February 8, 2016 Volume xxii, #6

“Some people see things that are and ask, ‘why?’ Some people dream of things that never were and ask, “why not?’ Some people have to go to work and don’t have time for all that.”
— George Carlin (American comedian, actor, and writer, 1937-2008)

IN THIS ISSUE:

• RONA board accepts new takeover offer from Lowe’s

• Online selling, leadership keynote topics in BSIA Show’s Education Track

• Lowe’s will share expertise with RONA to increase profitability

• Tembec CEO warns of U.S. protectionism

• PLUS: Schering joins CashierPRO, new Western DC for Allegion, new PR manager at Home Hardware, Stanley Black & Decker results, Newell Rubbermaid, U.S. construction—and more!

RONA board accepts new takeover offer from Lowe’s

MOORESVILLE, N.C. & BOUCHERVILLE, Que. ― Lowe’s has entered into a deal with RONA inc. to acquire all of RONA’s common shares for $24 per share in cash, and all preferred shares for C$20 per share. The deal is valued at $3.2 billion (US$2.3 billion) and is more than double the value of RONA’s share price just prior to the announcement of the acquisition.

Lowe’s Canada intends to move its head office from Toronto to RONA’s headquarters in Boucherville, Que., with Lowe’s Canada president Sylvain Prud’homme continuing in the lead role. Lowe’s says it will continue to operate RONA’s multiple retail banners and distribution services to independent dealers. The result will be Canada’s biggest home improvement retailer, with revenues close to $6 billion at retail.

Lowe’s made a friendly, albeit controversial, takeover bid for RONA back in 2012 that was worth $1.8 billion. But that offer was made just ahead of a provincial election in Quebec, and got a lot of resistance from the Quebec government, which perplexed the executives at Lowe’s.

This time, the deal has been unanimously accepted by RONA’s board of directors. Despite resistance from the Parti Quebecois and the Teamsters’ union, the deal is expected to go through, pending approvals from Investment Canada and the Competition Bureau. Even RONA’s largest shareholder, the Caisse de dépôt et placement du Québec, has confirmed it will sell its 17% ownership in the company.

Online selling, leadership keynote topics in BSIA Show’s Education Track

SURREY, B.C. — Education for dealers and vendors is going to be an important addition to the next BSIA Westcoast Building & Hardware Show & Ultimate Home Show. The event, produced by the Building Supply Industry Association of British Columbia, will be held in Surrey, B.C., at the Cloverdale Fair Grounds in the Agriplex, March 11 to 13, 2016.

The potential to grow your online sales, along with the issue of effective leadership within your organization, are the two topics that will be covered this year. Liz Drayton is part of the retail team at Google Canada, which means she works with the country’s largest retailers to help them best translate their brand and customer experience through digital media.

Drayton was a big hit at the Hardlines Conference last fall, when she explained how retailers are using apps to literally hijack customers from competitors' stores with time-limited offers that have them running through the shopping mall for a deal. Anyone trying to get their heads around the possibilities for online selling and marketing cannot afford to miss this breakfast presentation, which will take place on the morning of March 11.

Roy Prevost is a “customer service activist.” Through insightful, often humorous presentations, he provides a look into the minds of the corporate retail players and their marketing strategies.

On the morning of day two, March 12, Prevost will address an important topic for dealers and suppliers alike: the role of leadership in your company. This is a must-attend event for anyone who is:

• wondering whether you are being a leader—or just being a pain;
• leading using outdated, old-fashioned leadership concepts;
• looking for insights on how to develop leaders from within your business;
• looking to build a team of “go to” workers;
• wanting to create the ideal environment to foster leaders in your business;
• interested in the five steps of leadership development; and
• wanting to know how to identify leaders within your organization.

In addition, our very own editor, Michael McLarney, will present a keynote at the Show’s gala dinner on March 11. He will share his insights into the challenges confronting dealers today, and the opportunities available in this changing retail universe of bricks and mortar versus digital selling. He will also provide important statistics on the B.C. market, including its size and top performers.

Lowe’s will share expertise with RONA to increase profitability

TORONTO — Lowe’s has identified ways to cut costs and increase revenue and operating profitability through its takeover of RONA inc. Those measures could add up to an increase in profitability of least $1 billion, says the company.

Lowe’s intends to expand RONA’s offerings by applying Lowe’s specialization in categories such as appliances. It will also bring its strengths in omnichannel marketing to the RONA business. It further expects to drive pro profitability by leveraging shared supplier relationships, the expansion of Lowe's own private-label capabilities, and the elimination of RONA’s costs related to being a public company, which the company says add up to about $3 to $4 million annually.

In addition, the Lowe’s Canada head office will move from the north end of Toronto to RONA’s headquarters and main distribution centre in Boucherville, Que., on the South Shore of Montreal. Given these opportunities, Lowe’s believes there is potential to double operating profitability in Canada over five years.

While Lowe’s has been known for slashing management in other takeovers, it insists it will continue to employ the vast majority of RONA’s current employees and maintain key executives from RONA’s leadership team. It also says it will look to strengthen existing relationships with RONA’s vendor base, and potentially expand relationships both Lowe’s and RONA have developed with Canadian manufacturers and suppliers.

“We look forward to continuing our commitment to the Canadian market and further enhancing our offering to the customers of both Lowe’s and RONA,” said Sylvain Prud’homme, president of Lowe’s Canada, in a release. “We have great respect for RONA’s leadership team and RONA’s talented employee base and look forward to working together to take our businesses to the next level.”

Tembec CEO warns of U.S. protectionism

MONTREAL — The benefit of the weaker loonie to lumber exports is likely to arouse the protectionist instincts of the U.S. lumber industry, says James Lopez, CEO of Tembec. According to the Canadian Press, Lopez issued the warning prior to a shareholder meeting last week, saying, “I think that they’re watching the Canadian dollar drop, particularly in lumber, and they’re saying, ‘This isn’t fair. ’ ”

With the Canada-U.S. softwood lumber agreement having expired in October, Lopez believes the U.S. Lumber Coalition will argue the loonie’s position puts it at a competitive disadvantage.

A spokesman for International Trade Minister Chrystia Freeland dismissed accusations by the Conservative opposition that the government is stalling on reaching a new deal. The U.S. Lumber Council has not commented on the currency changes, but spokesman Zoltan van Heyningen stressed the importance of renewing the deal before inertia sets in.

DID YOU KNOW…?

RETAILER NEWS

BOUCHERVILLE, Que. — RONA has acquired a former Home Hardware store in Golden, B.C. The 23 current employees will all remain at the location, which includes 30,000 square feet of retail space and a 15,000-square-foot warehouse. In addition, the store, managed by Douglas Birnie, will hire new staff in preparation for the spring and summer season. Customers will have access to the full line of RONA products online as inventory is gradually rolled out.

SUPPLIER NEWS
MISSISSAUGA, Ont. — Allegion Canada is set to open a distribution centre in Edmonton in April. The new facility is designed to enhance delivery and service levels, fulfilling orders for British Columbia, Alberta, and Saskatchewan. It will carry Allegion’s lines of safety and security products, including residential and commercial door locks, door closers, exit devices, accessories, and access control, with brands that include Interflex, LCN, Schlage, and Von Duprin. “The new Western Canada distribution centre is a testament to Allegion’s commitment to investing in its customers, as we strive to ensure a consistent and positive delivery experience across Canada,” said Mark Wilson, general manager of Allegion Canada.

NEW BRITAIN, Conn. — Stanley Black & Decker saw sales decline to $2.85 billion, compared to $2.98 billion in Q4 of 2014, taking market watchers by surprise. Net income of $265.5 million was a considerable increase from $145.8 million a year earlier, which included a $74 million loss from discontinued businesses. The disparity between sales and profits is largely attributable to the increasingly strong U.S. dollar. As the company earns half its revenue outside the U.S., it has been feeling the pressure of the greenback’s fluctuations especially hard.

MONTREAL — Tembec is indefinitely suspending operations at its Senneterre, Que., sawmill, leaving 148 employees without work, the Canadian Press reports. The company, which posted robust Q1 results but adjusted EBITDA losses in the lumber business, pointed to high wood costs and a weak North American softwood lumber market in making the decision. Tembec’s two other Quebec and five Ontario sawmills are unaffected.

ATLANTA — Newell Rubbermaid reported that core sales grew across its business for the quarter, while profits fell from $52 million to $13.2 million. At the same time, adjusted profit matched analyst expectations. The company’s core sales metric excludes acquisitions, divestitures, and foreign currency movements. Newell reached a $15.4 billion agreement last month to purchase Jarden Corp. In the fall, Newell moved to acquire Elmer’s Products and to divest itself of its window treatment business.

MIDDLETON, Wis. — Spectrum Brands posted net sales of $1.22 billion in Q4, a 14.1% increase from $1.07 billion last year. Net income rose to $73.6 million, from $49.8 million in 2015.

ECONOMIC INDICATORS
U.S. construction spending during December 2015 was estimated at a seasonally adjusted annual rate of $1,116.6 billion, 0.1% above November’s rate of $1,116 billion. The December figure is 8.2% above December 2014. The value of construction in 2015 was $1,097.3 billion, 10.5% above the $993.4 billion spent in 2014. (U.S. Census Bureau)

PEOPLE ON THE MOVE
Barb Schering has joined CashierPRO in the customer implementations and support department. There, she will be assisting existing hardware, farm, and building supply dealer clients in the use of their CashierPRO retail POS and inventory management systems. She’ll also be providing installation and training to new clients. Schering brings more than 15 years of experience to the role, most recently as an account manager with ProfitMaster. She also has an extensive background in financial services, including eight years as controller at Sturgeon Falls Building Supplies in Sturgeon Falls, Ont. (888-250-8135, ext. 701; barb.schering@cashierpro.com) 

Jessica Kuepfer has been promoted to the role of public relations manager at Home Hardware Stores Ltd. She was formerly public relations co-ordinator. She reports to Rob Wallace, director, marketing. (Jessica.Kuepfer@homehardware.ca)

NOTED
A celebration of life for Barrie J. Sali, the former CEO of TIM-BR MART who died last month, will be held on Thursday, February 25, at Shaughnessy Golf and Country Club at 4300 SW Marine Drive, Vancouver. Visitation will take place between 2 p.m. and 5 p.m., with a short program at 2:45.

OVERHEARD…
“We believe the time is right to take the next step in the evolution of the RONA family. The team at Lowe’s has presented us with an excellent plan that enables our company to maintain its brand power while at the same time leveraging Lowe’s global presence to build upon and expand our reach.”

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