February 19, 2018 Volume xxiv, #7

“When we are no longer able to change a situation, we are challenged to change ourselves.”

—Viktor Frankl (Austrian neurologist, psychiatrist and Holocaust survivor, 1905-1997)

IN THIS ISSUE:

• How big is the retail home improvement industry? And how do we know that?

• Peavey completes buyout of TSC Stores one year ahead of schedule

• Lowe’s shares Ace’s training mandate with dedicated buying and marketing teams

• Canadian Tire’s Mike Magennis: presenting a unified offering online, in-store

• PLUS: Canac acquires 28th location, Home Hardware renews Aeroplan partnership, Canadian Tire enjoys healthy year end, Sears Canada pensioners ask for help, CertainTeed Insulation Canada earns safety designation, West Fraser’s fourth-quarter sales, Weyerhaeuser’s earnings, Masco Corp., Bona in the U.S. is moving, Ace Hardware profits slip, housing starts remain flat, who’s getting those U.S. appliance sales, and more!
  
  

How big is the retail home improvement industry? And how do we know that?

WORLD HEADQUARTERS, Toronto — A key indicator of the health of Canada’s retail home improvement industry is the annual release of the size of the industry. This measure of how much is sold at retail by all the stores in this sector—including hardware stores, home centres and building centres, and big boxes—is a calculation that reveals how much the industry has grown (or, in the case of the worldwide recession a decade ago, has shrunk).

The data, and the corresponding analysis of which provinces that growth has occurred in, and who the leading retailers are that have effected that growth, becomes part of Hardlines’ annual Home Improvement Retail Report. And that report has become a vital piece of research for marketers and sales teams across Canada every year.

But to complete this report, Hardlines needs the support of the industry. So, if you’re a retail chain, large dealer group, or buying group, please check your inboxes in the coming days for an email from us requesting information about sales and store locations. The survey will take only a few minutes to fill out, and we guarantee confidentiality on a number of questions.

With your help, we can complete our annual Retail Report and calculate the industry’s Top 20 players with more accuracy than ever before. Then we can all benefit from the insights this research provides, making the industry even stronger than ever.

Oh, and how big is the industry? In 2016, it grew to almost $46 billion in sales. Can’t wait to find out how much it grew in 2017!

Peavey completes buyout of TSC Stores one year ahead of schedule

RED DEER, Alta. — Peavey Industries, which operates Peavey Mart and MainStreet Hardware, has completed its acquisition of TSC Stores, based in London, Ont. The acquisition was finalized on December 22, 2017, one year sooner than originally anticipated.

TSC had been in the hands of a Toronto equity company, Birch Hill Equity Partners since 2005. With the finalization of the acquisition, Peavey has purchased all remaining shares of TSC that had been held by Birch Hill.

“In the last 18 months there has been a lot of energy, commitment, and grit demonstrated by both companies,” said Peavey CEO Doug Anderson. “Our strong financial and operational results from both operations in 2017 allowed us to accelerate the acquisition and continue the path of working together more closely.”

Anderson said it’s clear that the two companies serve the same customer, but in different markets, creating “countless opportunities to learn from each other—allowing us to ultimately serve our customers better.”

The two companies have been working actively to combine company cultures and share best practices. “I truly believe that team members from both TSC Stores and Peavey are cut from the same fabric and our cultures are becoming more and more integrated every single day.”

The company has already announced a second Peavey Mart location in Winnipeg and a new location in Sherwood Park, Alta., for 2018. Completion of the two new locations will boost the total number of stores from all three brands to 91 locations in five Canadian provinces.

Lowe’s shares Ace’s training mandate with dedicated buying and marketing teams

MISSISSAUGA, Ont. — The Ace banner has been gaining traction in Canada, thanks in large part to support for the Ace program coming from Lowe’s Canada, which owns the license for Ace in this country.

According to Bill Morrison, divisional vice president for Ace Canada, a big part of Ace’s success among independent dealers is its intense commitment to training. Lowe’s, he says, has a tremendous commitment to training, as well. “Ace Canada benefits from the partnership with Lowe’s—more than benefits from it. It’s been tremendous.”

That commitment reportedly goes right to the top of the Lowe’s Canada organization. Morrison says CEO Sylvain Prud’homme has “done a deep dive” into what Ace is and what it stands for.

Morrison says Prud’homme has expressed from the outset how important having the independent is to Lowe’s and has invested heavily into that part of the business. With Ace Canada, Lowe’s can cater to smaller independents, both hardware and building supply dealers, while RONA’s proximity stores address the mid-sized store niche. The Lowe’s banner is reserved for the company’s big boxes.

From a structure standpoint, the Ace Canada team resides in two locations. The marketing department and Ace buying teams are at the Toronto-area office that is also the head office of the Lowe’s big boxes. Growth and training are run out of Lowe’s Canada’s national headquarters in Boucherville, Que.

Those buyers, by the way, are 100% dedicated to the Ace dealers, says Morrison. The efforts of the Ace teams is “to help independents achieve a higher topline, a fatter bottom line, and more return on the tremendous amount of work that being an independent entails,” says Morrison.

“From a dealer’s view, Lowe’s Canada has a deep interest and has deep support for this banner, to invest and make Ace Canada the number-one banner for independents in Canada.”

Canadian Tire’s Mike Magennis: presenting a unified offering online, in-store

TORONTO — Mike Magennis has a new role at Canadian Tire Retail, one that moves him out of a senior buying function to vice president, business development and operations. The new position focuses Magennis on integrating elements of two other Canadian Tire businesses, FGL Sports Ltd. and clothing retailer Marks, into the Canadian Tire stores.

As Canadian Tire gets its bricks and mortar aligned with its online initiatives, the company can now act effectively on its “one company, one customer” strategy. Those other divisions share some common elements and product lines. Working closer with them could mean a greater emphasis on sporting goods and bigger ranges of workwear at Canadian Tire stores. For example, Magennis explains how the Mark’s clothing banner division does business with industrial and commercial customers. That’s something, he says, that other stores could tap into.

Magennis notes the evolution of Pro Hockey Life, a sporting goods chain bought by Canadian Tire in 2013. That brand is now the lightning rod for any hockey equipment needs by a Canadian Tire customer.

The PHL website combines all the related sporting goods available in any of Canadian Tire’s banners on one online destination. In addition, PHL assortments are now being installed in some Canadian Tire stores.

The store-within-a-store approach mirrors what Canadian Tire has done in the past with fishing and hunting at some of its locations. The product mix will get fairly sophisticated, he promises. “Now, when you search hockey on canadiantire.ca, you’ll see a much broader assortment than you’ve ever seen before.”

DID YOU KNOW…?

... that Canadian retailers heading to Orlando, Fla., for the Orgill Spring Dealer Market are invited to be our guests at another Canada Night Reception? This one will be at B.B. King’s Blues Club on February 22, from 6:30 to 8:30 p.m. Join us, and our sponsors, for a beer, some snacks, and a chorus or two of “O Canada.” Click here for more info and to register! If you’re a vendor and want to join us as a sponsor, contact David Chestnut right away!

RETAILER NEWS

LONGUEUIL, Que. — Canac has acquired its 28th location on a portion of the site of the former Rio Tinto Alcan factory in Shawinigan, Radio Canada reports. Groupe Laberge, which owns the banner, revealed the details of the planned opening, which amounts to an $8 million investment, including $6 million for construction. The city of Shawinigan purchased the site from aluminum giant Rio Tinto Alcan in 2016 for the nominal sum of $1 with the goal of attracting new businesses. The store is due to open in November with some 90 employees.

MONTREAL — Aimia Inc., the company that owns Aeroplan, has renewed its strategic partnership with Home Hardware Stores Ltd. Aeroplan claims to have five million active members, who can earn Aeroplan Miles for purchases at Home Hardware’s 1,000-plus stores across Canada. Since joining the program in 2007, Home Hardware says it’s seen increased value in total spend by Aeroplan members, as well as increased basket size and shopping frequency. By extending the partnership, Home Hardware expects to further leverage Aeroplan’s advanced data analytics capabilities to enhance long-term customer engagement and value for its Home Hardware dealers.

TORONTO — Sears Canada pensioners will ask an Ontario court to appoint a retired judge to review dividend payments, including many to CEO Eddie Lampert and his hedge fund, made by the company prior to its insolvency. The group wants Frank Newbould, who is retired from the Ontario Superior Court, to be named litigation trustee. In that capacity, he would co-ordinate a variety of investigations into Sears’s actions, including the payment of dividends the pensioners say contributed to the retailer’s downfall. The investigation would address concerns that Sears may have sold off significant assets and paid dividends to shareholders, including Lampert himself, leaving little for the employees who staffed the stores.

TORONTO — Same-store sales for Canadian Tire stores were up 3.5% in the fourth quarter of 2017, while retail sales were up 3.8%. For the full year, Canadian Tire Retail sales increased 3.4% and same-store sales increased 2.7%.

OAK BROOK, Ill. — Ace Hardware Corp. has reported fourth-quarter 2017 revenues of $1.32 billion, an increase of 6.8%, from the fourth quarter of 2016. However, net income for the quarter dipped to $14.2 million, a decrease of $7.3 million from the previous year. This drop included a charge of $4.1 million due to new tax legislation in the U.S., as well as increased warehouse costs due to reconfiguration. Net income for fiscal 2017 was $147.4 million, a decrease of $13.8 million from fiscal 2016. This decrease was the result of a charge of $4.1 million due to the new tax legislation enacted in 2017, and $9.5 million of after-tax charges to reposition Ace’s warehouse and call centre.

CHICAGO — Sales of household appliances in the U.S. are on the rise, but Sears is not holding on to its traditional dominance in the market, the Chicago Tribune reports. With more and more millennials buying their first homes, and baby boomers downsizing from their empty nests, conditions are ripe for retailers of major appliances. Although these groups have long been a staple of Sears’s business, the struggling retailer is losing ground to big boxes like Home Depot, Best Buy, and even J.C. Penney in appliance sales.

SUPPLIER NEWS
MISSISSAUGA, Ont. — CertainTeed Insulation Canada has announced that the CertainTeed insulation plant in Ottawa is the latest to be inducted into the Saint-Gobain’s “Millionaires Club”, a program designed by the parent company to reward plants that have operated at least one million work hours without a lost-time accident. According to the company, the Ottawa plant is only the 12th out of 66 Saint-Gobain insulation facilities worldwide to be awarded this honour. The plant operates 24 hours a day, with employees working 12-hour shifts.

VANCOUVER — West Fraser had fourth-quarter sales of $1.38 billion, up 24% from the fourth quarter of 2016. For the year, sales reached $5.13 billion, up 15% from $4.45 billion a year earlier. Earnings were up 83% to $596 million, from $326 million.

FEDERAL WAY, Wash. — Weyerhaeuser reported earnings of $234 million, or $0.31 per share, up from $106 million ($0.14 per share) a year ago. Revenue for the quarter rose 13.8% to $1.82 billion, compared to $1.6 billion last year.

LIVONIA, Mich. — Masco Corp. saw earnings rise to $137 million, or $0.44 per share, in Q4. The plumbing and cabinetry manufacturer said that total revenue for the quarter came to $1.87 billion, a 6.2% increase from the $1.76 billion reported a year ago. 

AURORA, Colo. — Bona US, the hardwood floor care products producer, is moving its North and South American headquarters to the Denver Tech Centre in Englewood, Colo. In December 2017, the company finalized its purchase of a building that will serve as its new office space, training centre, and machine maintenance facility. The move is expected to take place late in 2018.

PEOPLE ON THE MOVE
Claude Chalifour has joined Formedica, a home health care products company, as vice president of business development and major accounts. Chalifour has extensive background in the hardware business, having working at Sodisco-Howden Group, Techniseal, Sterno Home, and Napa Auto Parts.

ECONOMIC INDICATORS
The seasonally adjusted annual rate of housing starts in January was 216,210 units, essentially unchanged from 216,275 units in December. Urban starts seasonally adjusted increased slightly by 0.2% in January to 198,400 units. Multiple urban starts held steady at 134,685 units, while single-detached urban starts increased by 0.6% to 63,715 units. Rural starts were estimated at a seasonally adjusted annual rate of 17,810 units. (CMHC)

NOTED
Last year, for the first time, Sears came in behind Lowe’s among destinations for appliance spending in the U.S.

OVERHEARD
“Our employees are really proud to have worked over four years without a loss-time accident. I’ve been on both sides of the business. I was a production worker for 12 years before moving into management four years ago, so I know the importance of being recognized for a job well done.”
— John Polnick, environmental health and safety manager at Certainteed Canada’s Ottawa plant. That facility has become part of parent company Saint-Gobain’s Millionaires Club for having an accident-free work place. Only 12 of Saint-Gobain’s 66 insulation factories worldwide have received this designation.
 

OUT AND ABOUT
Katherine Yager, David Chestnut, Beverly Allen, and Michael McLarney are heading to the Orgill Spring Market in Orlando, Fla., this week. There, Hardlines will host another amazing Canada Night Reception for Canadian dealers heading down to that show. If you’re a retailer, be sure and join us at B.B. King’s Blues Club on Thursday evening, February 22, from 6:30 to 8:30 p.m. If you’re a vendor who would like to attend, please contact David right away to find out about sponsorship!

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