September 3, 2018 Volume xxiv, #32
"Tomorrow is always fresh, with no mistakes in it.”
―Lucy Maud Montgomery (Canadian author, 1874-1942)
IN THIS ISSUE:
- More changes at Home Hardware as Rick McNabb announces retirement
- BMR hosts its first-ever summer show to highlight seasonal products
- Orgill fall market provides plenty for Canadian dealers, including a get-together
- Lowe’s new CEO upbeat about Canada despite closure of Orchard Supply
- PLUS: Castle adds Toronto dealer, RONA will acquire Lespérance stores, Alexandria Moulding acquired by U.S. Lumber, Lowe’s and RONA support local heroes, Canadian Tire’s Q2 profits tumble, Quebec’s first Lee Valley Tools store, Home Depot earnings, Ace Hardware’s record second quarter, Garaga acquires Mid-America Door, Orgill increases DC size, national home sales, lots of classified ads and more!
More changes at Home Hardware as Rick McNabb announces retirement
ST. JACOBS, Ont. — Yet another executive at Home Hardware has announced their pending retirement. Rick McNabb, the vice president of marketing and sales at Home Hardware Stores Ltd., will depart effective September 12.
The news was announced by President and CEO Terry Davis, who had previously announced plans of his own to retire, pending the naming of his replacement. According to Davis, “Rick joined Home with a mandate to review and evolve our marketing efforts into a cohesive, integrated approach, a mission that he accomplished. It was a pleasure for me to have Rick on my leadership team and I wish him well on his retirement.”
Home Hardware is also close to naming a replacement for Davis in the top job, just months after Davis, a 48-year veteran of the company, was given the title of president in addition to his CEO role.
To add to the changes, one of the founding employees of the company, Ray Gabel, retired as Home Hardware’s senior merchandise advisor at the end of June. Gabel joined Hollinger Hardware in the summer of 1950 and was present at the landmark 1964 meeting that evolved that wholesaler into Home Hardware.
McNabb, then, is the relative newcomer. He joined Home Hardware two and a half years ago in a move that caused a stir in the industry. Although his family has been involved with Home Hardware—his brother owns a store in Parry Sound, Ont.—he was considered an outsider—virtually the first key executive not to be hired from within over the company’s 79-year history. (The only other exception would be Darrin Noble, hired in 2007 as vice president and general manager of Home’s Beauti-Tone Paint division.) McNabb’s presence resulted in a number of changes, the most visible one being the introduction of a new slogan for the company, “Here’s how”.
Home Hardware was down to a short list of candidates for Davis’s position by mid-August, and the company has been actively seeking a replacement for McNabb. With the company’s fall market just two weeks away, any formal announcements could well be timed to correspond with that event.
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BMR hosts its first-ever summer show to highlight seasonal products
BOUCHERVILLE, Que. — Groupe BMR hosted a new show last week, focused entirely on seasonal products. Unlike the annual dealer show held mid-November in Quebec City, this event was held near the company’s Boucherville headquarters, at the Hotel Mortagne on Montreal’s South Shore.
The creation of a separate show reflects the growing popularity of the seasonal category, and the fact that most groups rely heavily on their own Asian-sourced import programs for products such as outdoor furniture and accessories. At the November show, outdoor living has been growing rapidly in recent years, while the timing was not ideal for lawn and garden buying.
“The main goal of this new formula was to make life simpler for our dealers,” said Martin Menard, vice president of hardware and imports for Groupe BMR. “It’s much easier for them to target their needs in this category during the summer.”
Despite being a busy time for most dealers in their stores, the timing of the new show appears to have worked for them. The company reports that teams from almost all its BMR and Unimat stores, which number more than 300 (source: the 2018-2019 Hardlines Retail Report—your ever-helpful Editor), were in attendance to check out the new offerings on display. Close to 600 people in total walked the aisles of the show.
BMR rounded out the event with booths and information kiosks representing the range of programs and supports it offers, including a service zone where dealers could place orders directly. BMR’s marketing team used the event to map out the group’s media plan for 2019, as well.
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Orgill fall market provides plenty for Canadian dealers, including a get-together
LAS VEGAS, Nev. — Orgill’s presence continues to grow in Canada, a fact that was reflected in the large number of Canadian dealers who attended the Memphis, Tenn.-based wholesaler’s fall dealer market in Las Vegas late last month.
The Orgill Fall Dealer Market covered nearly one million square feet over two floors at the Sands Expo and Convention Centre. It featured two concept stores, numerous product showcases and workshops about Orgill’s various retail programs and services.
Orgill reports that a record number of attendees from more than 50 countries gathered to see new home improvement products, find great deals and network. They included at least 300 Canadian dealers, managers and family members. The majority were from major buying groups, particularly Castle and TIMBER MART, but delegates from every banner and every part of the country were walking the show floor.
“We’re excited to see so many of our customers here in Las Vegas,” said Ron Beal, Orgill’s chairman, president and CEO. “Our team and vendors have worked hard to put together a show that will deliver on our customers’ expectations.”
One concept store had a distinctly Canadian twist: “Cider Mill Home Centre” was designed to cater to a broad mix of both contractors and DIYers within 11,500 square feet of retail. It featured plumbing, HVAC, fasteners and electrical as dominant departments—all adjacent to the store’s service counter. All products in the store were Canadian compliant and advertised as available through Orgill’s London, Ont., and Post Falls, Idaho, distribution centres.
Elsewhere in the show, promotional areas, which included door busters, coupons, market busters, new items and pallet buys, again proved popular with attendees. All Canadian promotional areas were located on the lower level of the convention centre, so Canadian retailers could find them easily.
Canadian dealers had an additional opportunity to get together, thanks to Hardlines’ own Canada Night reception, which was held at the end of day one of the show at Señor Frog’s restaurant on the Las Vegas strip. Sponsored in part by a dozen exhibiting vendors, the event drew about 350 people to share drinks and snacks and to network.
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Lowe’s new CEO upbeat about Canada despite closure of Orchard Supply
MOORESVILLE, Ont. — While turning in healthy numbers for its second quarter, the news that Lowe’s would shutter its Orchard Supply Hardware chain came as a surprise to many in the industry.
The giant home improvement retailer reported net earnings of $1.5 billion for its second quarter, compared to net earnings of $1.4 billion last year. Sales for the quarter rose by a healthy 7.1% to $20.9 billion, while comparable sales increased 5.2%.
The Orchard Supply Hardware business contributed $600 million in sales to Lowe’s fortunes, but lost $65 million. As a result, the chain, which consists of 99 stores in California, Oregon and Florida, will be closed by the end of the year. That sudden departure from Orchard and its home centre format raises questions about Lowe’s inclination to invest long-term in retail formats outside of the big box footprint.
That investment is a big part of Lowe’s acquisition of RONA in Canada.
Marvin Ellison, president and CEO of Lowe’s, addressed this concern, which was shared by analysts during a call. He remained upbeat about the Canuck experiment. “I would say Canada—and RONA—has been a very positive benefit for the company.”
He added that his team is pleased with the way Lowe’s and RONA are meshing. “The introduction of unique and different categories to RONA, like appliances, has been met with really strong response from the customers. We feel very, very good about the Canadian business performance... and we think that it’s exactly where we want it to be, if not exceeding expectations from the original pro forma.”
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DID YOU KNOW...?
...that retail sales growth in this industry varied from province to province last year? Or that the West showed a net gain, thanks to a steady increase in British Columbia and a rebound in Saskatchewan? The market shares of the provinces, performance of the big box stores, the buying groups and Canadian Tire are all tracked in the 2018 Hardlines Retail Report. This incredible PowerPoint report features 200 slides, with in-depth analysis of the country’s top hardware and home improvement players and breakdowns of the Top 20 retail groups. And this year, more trends analysis and more forecasts than ever. Click here now for details and to order your Hardlines Retail Report now!
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RETAILER NEWS
MISSISSAUGA, Ont. ― Castle Building Centres has announced the addition of Toronto’s Eastway Construction and Supplies Ltd. as its newest member dealer. Owner Raymond Wan has 30 years of industry experience, which includes being the owner-operator of a former Castle location. “When we decided to open another building supply business, coming back to Castle was the only option we would consider,” he said.
BOUCHERVILLE, Que. — Lowe’s Canada has announced the kickoff of its national Heroes campaign. This year, for the first time, every Lowe’s, RONA and Reno-Depot corporate store in the country will support a non-profit organization or public school in the community by collecting donations to help it fulfill its mission or carry out a specific project. A total of 260 local organizations will benefit from the campaign throughout September.
BOUCHERVILLE, Que. ― RONA will acquire the RONA Lespérance stores in Sainte‑Therese and Blainville, Que. The transaction is expected to close in the fall. The Lespérance’s family business has been serving Montreal’s North Shore since the early 1950s.
TORONTO ― Canadian Tire Corp’s Q2 profits tumbled 20% as the company increased spending to compete with Amazon and Walmart. Revenue rose to $3.48 billion from $3.37 billion, but expenses also increased to the tune of about 5% for a total of $831.2 million. Net income therefore fell to $156 million, or $2.38 per share, from $195.2 million ($2.81) a year earlier. Same-store sales increased by 1.6%, discounting petroleum products.
LAVAL, Que. — Centre Laval has announced it will be the site of Quebec’s first Lee Valley Tools store. The 25,000-square-foot location, due to open October 3, will be the chain’s 20th.
ATLANTA ― Home Depot reported earnings above Wall Street estimates, following on a slower Q1 in which cool weather in much of the U.S. put a damper on construction. Net earnings rose to $3.5 billion, compared to $2.7 billion in Q1 of 2017. Net sales surged by 8.4% to $30.5 billion. At stores open for more than a year, sales increased by 8%.
OAK BROOK, Ill. ― Ace Hardware Corp. reported record second-quarter 2018 revenues, which climbed to $1.59 billion, an increase of 6.4%. Net income was $54.8 million for the period, up 7.2% from the second quarter of 2017. Ace dealers enjoyed a 3.3% increase in same-store sales, reflecting a 4.1% increase in average ticket, partially offset by a 0.8% decrease in same-store transactions. Big growth came from power equipment, barbecues and paint. Online sales were up 36% year to date.
QUEBEC CITY — IKEA Canada opened a new store in Quebec’s capital on August 22. The event drew big crowds, including hundreds of people who lined up in the pouring rain before the store opened, to visit the 340,000-square-foot outlet. The retailer closed down its pick-up and order point in that city a week earlier. This is IKEA’s 14th Canadian store.
SUPPLIER NEWS
ATLANTA and ALEXANDRIA, Ont. — Alexandria Moulding is being acquired by U.S. Lumber Group. U.S. Lumber is a two-step distributor of specialty building products in the Eastern and Midwestern United States. The company anticipates that the addition of Alexandria’s full range of mouldings and accessories will create a company with a broader geographic presence as well as enhanced product and service capabilities. The transaction is expected to close by early October.
SAINT-GEORGES, Que. ― Garaga Inc. has announced its acquisition of Ponca City, Okla.-based Mid-America Door Co., which, like Garaga, is a manufacturer of residential and commercial sectional garage doors. The merged business will combine Mid-America’s specialty in pan and styrene garage doors with Garaga’s polyurethane expertise. The purchase translates into significant inroads into the U.S. for the family-owned Garaga, which plans to continue to developing both brands.
MEMPHIS, Tenn. — U.S. hardware wholesaler Orgill, Inc. has plans to expand its distribution centre in Kilgore, Tex. The company will almost double the size of the existing facility to nearly a million square feet. According to Vic Price, vice president of distribution for the southwest region, construction is expected to begin in the third quarter, with completion by June 2019.
ECONOMIC INDICATORS
National home sales via Canadian MLS systems rose 1.9% in July, building on increases in each of the two previous months. Led by the Greater Toronto Area, more than half of all local housing markets reported an increase in sales activity from June to July. Actual (not seasonally adjusted) activity was down 1.3% year over year. The result reflects fewer sales in major urban centres in British Columbia and an offsetting improvement in activity in the GTA. ―Canadian Real Estate Association
Following a 2.2% increase in May, retail sales edged down 0.2% in June to $50.7 billion. Sales were down in six of 11 sub-sectors, representing 52% of total retail trade. Building material and garden equipment and supplies dealers were among the exceptions, and saw sales rise 1.1%. After removing the effects of price changes, retail sales decreased 0.3%. ―StatCan
Sales of existing U.S. homes took an unexpected fourth consecutive monthly fall in July, reaching their lowest level in more than two years. Sales for the month declined by 0.7% to a SAAR of 5.34 million units. Compared to a year ago, sales were down 1.5%. Home prices rose amid a shortage of available properties, likely adding to the discouragement of prospective buyers who are also facing higher borrowing costs. ―National Association of Realtors
NOTED
A study just released by Canadian Tire examined what Canadians would most like to do on this Labour Day long weekend. Respondents indicated they would love to visit scenic destinations such as Whistler, B.C.; Banff, Alta.; Lunenburg, N.S.; or even Ottawa’s famous Byward Market. No mention was made of beer, however, casting doubt over the credibility of the entire survey.
OVERHEARD...
“Exiting Orchard Supply Hardware and rationalizing inventory are the driving force behind the changes to Lowe’s business outlook.”
―Marvin Ellison, president and CEO of Lowe’s Cos., on the retailer’s decision to close its Orchard Supply Hardware division, with 99 stores in California, Oregon and Florida.
Ace Hardware Corp. has named Kim Lefko senior vice president, chief marketing officer (CMO). Lefko will report directly to John Venhuizen, president and CEO of the co-op. As the company’s new CMO, Lefko will be responsible for the brand’s global marketing and advertising. She will also be charged with leading digital initiatives and creating new strategies to further Ace Hardware’s reach.