May 29, 2017 Volume xxiii, #22
“Advice is what we ask for when we already know the answer but wish we didn’t.”
— Erica Jong (American novelist and poet, 1942- )
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How vendors can meet eRetail buyers—and other ways Hardlines is connecting the industry
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Home Depot reveals its hot sales drivers in Q1
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U.S. lumber dealers confront higher prices in wake of Trump tariff declaration
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Women carve out their place in the world of home improvement retailing
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PLUS: Lowe’s sales for the first quarter, Canadian Tire to test Mark’s, Wal-Mart Canada’s sales increase, results for Ace Hardware, Lowe’s tests exoskeleton, Orgill wins U.S. Corporate Investment and Community Impact Award, Nadeau acquires Boomerang Tools, Saint-Gobain reaches deal, retail sales up, U.S. housing sales, and more!
How vendors can meet eRetail buyers—and other cool ways Hardlines is connecting the industry
WORLD HQ, Toronto — Here at the Hardlines World Headquarters, we continually look for new ways to bring information and services to you, our Faithful Readers. Here’s a rundown of what we have in store for you for the rest of 2017…
Home Improvement eRetailer Summit: A dynamic forum for suppliers and traditional retailers to learn from North America’s leading e-commerce buyers and executives. You will meet face-to-face with retail buyers who are interested in increasing their online sales with your products. The focus of this year’s eRetailer Summit is on hardware and tools, home décor, paint, housewares, lawn and garden, outdoor living, and flooring. Suppliers and retailers alike will learn how to develop winning e-commerce strategies.
Who’s Who Directory of Buyers: Yes, it’s mailing this week! Our listing of all the top retailers, buying groups, co-ops, and wholesalers in Canada. Each listing includes full contact info, key buyers and their categories, key executives and management teams, sales, and buying group affiliations. The Who’s Who is indispensable for anyone trying to expand their leads and understand who the top retail buyers are.
Annual Retail Report: This one will be released next month. A massive document, it consists of more than 170 PowerPoint slides with quite simply everything we know about this industry. Year-over-year growth, sales by store format, market share by province, detailed analysis of Home Depot, Lowe’s, Home Hardware, and Canadian Tire, plus breakdown and ranking of the buying groups, and leading retail chains. This report digs deep, with a recap of conditions affecting the industry, analysis of trends and business conditions, and critical forecasts for 2017 and 2018.
Hardlines Market Share Report: This important research document provides market share data for every home improvement banner in this country, including valuable year-over-year analysis. Available in August. (Pairs perfectly with our Retail Report!)
Free Daily News Updates: You don’t have to wait until Monday morning for your updates on the industry. We provide a free “clipping service” of news related to hardware, home improvement, and retail in general on a daily basis. Just sign up at our website under “Daily News Updates” or click here right now!
Hardlines Home Improvement Quarterly Magazine: HHIQ is mailed four times a year to more than 11,000 home improvement dealers and managers across Canada. Your best source for information on running your business better—and for vendors it’s absolutely the best way to advertise your message to the retail community!
And finally, don’t forget to mark in your calendar our 22nd annual Hardlines Conference, November 14 to 15 at the Sheraton on the Falls hotel in Niagara Falls, Ont. Speakers include executives from Lowe’s Canada, Peavey Industries, and Patrick Morin. The best networking event of the year!
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Home Depot reveals its hot sales drivers in Q1
ATLANTA — Home Depot reported healthy first-quarter results last week, including sales of $23.9 billion that were up 4.9% over 2016. In a call to analysts following the release of those results, Home Depot executives provided some insights into where the growth is coming from, including large-ticket sales, increases in its contractor business—and a dramatic rise in e-commerce.
According to Ted Decker, the retailer’s EVP of merchandising, “We had a great first quarter driven by continued strength across the store. Our pro business was particularly strong and outpaced the company average. We also saw excellent growth in our online business as online sales grew approximately 23%.”
Decker pointed out that Home Depot’s pro business keeps growing: “In the first quarter, sales with our pro customers outpaced the company average driven by both our high-spend and low-spend pros. We saw strong comps in several lumber categories—wire, commercial-industrial lighting, and gypsum.”
But other areas performed well in the first quarter, as well. “All of our merchandising departments posted positive comps. Appliances, lumber, and flooring had double-digit comps in the quarter. Tools, electrical, plumbing, décor, and kitchen-bath were above the company average.”
Product innovation continues to drive sales, said Craig Menear, Home Depot’s chairman, CEO and president. “The extension of lithium-ion battery technology into the outdoor power category is an excellent example of our ongoing focus on innovation and we continue to see great sales in this category.”
While noting the strength of Home Depot’s online sales strategy, he pointed out the importance of the company’s bricks-and-mortar presence, as customers still largely prefer to come to the store to finalize the sale. “With over 45% of our orders on homedepot.com, the customer is actually choosing to pick up in our stores.”
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U.S. lumber dealers confront higher prices in wake of Trump tariff declaration
SPECIAL REPORT — A new U.S. tariff on imported Canadian softwood lumber is the latest change to an old trade debate between the two countries. The U.S. government, as of late April, is implementing a 20% tariff on Canadian softwood.
Lumber sellers in the U.S. have been anticipating the tariff and increasing prices since the presidential election in November, says Ray Formosa, president of Brooks Lumber in Detroit. Brooks Lumber buys some Canadian utility- and economy-grade lumber, which is used to build commercial pallets.
In Canada, most forests are on crown land, and prices for harvesting trees on that land by private companies are set by the government as stumpage fees. Those stumpage fees are considered artificially low by the U.S. side, thereby constituting a government subsidy. In the U.S., most of the forest land harvested for softwood is privately held, and prices for the trees are market driven.
Due to competition, the tariff will impact lumber prices throughout North America, Formosa says. “It’s going to have a domino effect.” Construction costs will increase as a result, but he doesn’t think his business will suffer. “If everyone else’s prices are going to go up, so are mine,” he says. “I really don’t foresee it changing our business because everyone is in the same water. Nobody likes higher prices, but then again, if you’re all doing it, I say everyone’s going to have the same impact.”
Kenyon Noble Lumber & Hardware in Bozeman, Montana, has been planning ahead for the tariff since January, says general manager Mike Thompson. “If you appropriately planned for the tariff, then it shouldn’t affect your business.”
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Women carve out their place in the world of home improvement retailing
SPECIAL REPORT — Women make up more than half the population, and affect more than 80% of the buying decisions concerning home improvements and repairs. And there are many women who have chosen to build their careers in the industry.
Last fall, the Hardlines Conference brought together a panel of women from across the industry to weigh in on the role women have in the future and growth of the home improvement industry. Moderated by HARDLINES’ own publisher, Beverly Allen, the panellists consisted of Sherri Amos, director of dealer support for Home Hardware; Sara Clarkson, president of Storesupport Canada; Christine Joannou, key account manager for MAAX Bath; and Jillian Sexton, COO of Hector Building Supplies.
Sherri Amos started with Home Hardware 17 years ago. She told the audience, “Like many of you in this room, I’m sure, it was a happy accident that I found myself in this industry. But what I can say is that once I arrived, I really fell in love with what we do and how critical it is; how it’s a foundation within Canada and the stability it offers.”
Sexton, despite being born into the industry, nevertheless surprised her father with her decision to make a career in the family’s Nova Scotia chain of stores. Beyond the fact that having a thriving company that you can simply walk into is an opportunity not everyone gets, she says she found the field universally relevant. “Everyone has a home or wants a home,” says Sexton. “The industry isn’t going away, it may change or grow, but everyone’s always going to need things to build and modify their homes.”
Joannou, who works in fashion bath, started her career in in clothing retail before moving into sporting goods. Having been in the home improvement industry for 11 years, she says her gender offers her an advantage in the field as her category’s target customer is the female shopper. “Being a woman gives me the insight to enable me to relate to the customer better and target our offerings and marketing correctly for our target customer.”
(This story is excerpted from the latest issue of our sister publication, Hardlines Home Improvement Quarterly. This magazine gets mailed to more than 11,000 dealer-owners and managers across Canada. For more information, click here!)
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DID YOU KNOW…?
...that you have just three days left to register for the Early Bird Special for the 2nd Annual Home Improvement eRetailer Summit? Retailers looking to understand the e-commerce space and suppliers who want to make real connections with leading eRetail decision makers will find this ground-breaking forum an amazing way to meet, share ideas, and grow online sales. Check it out now ―or contact Beverly Allen for more info and to save big!
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RETAILER NEWS
MOORESVILLE, N.C. — At Lowe’s Cos., sales for the first quarter increased 10.7% to $16.9 billion, from $15.2 billion in the first quarter of 2016. Comp sales increased 1.9% across all stores, and increased 2.0% for its U.S. business. Net earnings dropped, however, to $602 million from $884 million a year earlier. Lowe’s outlook for 2017 anticipates that total sales will increase by about 5%, while comparable sales are expected to increase approximately 3.5%.
TORONTO ― Canadian Tire intends to start testing Mark’s clothing and workwear in its Canadian Tire stores. According to Allan MacDonald, president of Canadian Tire Retail, “This one for me is an obvious one. We both sell footwear and apparel … so it’s a natural collaboration.”
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ST. JACOBS, Ont. — Home Hardware says “just a fraction” of its Canada 150 tulip bulbs aren’t blooming as expected. The chain sold four million of the red-and-white tulip bulbs last fall in anticipation of the 150th anniversary of Confederation this year. It has received 180 complaints of plants flowering in unexpected colours like orange. Spokesperson Jessica Kuepfer said that despite the low proportion of complaints “people are disappointed and we are taking this very seriously.” The company is offering refunds to customers who can provide photographic documentation of the errant plants and proof of purchase at a Home Hardware store.
MISSISSAUGA, Ont. — Wal-Mart Canada’s first-quarter net sales increased 2.7% and same-store sales increased 1.5%, the 12th consecutive quarter of positive comps. During the quarter, inventory levels were reduced as sales increased. The company gained market share in categories such as food, consumables, and health and wellness.
OAK BROOK, Ill. ― Ace Hardware Corp. experienced increases in revenue and net income during the first quarter of 2017, as well as a slight dip in same-store sales. The co-op reported revenue of $1.24 billion, essentially flat over the same period in 2016. Net income was $28.3 million, for a year-over-year increase of 8.4%. Decreased customer traffic produced a 0.2% decrease in same-store sales.
MOORESVILLE, N.C. — Lowe’s is testing out exoskeleton harnesses on employees at a Virginia store. The non-motorized devices help workers lift and move heavy objects. “It feels very natural,” Kyle Nel, director of Lowe’s Innovation Labs, told The Verge. “When the person is walking and bends down to pick something up, the rods collect potential energy. And when they stand back up it puts that energy back into their legs and back. It’s very smooth, and it feels like this heavy thing is much less heavy.” Carbon-rod shafts along the wearer’s back and thighs act as artificial tendons, responding to movement, and storing and displacing energy.
SUPPLIER NEWS
WASHINGTON — Orgill was one of 15 winners of the U.S. Trade & Industry Development’s 12th Annual Corporate Investment and Community Impact Awards. The awards program celebrates companies and projects that improve communities, revitalize environments, and provide jobs. Wholesale distributor Orgill was honoured with the award nationally for its decision to expand distribution facilities in Post Falls, Idaho. Orgill’s new 500,000-square-foot distribution centre will be the company’s seventh full-serve DC, and will bring more than 135 new jobs to Post Falls. It will serve a number of states in the Northwest, as well as British Columbia, Alberta, and Saskatchewan dealer customers.
JACKSONVILLE, Fla. & MONTREAL ― Tembec Rayonier Advanced Materials Inc. has entered into an agreement with Tembec Inc. to acquire the Montreal-based forest and cellulose products supplier. The purchase price is about US$807 million, including the assumption of US$487 million of debt. For Tembec shareholders, the purchase price per share represents a 37% premium to its closing price on May 24, 2017. The company expects to retain Canadian headquarters in Montreal, and a presence in Ontario, and continue all Tembec operations. The company will also proceed with Tembec’s recently announced four-year investment plan for its Quebec facilities. Rayonier is a global supplier of cellulose products.
MONTREAL ― Christian Nadeau, president of CTM International Hardware Inc., has acquired Boomerang Tools, a hand and power tool accessories distributor based in Longueuil, Que. He points out that he bought the company himself, and it is not part of CTM, which produces wooden kitchen counters, barn rail doors, and hardware. Nadeau says power tool accessories is a new category for his current interests, but one he knows very well based on his background as a former hardlines buyer for Groupe BMR. Stephan Rodrigue will stay on with Boomerang as president.
PARIS — Saint-Gobain announced that it has reached a share purchase agreement to acquire German specialty adhesives manufacturer Biolink. Founded in 1997 and based in Waakirchen, near Munich, Biolink specializes in environmentally friendly solvent-free acrylic resin adhesive tapes for applications in the aeronautic, automotive, and other industrial markets.
ECONOMIC INDICATORS
Following a 0.4% decline in February, retail sales rose 0.7% in March to $48.3 billion on the strength of higher sales at motor vehicle and parts dealers. After removing the effects of price changes, retail sales in volume terms rose 1.2%. Building material and garden equipment and supplies dealers were up 1.0% from February and up 9.0% year over year. (StatCan)
Wholesale sales rose 0.9% in March, surpassing the $60 billion mark for the first time. The building material and supplies sub-sector recorded the largest increase in dollar terms, as sales rose 3.9% to a record high of $8.4 billion on the strength of higher sales in the lumber, millwork, hardware, and “other” building supplies. (StatCan)
Sales in the U.S. of new single-family houses in April were at a seasonally adjusted annual rate of 569,000, down 11.4% from the previous month. However, they were up slightly (0.5%) over April 2016. (U.S. Census Bureau)
NOTED
Home Depot expects to benefit from the demise of Sears, if and when that should happen. The ailing department store chain represents about $5 billion in tool and appliance sales, which Home Depot COO Carol Tomé believes could be acquired by Home Depot over time.
OVERHEARD…
“America must import about one-third of its lumber supply from Canada because U.S. lumber production is simply not robust enough to meet the nation’s needs. Therefore, lumber imports are vital for the construction of affordable homes for American families.”
— Granger MacDonald, chairman of the National Association of Home Builders in the U.S., in a commentary in Forbes magazine about the impact of lumber tariffs on the cost of houses there.