)
 

OUT AND ABOUT
The Hardlines team is in St. Jacobs, Ont., this week for Home Hardware’s Fall Market. We’ll also be working in the NRHA Canada booth up in the mezzanine, telling dealers about the latest online training programs available from NRHA. Come by and say “hi”!

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