April 4, 2016 Volume xxii, #14

“Have patience. All things are difficult before they become easy.” —Saadi Shirazi (Persian poet, 1213-1291)

IN THIS ISSUE:

• IMPORTANT MESSAGE FROM HARDLINES: Meet the Buyers update

• RONA shareholders OK Lowe’s deal, but without preferred shareholders

• Latest openings and conversions reflect Home Hardware’s growth in Quebec

• La Coop fédérée garners retail excellence award from Quebec association

• PLUS: Castle snags Labrador dealer, Ace Canada new account managers at DAP Canada, CanWel buys into adventure resort, Amazon’s Home Services gaining ground —and more!

IMPORTANT MESSAGE FROM HARDLINES: Meet the Buyers update

We regret to inform you of changes to our Meet the Buyers Event on April 28. We were delighted to have both RONA and Lowe’s Canada commit to this event. Now, however, both companies have withdrawn from the event.

We understand this decision. A lot is bound to change over the coming months, and to ask either company at this time to give our vendors any meaningful insight into the next steps would be very difficult, if not impossible.

This change may be an inconvenience for many of you. And for that, we apologize. We realize the impact this will have on those of you who will have to cancel flights and change itineraries.

Please note: We have a commitment from Lowe’s to reschedule. Once a date has been set, more information will be available.

RONA shareholders OK Lowe’s deal, but without preferred shareholders

BOUCHERVILLE, Que. ― RONA inc. held a special meeting on March 31 at which its shareholders voted to pass a special resolution to approve the company’s sale to U.S.-based Lowe’s Cos. through the acquisition of all of RONA’s common shares $24 per share in cash, and all of the preferred shares $20 per share in cash.

The deal, which had already been approved by RONA’s board of directors, was approved by 99.9% of the shareholders at the meeting, representing 70.2% of the total common shares outstanding as of February 25, 2016.

However, preferred shareholders did not approve the arrangement, with just 25.2% of their votes cast in favour of the arrangement, which required the approval of two-thirds of the votes cast by such shareholders. The votes cast by preferred shareholders represented 43.01% of the total of outstanding five-year preferred shares.

Completion of the deal is not conditional on approval by the preferred shareholders, so those shares will be excluded from the deal. They will continue to trade on the Toronto Stock Exchange under RONA at a price that will be determined by the market, based on rate and credit rating. And current shareholders can still redeem them in five years at a value of $25.

RONA Chairman Robert Chevrier expressed that he was “very, very, very pleased” with the outcome, and affirmed his faith in Lowe’s pledge to maintain head office operations and not to slash jobs. Activist shareholder Jean Dorion, however, called on the federal and provincial governments to hold Lowe’s to its word. “We hope that government authorities pressure [Lowe’s] so that the commitments made by Lowe’s are respected,” he said. RONA CEO Robert Sawyer will be succeeded by Lowe’s Canada President Sylvain Prud’homme.

Finalization of Lowe’s acquisition of RONA still needs to be approved by the Quebec Superior Court, the receipt of required regulatory approvals, and other closing conditions.

Latest openings and conversions reflect Home Hardware’s growth in Quebec

ST. JACOBS, Ont. — While it’s Canada’s second-largest province for home improvement sales (Source: Hardlines Market Share Report —shameless plug here!), Quebec is under-represented by some of the country’s large national banners.

Home Hardware Stores Ltd. is no exception. While the chain has almost 1,100 stores nationwide, only 122 of them are in Quebec, even though la belle province represents about 25% of the Canadian market (Source: Hardlines Market Share Report —yes, another even more shameless plug!). But Quebec has been a focus for the dealer-owned co-op in recent years, and all the upheavals that have been taking place there have provided added opportunities for growth.

“Whenever there’s movement in the industry, not everybody is happy with it. Some will look elsewhere,” says Mario Durocher, Home’s director of operations for Quebec, alluding to the string of changes that have included Ace’s move to RONA, the acquisition of Groupe BMR by La Coop fédérée, and RONA’s imminent sale to Lowe’s Canada.

Indeed, other groups have beefed up their efforts in Quebec: Groupe BMR has announced it will pursue RONA dealers, offering a Quebec-based solution. Castle Building Centres has made big gains with large dealers there in recent years. And just last week, TIMBER MART Group announced it had hired two more Quebec recruitment managers.

Durocher stresses that opportunities abound, and with three regional managers of its own in the province, Home’s growth has been good. In fact, 2014 was a record year, with 15 new dealers signed; last year another six joined. Since 2009, Home has increased its store count in Quebec by 45%. Three more have joined year to date: a dealer conversion located just north of Montreal, plus two more that will be announced soon (we’ll keep you posted! —your enthusiastic Editor).

Growth also includes expansion of existing businesses. Quincaillerie Sainte-Julie Inc. in Sainte-Julie expanded into a new location with a grand opening last week. The owner, Michel Robidoux, and his wife Marie-Josée Hébert (shown above, with Mario Durocher on the left, and Claude Bissonette, retail sales and operations manager for that area), joined Home Hardware two years ago. Another existing dealer, Centre de Rénovation FDS Home Hardware in Arvida, is also moving into a larger space, a former Super C store in Jonquière, to better serve the Saguenay region. Grand opening is slated for June 2016.

Durocher is anticipating a banner year for conversions, because of “too much instability in the market. Are we the right fit for everybody? No—but we feel we have a lot to offer to dealers changing banners in 2016. There’s still tons and tons of potential.”

La Coop fédérée garners retail excellence award from Quebec association

MONTREAL ― La Coop fédérée has received an Award of Recognition from the Conseil québécois du commerce de détail (CQCD). This award highlights the contribution and part played by La Coop fédérée through its Sonic, BMR, and Unimat brands in developing the Quebec retail trade.

“In 93 years of history, La Coop fédérée has had the chance to receive several awards for its contribution to the agricultural community—our core business—but its contribution to retail trade remains largely unknown. However, retail represents one third of our $6 billion in revenues,” said François Dupont, senior vice-president of retail and innovation, on receiving the award on behalf of La Coop.

Throughout the past few years, La Coop fédérée has positioned itself as a major player in retail trade in Quebec. The acquisition of Groupe BMR in 2015 has allowed the group to consolidate its presence in the hardware and renovation market. Today, BMR lays claim to being the largest hardware retailer held exclusively by Quebec interests (That will certainly be true within a few months. —Editor).

“Our goal is clear: we want to be recognized as a leader in the retail sales industry in Eastern Canada. This Award of Recognition is testimony to the increasing contribution of La Coop fédérée in retail trade and its economic impact in Quebec,” Dupont added.

DID YOU KNOW…?

RETAILER NEWS

MISSISSAUGA, Ont. — Castle Building Centres has announced the addition of its latest member, in Charlottetown, Labrador. Benjamin “Trapper Ben” Powell, founded both the original business, B.W. Powell, as a sawmill―one of Labrador’s first―and the town of Charlottetown itself. The business expanded over the years into a full-supply general store. Benjamin’s children Marie and Irving assumed ownership in 1992. Under the Castle banner, the location provides lumber, building materials, and hardware, as well as fuel for local homes. It also serves as the town’s post office.

WINNIPEG ― Ace Canada will hold its Spring Market from April 16 to 18 at the RBC Winnipeg Convention Centre. The Centre has been renovated and expanded, allowing the show to be on one floor this year. The show highlights seasonal offers for fall and winter selling, kicking off with a retail leadership seminar featuring Ace retail training manager Jo-Ann Kratz. Sunday evening’s entertainment will be provided by Dennis Hull, the wise-cracking former Chicago Blackhawks player and raconteur. Click here for more info about Ace Canada.

SEATTLE — Amazon announced that orders for its Home Services division have increased by an average of 20% per month since its launch last year. According to Reuters, the e-retailer’s contractor directory, which allows customers to find plumbers or TV installation, allows it to go head to head with services such as Yelp and Angie’s List. The service is available in 30 U.S. metropolitan areas to date.

OAK BROOK, Ill. — Ace Hardware CEO John Venhuizen expects to see a lift in the company’s performance as consumers find themselves in a stronger position during the spring shopping season. “We are more about home preservation than home renovation, thus the housing cycle does not impact us as much, but I think it is steadily improving and that is good for all of us,” he told The Street. “The big box players are doing very well at the ‘stack it high, watch it fly’ low price style of selling, but then the specialty, convenience, high-touch retailers are also doing very well, and we are fortunate to be in that latter space.”

SUPPLIER NEWS
VANCOUVER — CanWel Building Materials Group Ltd. has completed the latest round of financing to acquire all of the issued and outstanding common shares of Jemi Fibre Corp., and refinance approximately $50 million of Jemi Fibre’s high yield, senior loans through the proceeds of a private placement by CanWel of subscription receipts that raised just over $25 million. Jemi Fibre is an integrated timber harvesting and wood processing company, which also owns 50% of an outdoor adventure resort near Fernie, B.C. The deal is still subject to certain closing conditions.

AURORA, Ont. — Industry veteran Jim Brody has created a new company, POGwise, Inc., to help fill what he calls “a serious market intelligence gap in our industry” to help companies do effective business reviews that are data driven. Brody’s company offers cost-effective and timely independent retail audits to provide manufacturers and retailers alike with data encompassing: lineal footage, facings count, brand participation, price-point architecture, product segmentation, merchandising, and off-shelf activity. To learn more check out his website or email Brody directly.

PEOPLE ON THE MOVE
Jeff McCully and Paul Montgomerie have joined DAP Canada as national account managers. (Jmccully@dap.com; pmontgomerie@dap.com)

ECONOMIC INDICATORS
U.S. home prices in major cities appreciated more than expected in January, rising 0.8% from December. Growth was up about 5.7% from the previous year. (S&P/Case-Shiller Composite Index)

NOTED
Light Up Guatemala is an initiative from Developing World Connections, an international development agency that is working to bring eco stoves to rural Guatemala. A number of home improvement and hardware industry members have been involved in the initiative. On May 31, they'll be hosting a fundraising golf tournament in Kleinberg, Ont., at the Copper Creek Golf Club. For more information, contact Marianne Thompson at golf@developingworldconnections.org.

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