August 15, 2016 Volume xxi, #32

“Summer time, and the livin’ is easy.”
—George Gershwin, DuBose Heyward, and Ira Gershwin
(from the opera, “Porgy and Bess,” 1935)

SUMMER PUBLISHING SCHEDULE: Please note there will be no weekly edition of HARDLINES for the next two weeks, August 21 and 29. The World Headquarters will remain open, however, during this time. The regular weekly schedule will resume September 5.

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OUR BIG SUMMER READING ISSUE!

• Orgill to open Western DC that will serve Alberta and B.C. dealers
• Following departure of Michael Medline, Canadian Tire ramps up digital initiatives
• Lowe’s Christmas preview features products designed for Canadian customers
• Christmas in July: a preview of holiday products at Canadian Tire
• Selkirk Home Hardware manager receives scholarship for NRHA Management School
• NRHA brings together dealers for an afternoon of baseball

• PLUS: Lowe’s Canada grand opening, Home Hardware milestones, Canadian Tire same-store sales, Superior Plus’s sale of its Construction Products, Ikea Canada in Halifax, Home Depot’s Craig Menear, Amazon in Europe, Costco in July, CanWel in Q2, Weyerhaeuser, Acadian Timber, Spectrum Brands, IPG, housing starts, building permits, classified ads —and more!
  
  

Orgill to open Western DC that will serve Alberta and B.C. dealers

MEMPHIS — U.S. hardware wholesaler Orgill has announced the addition of a distribution centre in Post Falls, Idaho. Orgill has signed an agreement to acquire the facility and is expecting to close on the purchase September 1.

“We are excited to announce this expansion to our distribution network and look forward to the enhanced efficiencies this will create for our customers as we move forward,” says Ron Beal, Orgill’s chairman, president and CEO.

The 500,000-square-foot facility will be Orgill’s seventh full-service distribution centre, in addition to existing locations in Tifton, Ga.; Inwood, W.V.; Sikeston, Mo.; Hurricane, Utah; Kilgore, Texas; and London, Ont. The new facility will service Canadian customers in British Columbia and Alberta, as well as customers in five states throughout the American Northwest. It’s expected to be fully operational by March 31, 2017.

Following departure of Michael Medline, Canadian Tire ramps up digital initiatives

TORONTO — The recent ouster of Canadian Tire CEO Michael Medline marred the otherwise positive news of reasonably strong second-quarter results for Canadian Tire Corp. However, some insiders have speculated that the company’s tepid growth online was a contributor to Medline’s departure.

Under Stephen Wetmore, who originally preceded Medline in the CEO role and has replaced him since, Canadian Tire has revealed it has 30 online initiatives currently in the works. These initiatives have been active over the past 18 months, corresponding approximately to the timeline during which Wetmore quietly began stepping back into day-to-day operations at the company.

“The journey to become an omnichannel retailer, able to satisfy the customers’ needs in whatever manner they want to shop, has brought about a major shift in culture for [Canadian Tire], building on our test-and-learn orientation in every banner, and creating even greater collaboration within our businesses and with our dealer partners,” Wetmore said recently in a call to analysts.

Of the 30 projects currently under way, he admits, “not all of these will be home runs,” but they will all be part of the company’s learning curve to master the online space. The Canadian Tire Retail stores are already using a pay online and pick up in-store model.

Wetmore indicated that Canadian Tire Corp., which includes Sport Chek and Mark’s Work Wearhouse, will continue to build on its strength as a bricks-and-mortar retailer. “I don’t believe that we should aspire to be the number-one digital player in the world. It’s an impossible aspiration. But I think we have to be extremely creative and innovative in our marketplace.”

Lowe’s Christmas preview features products designed for Canadian customers

TORONTO — For the first time, Lowe’s Canada has opened up its holiday products preview to the media. Cindy Jardim, the director of style and trends for the company, added that it was the first time the company presented exclusively Canadian-designed products that they felt were more suitable to Canadian consumers.

Held in an event space in Toronto’s trendy Entertainment District, the décor was divided into four distinct themes: comfort and joy, sweet Noel, deck the halls, and cold spell. Everything on display, save for the dishes, was available at Lowe’s Canada stores.

And for another first, this will mark the first year the company has done open-stock ornaments, which Jardim anticipated Canadian shoppers will like. “A lot of thought went into these collections,” she says. “We’re really taking the look up a notch, bringing more sophistication, but still at an accessible price for our customers.”

In addition to the seasonal products, Lowe’s also took the opportunity to showcase its appliance lines and in-stock kitchen lines. One new product Jardim was especially enthused by was a clothing steamer from LG. Apparently, demand for the product was so high when first released in Europe that the North American launch had to be delayed. She jokingly added that it was going to be on her own Christmas list.

Jardim has been very impressed with the appliance assortment, and the variety of aesthetics they appeal to. Ranging from a vintage look, complete with a fridge, toaster, and kettle by Smeg—the Italian appliance company for which Lowe’s is the exclusive retailer—and more traditional looks that evoke turkey dinner served on “the good china” to a contemporary, condo-sized look, Lowe’s is tailoring its offerings to a diverse range of customers.

Christmas in July: a preview of holiday products at Canadian Tire

TORONTO — Canadian Tire held a promotional event recently in Toronto to showcase the new lines and colours for its Christmas assortments. The preview was an invitation to press and TV types to get an insider’s look at coming trends.

But as it turned out, it was somebody’s birthday at the World Headquarters and, well, we just never made it to said event. Nevertheless, a helpful PR person working on behalf of Canadian Tire did their best to shore us up with additional information, including a digital copy of the product booklet. It showcases the latest in holiday décor, trees, and lights. Canadian Tire’s proprietary label, Canvas, was prominent in the assortments, with Spiced Plum, “a shadowy, sophisticated tone inspired by twilight hues,” being the company’s designated hue of the season.

Hey, why don’t you just take a look for yourself? Enjoy!

Selkirk Home Hardware manager receives scholarship for NRHA Management School

SELKIRK, Man. — Wendy Lang, Store Manager of Selkirk Home Hardware Building Centre is the recipient of the Home Hardware NRHA Retail Management Certification Program Scholarship valued at US$6,250 ($8,166). The program, offered through the North American Retail Hardware Association (NRHA), will take place in Indianapolis this fall.

To apply, scholarship candidates completed an essay and participated in a phone interview with program administrators. Following this process, a successful applicant was chosen by an NRHA selection committee.

“The scholarship selection committee was very impressed with Wendy’s superior organizational skills and her vision for expanding Home Hardware’s future use of technology,” says Scott Wright, executive director of the Retail Leadership Institute at NRHA. “Wendy will bring a great deal of experience to the class and will be able to share many of the best practices she has gleaned while working in an award-winning store over the past 20 years.”

The NRHA Retail Management Certification Program provides up-and-coming retail leaders with the skills they need to engage in strategic planning, decision-making, and leadership activities.

NRHA brings together dealers for an afternoon of baseball

TORONTO — The North American Retail Hardware Association (NRHA) and the National Hardware Show brought together Canadian dealers for an afternoon of baseball, hot dogs, and hardware in Toronto on July 31. Dealers from the area were invited down to a box at the Rogers Centre to watch the Toronto Blue Jays take on the Baltimore Orioles.

Hosted by Dan Tratensek and Bob Cutter of the NRHA, and joined by the team from NRHA Canada, about 30 dealers from 12 different stores came out to talk and share ideas, enjoy some food and drinks, and take an afternoon off from the store.

The NRHA has been helping independent home improvement retailers in North America become better and more profitable merchants for more than 100 years. The organization provides members with a wide array of educational and training programs, financial management resources, and human resource tools—all available online with unlimited access.

The game itself was an intense one—going into 12 innings—and was neck and neck until the Orioles hit a homerun with the bases loaded in the top of the 12th. In the end, the Orioles won 6-2. A disappointing loss, but it was still a great day for dealers to get out of the store for an afternoon, get to know their fellow dealers, and learn more about the NRHA.

DID YOU KNOW…?

... that dealers attending the Orgill Fall Dealer Market in Las Vegas are invited to have a beer on us while there? That’s right! HARDLINES (along with our amazing vendor sponsors) will host a Canada Night Reception at Senor Frog’s on August 25 from 6 to 8 p.m. Click here to RSVP for this dealer-only event now. Thanks to our sponsors so far: A.O. Smith, Acceo, EAB, Hillman Group, Ipex Homerite, Knape & Vogt, Makita Canada, The Mibro Group, Milwaukee Power Tools, Regal Ideas, Selkirk, Spectrum Brands, Task Tools, Thomas & Betts, and U.S. Stove Co. (We still have room for a few more vendor sponsors. Email Michael if you’d like to participate!)

RETAILER NEWS

CALGARY ― Lowe’s Canada held the grand opening of its newest store in Calgary on August 4. Located in Shawnessy, the store’s festivities featured a board cutting that included Store Manager Brian Flynn and Malcolm Parks, market director of Lowe’s Canada, and a community grant presentation to a charitable organization. The Shawnessy store is the company’s 48th under the Lowe’s banner in Canada, and its fifth in Calgary. The store represents a local investment in excess of $32 million and has created between 120 and 140 jobs, plus 30 to 40 seasonal positions.
 
ST. JACOBS, Ont. — Home Hardware Stores Ltd. has enjoyed a number of openings and milestones amongst its dealer-members in recent weeks. Davie Village Home Hardware in Vancouver is celebrating its grand opening recently that included a chain-cutting ceremony. Owner Jeffrey Ho already owns and operates Blight’s Home Hardware and Gandy’s Home Hardware in Vancouver. In Wellesley, Ont., Wellesley Home Centre is celebrating its 10th anniversary. The store has distinguished itself by offering distinctive products and services, including alternative materials for wood decking as well as smokeless fire pits.

MISSISSAUGA, Ont. — Canadian Tire Corp. reported that same-store sales increased for Q2 in all core retail banners. Sales were up 2.9% at Canadian Tire, 7.2% at Sport Chek, and 4.6% at Mark’s. Diluted earnings per share rose 14.5% to $2.46. Consolidated retail sales increased $121.1 million, or 3.1% in the second quarter, including a 5.3% decline in Petroleum retail sales due to lower gas prices. Excluding Petroleum, consolidated retail sales were up 4.5% over the same period last year.

TORONTO — Superior Plus has completed the sale of its Construction Products Distribution business in a cash deal valued at US$325 million (about $428 million). The buyer is Foundation Building Materials, a California-based commercial gypsum supply dealer. Proceeds from the sale are expected to be used initially to repay debt and to redeem $150 million worth of debentures due June 30, 2018. 

BURLINGTON, Ont. — Ikea Canada has broken ground on its new store in Halifax. Located at Dartmouth Crossing, the store will take roughly 14 to 16 months to complete and be 330,000 square feet in size—larger than four football fields.

ATLANTA — Home Depot CEO Craig Menear told CNBC he doesn’t see the company’s fortunes fading soon. With rising home values strengthening the housing market, and homeowners staying in their homes longer, renovation spending is on the upswing. “If people aren’t moving, they’re clearly investing in their homes,” he said. “That is a project driver.” Even the coveted millennial demographic, so far slow to invest in home ownership, has been warming up.

LONDON — Even though Amazon is present in Great Britain and Spain, bricks-and-mortar retailers B&Q and Leroy Merlin head the rankings of most-used online shops for hardware and home improvement products. According to DIY Week, in the other European countries where Amazon is present—France, Germany, Italy, Denmark, and Austria—Amazon is number one.

ISSAQUAH, Wash. — Costco Wholesale Corp. had net sales in July of $8.65 billion, up from $8.64 billion last year. Due to the timing of the Independence Day holiday, this year’s July results included one less sales day in the U.S. than last year. This shift negatively impacted total company sales by an estimated 2.5% (3.5% in the U.S.).

BENTONVILLE, Ark. ― Wal-Mart Stores, Inc. is buying online retailer Jet.com for $3 billion in cash. In addition, $300 million of Walmart shares will be paid over time as part of the transaction. The purchase highlights Walmart’s drive to boost its online business.

SUPPLIER NEWS
VANCOUVER — CanWel Building Materials saw Q2 revenues increase by 29% to $290 million, compared to $225 million in the same period in 2015. The increase was mainly attributable to the additional revenue resulting from the acquisition of California Cascade Industries and Jemi Fibre Corp. Net earnings increased 64% to $9.8 million, before non-recurring items. During the quarter, gross margin increased by 47.8% to $39.6 million.

FEDERAL WAY, Wash. — Weyerhaeuser reported Q2 net profits of $157 million, up from $133 million a year ago, as sales increased. Earnings of $0.21 per share nearly matched the $0.22 consensus estimate. The results include net charges of $11 million after taxes from special items; without special items, earnings came to $0.17 per share. Also included are earnings of $38 million after taxes from discontinued operations, including Weyerhaeuser’s cellulose fibre business.

VANCOUVER — Acadian Timber reported Q2 operating earnings of $3.2 million, a $0.3 million decrease year-over-year, reflecting reduced sales volume. Net income totalled $5.8 million, or $0.35 per share, compared to $0.34 for the same period in 2015. At the same time, the company announced the immediate departure of COO Brian Banfill and CFO Erika Reilly. Reilly is succeeded by Wyatt Hartley.

MADISON, Wisc. ― Spectrum Brands Holdings reported third-quarter net sales of $1.36 billion, up 9.1% from the same period a year earlier. Net income more than doubled to $101.9 million from $44.9 million. The hardware and home improvement (HHI) segment had net sales of $328.5 million, up 4.8%, thanks in large part to growth in the U.S. residential security, builders’ hardware, and plumbing categories.

MONTREAL — Intertape Polymer Group reported that revenues increased 2.5% to $201.5 million. Gross margin increased to 25.7% from 21.6% primarily due to flood insurance claim settlement proceeds, the company’s manufacturing cost reduction programs, and an increase in the spread between selling prices and lower raw material costs. Net earnings rose $1.9 million to $13.7 million.

IN MEMORIAM: Jack King
Jack King died on July 28 after a long battle with pulmonary fibrosis, the day after his 85th birthday. Born in Magnetawan, Ont., in 1931, his career took him from White Hardware to Bannister & Jenkins Home Hardware before he struck out on his own as a manufacturer’s agent and a founding member of the Housewares and Hardware Independent Representatives of Canada. King is survived by his wife, Willa, their son John and daughter-in-law Lisa, and grandsons Thomas and Matthew.

CORRECTION
Peter Drucker did not co-author “In Search of Excellence,” as we stated in our last issue. The book was written by Tom Peters and Robert Waterman. Thanks to a Faithful Hardlines Reader from Saint John, who spotted that one.

ECONOMIC INDICATORS
The standalone monthly rate of housing starts for all areas in Canada was 198,395 units seasonally adjusted in July, down 9.0% from 218,326 units in June. Urban starts decreased by 9.9% seasonally adjusted to 182,620 units. Multiple-urban starts decreased by 13.3% to 123,630 units and single-detached urban starts decreased by 1.8% to 58,990 units. In July, the seasonally adjusted annual rate of urban starts decreased in Quebec, British Columbia, Ontario, and in Atlantic Canada, but increased in the Prairies. (CMHC)

The New Housing Price Index rose 0.1% in June, following a 0.7% increase in May. The advance, driven mainly by new housing prices in Toronto and Oshawa, and in Vancouver, was moderated by decreases in Calgary and Edmonton. With an increase of 0.5%, the combined region of Toronto and Oshawa was the top contributor to the national gain. Builders reported higher labour costs, market conditions, and new list prices as the reasons for the increase. New house prices in Vancouver advanced 0.4%, reflecting market conditions. (StatCan)

Municipalities issued building permits worth $6.4 billion in June, down 5.5% from the previous month. Lower construction intentions for multi-family dwellings and institutional buildings were mostly responsible for the decline. The value of permits for multi-family dwellings was down 15.8% to $1.7 billion in June. Declines were recorded in seven provinces, led by Ontario and British Columbia. Construction intentions for single-family homes were up 4.2% to $2.4 billion, the fourth advance in five months. The gains were spread among seven provinces, led by Ontario. (StatCan)

OUT AND ABOUT
Beverly, Katherine, and Michael are all heading to the Orgill Fall Dealer Market in Las Vegas next week. If you’ve got a scoop or a new product we should know about, text Michael at 1-647-209-5663.

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