October 17, 2016 Volume xxii, #39

“The important thing is not to stop questioning.”
—Albert Einstein (German theoretical physicist, 1879-1955)

IN THIS ISSUE:

• Lowe’s ups price for RONA with new offer to buy preferred shares

• Home Hardware ranked one of Canada’s top brands

• Store management lessons: leading by example

• Canadian housing starts shoot up in September

• PLUS: New president at WRLA, Newell sells tools to Stanley B&D, Unimat dealers switch to BMR, Morency joins TSC, Henkel relocates, Home Depot helps hurricane victims, new housing prices—and more!
  
  

Lowe’s ups price for RONA with new offer to buy preferred shares

MOORESVILLE, N.C. & BOUCHERVILLE, Que. — Lowe’s Cos. says it has entered into a definitive agreement for the acquisition of RONA’s outstanding Class A preferred shares for $24 per share in cash. Lowe’s will make the purchase through its wholly owned Canadian subsidiary.

The latest offer is worth $165.5 million to the holders of the 6.9 million preferred shares. The initial offer from Lowe’s for RONA, which totalled $3.2 billion, included an offer of only $20 per share for the preferred shares. Those shares at the time were valued at $25, which left a lot of those shareholders opposing the deal outright. Lowe’s says the new offer reflects the company’s desire to simplify accounting around the RONA takeover—but it also means dividends would no longer have to be paid to the preferred shareholders.

RONA’s board of directors has unanimously approved the transaction and will hold a meeting for preferred shareholders to vote on the decision sometime in November. The deal needs approval by two-thirds of the shareholders to be accepted. However, Fidelity Investments Canada, a major holder of the preferred shares, has announced it will vote in favour of the sale.

If it goes through as planned, the deal is expected to be completed before the end of the year.

Home Hardware ranked one of Canada’s top brands

ST. JACOBS, Ont. — Home Hardware Stores Limited has once again been recognized as one of the most influential brands in the country. According to this year’s ranking by Canadian Business magazine, Home Hardware came in at number two. Sports equipment and clothing company MEC (aka Mountain Equipment Co-op) held on to the top spot for the second year in a row.

The list of Canada’s Top 25 Brands is reserved for companies that connect most with their customers. An online survey asked approximately 1,500 Canadians to provide their opinions on key aspects of a company’s reputation, including the quality of its products and services, customer service, commitment to innovation, and community involvement. A score is then given to each brand based on the results. 

“We are extremely proud to be recognized as one of Canada’s top brands,” said Terry Davis, CEO, Home Hardware Stores. “Canadians know our brand stands for exceptional customer service, quality products, and expert advice.” The dealer-owned co-op climbed in the rankings from number 12 last year.

In the category of “Product and Service Quality,” Home Hardware took first place, with a 99.6% overall brand rating.

The list included companies from all sectors of business, including WestJet (number three) and Tim Hortons (number four). In the retail home improvement sector, RONA weighed in at 21st spot, down from 18 last year. Canadian Tire was number six, climbing seven spots from number 13 last year.

Store management lessons: leading by example

SPECIAL REPORT — For Jillian Sexton, COO of Hector Building Supplies in Pictou County, N.S., leadership is about your actions. As a young girl, she worked her way up in the family business rather than walking into a management position. And she continually works to prove her commitment simply through her presence.

“I think showing up, being there, that’s really key,” says Sexton. “If we hold a big event on the weekend, I show up too. I’m not just asking them to go in and do things. I really think that’s the secret to both your customers and your employees feeling like you’re invested.”

Susan Robinson took over Fletcher Ace in Princeton, B.C., in 2012. She moved to the small community of 2,700 from the Lower Mainland, nearly three hours away. The resource-dependent town has changed a lot since a local mine reopened, but it still faces the challenge of isolation. Princeton is at least an hour and a half away from any major centres.

Robinson’s charitable efforts in town focus on addressing those needs. She says the store contributes to about 50 to 75 charities in a year, with a focus on medical-related support, since there are only a few doctors in town.

It’s easiest for staff to get on board when their boss is passionate about their work. That kind of enthusiasm is catching. As Kim Ytsma, from Alliston Home Hardware in Alliston, Ont., says, “When you lead by example, others will follow.”

(Our full article on leadership appears in the upcoming edition of our sister publication, Hardlines Home Improvement Quarterly magazine. Free to dealers across Canada! Click here to see a recent digital edition and subscribe yourself! —Editor)

Canadian housing starts shoot up in September

OTTAWA — Housing starts climbed in September, rising 19.8% to 220,617 units, up from 184,201 units in August. Urban starts increased by 19.7% seasonally adjusted to 201,848 units, with the biggest gains in multiple urban starts, which were up 22.3%. However, single-detached urban starts showed healthy gains, as well, increasing by 14.5%.

“Housing starts were on an upward trend in September, as residential construction increased across the country, with the exception of Ontario, where the multiples segment softened to levels that are more consistent with household formation,” said CMHC Chief Economist Bob Dugan. “Quebec saw the largest gain in housing starts due to the development of new rental apartments intended for seniors.”

In September, the seasonally adjusted annual rate of urban starts increased in British Columbia, Quebec, the Prairies, and Atlantic Canada, but decreased in Ontario.

In the Greater Toronto Area, Canada’s single largest market, housing starts dipped to 30,232 units seasonally adjusted in September, down from 40,406 units in August. The decrease was mainly a result of fewer apartment starts. “September saw fewer apartment starts in Toronto than earlier in the year, slowing the overall housing starts trend in the GTA,” said Dana Senagama, CMHC principal market analyst for the GTA.

DID YOU KNOW…?

... that the 21st Annual Hardlines Conference starts tomorrow? YEAH! This is it — our biggest event of the year. There’s still room for you to join us, but time is running out. Please click here right away to register!

RETAILER NEWS

BOUCHERVILLE, Que. — Two Unimat renovation centres have adopted the BMR banner. They are in Acton Vale and Mont-Joli, Que. Both stores celebrated grand openings at the end of September. BMR was acquired outright by La Coop fédérée, which owns the Unimat banner, at the beginning of 2015.

SUPPLIER NEWS
HOBOKEN, N.J. ― Newell Brands Inc. is selling off its tools business to Stanley Black & Decker. The portfolio includes the Irwin, Lenox, and Hilmor brands. The deal is worth about $1.95 billion and is part of a new corporate strategy for Newell to “focus resources on the businesses with the greatest potential for growth” following the company’s acquisition of Jarden Corp. earlier this year, according to Newell Brands CEO Michael Polk. Net sales for the tools business were approximately $760 million for the last twelve months. The deal is expected to close by the middle of 2017. Newell owns about 160 brands, including everything from Sharpie pens to Rubbermaid containers.

STAMFORD, Conn. — Henkel Consumer Goods Inc. is relocating from Arizona to Connecticut, where it will combine operations with Sun Products Corp., which it took over last month. The move will also put the division closer to Henkel’s North American headquarters outside of Hartford, about two hours away.

PEOPLE ON THE MOVE
The Western Retail Lumber Association has chosen a new president. Liz Kovach will take over managing the WRLA, effective November 14. She will replace Gary Hamilton, current president. A native of Winnipeg, Liz has dedicated the past 10 years to the non-profit sector, most recently as executive director for the Manitoba Camping Association and Sunshine Fund, whose mission is to send underserved children and youth to organized summer camp. Prior to that, she held senior positions with the Heart and Stroke Foundation and Folklorama.

Vince Morency has joined TSC Stores as category business manager for tools, power equipment, hardware, and automotive. He was formerly senior category manager at Orgill Canada.

At Armstrong Flooring, COO David Schulz is leaving the company. Just six months after a split from its parent company Armstrong World Industries, Armstrong Flooring will eliminate the COO role on its executive team, effective Oct. 15. He will receive a $1.26 million severance payment, plus a pro-rated annual incentive bonus. Formerly with Procter & Gamble, Schulz joined Armstrong in 2011. 

ECONOMIC INDICATORS
Canada’s New Housing Price Index in August rose 0.2% from July. While prices were up in eight census metropolitan areas, the increase was largely attributable to new housing prices in the combined region of Toronto and Oshawa, which were up 0.7% for the month. Builders reported market conditions and higher costs for materials as reasons for the gain. Prices increased 0.5% in Kitchener–Cambridge–Waterloo and the combined region of Greater Sudbury and Thunder Bay (+0.4%). New housing prices rose 0.2% in Saint John, Fredericton, and Moncton, after being unchanged for six consecutive months. Prices decreased 0.5% in Regina, as a result of new promotional packages to encourage sales. Prices in Saskatoon were down 0.2% for the third month in a row, with builders reporting market conditions as the reason for the decline. (StatCan)

NOTED
Top-level eRetail executives and buyers are gathering in Fort Lauderdale, Fla., next week to meet with vendors and suppliers who want to grow their online business. The Home Improvement eRetailer Summit www.eretailersummit.com will be held at the Hilton Fort Lauderdale Beach Resort, October 26 to 28. Online retailers attending include Wayfair, BuildDirect, Sears.com, Organize-It, SupplyHog, ToolsandHardware.com, Wakefern, and HSN. Want to sit down with these top eRetail decision makers? Contact Beverly Allen: bev@hardlines.ca; or 1-647-880-4589.

OVERHEARD…
“I am excited about the future of the WRLA under Liz’s leadership. She is ideally suited to meet the challenges ahead and create new opportunities. I look forward to working with Liz until the end of January to assist in the transition.” ―Gary Hamilton, outgoing president of the Western Retail Lumber Association, on the appointment of his successor, Liz Kovach.

OUT AND ABOUT
Team HARDLINES is in Niagara Falls this week for the 21st Annual Hardlines Conference, along with 150 dealers and industry leaders from across Canada and the U.S. Won’t you join us?

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