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News

September 3, 2019

Retail Sales Growth Weakens Again

Retail sales growth in the second quarter was just 1.5 per cent year-over-year on a not seasonally adjusted basis. This was even lower than the dismal 1.8 per cent increase for the first quarter, although both are slightly ahead of the 1.3 per cent gain in the fourth quarter of 2018, says Ed Strapagiel, a retail consultant. All these low growth rates are less than price inflation plus population growth and should not be sustainable, but you never know, he says. What looked like some recovery earlier in the year turned out to be a red herring. “Both trends are now weakening and there doesn't appear to be much cause for optimism moving forward. The automotive and related sector is the main drag on total retail sales, but other retail sectors are not picking up the slack either. A few store types did have a particularly solid second quarter. Furniture stores' retail sales gained 5.8 per cent year-over-year in the quarter, while general merchandise stores were up 4.9 per cent. Canadian eCommerce sales were up 24 per cent year-over-year for the second quarter.


Royal, Alexandria Partnership Adds Professional Channel

Royal Building Products, a Westlake Company, is expanding its relationship with Alexandria Moulding, a division of U.S. Lumber, as a preferred distributor of Royal Trim & Mouldings and Celect Cellular Composite Siding by Royal across Canada to the professional channels. Alexandria Moulding is a global moulding manufacturer and distributor of wood and wood composite mouldings and related products. Royal has previously worked with Alexandria Moulding in Canada to distribute to retail partners only.


Government Process Seeks Innovative Solutions

As the single largest purchaser of goods and services, the federal government is using procurement to help Canadian small businesses. Through the Innovative Solutions Canada program, government departments are inviting small businesses to propose a new innovative solution that addresses a specific challenge they face. Successful small businesses may receive up to $150,000 to refine their research and development and could, if accepted into Phase 2, receive up to $1 million to develop a working prototype. The government can then act as a first customer, which helps small businesses to commercialize their innovations, scale up their business, and create middle-class jobs. Two proposed challenges include Shared Services Canada (SCC), which spends too much time and money and too many resources gathering information on current technologies, applications, and services in aging data centres. That is why it is seeking a solution to collect and analyze information from multiple data centres in order to develop new options for reducing its infrastructure and create new plans for data centre migrations. Additionally, SSC and the Treasury Board of Canada Secretariat are seeking a standardized method for issuing and rapidly verifying portable digital credentials. A successful solution to this challenge will help reduce human error, increase efficiency, and ensure digital credential validity using cryptography.


Ebates.ca Rebrands To Rakuten.ca

Shopping rewards company Ebates.ca has formally rebranded to Rakuten.ca, in a move that follows Ebates' 2014 acquisition by global parent company Rakuten Inc. The rebrand allows the company to continue to provide members the same benefits and rewards, while also leveraging its global presence and partnerships. In addition, Rakuten.ca will continue to enhance the Cash Back rewards shopping experience by expanding its merchant partners. The word 'rakuten' translates into 'optimism,' a fitting sentiment, says the company, as it plans to celebrate its new name and its seven-year anniversary of being in Canada. The company has also moved its Canadian headquarters to Toronto, ON.


Lloyd Acts As CFO

Anne Lloyd is interim chief financial officer with James Hardie. Previously, she served as chief financial officer of Martin Marietta. She has also been a member of James Hardie's board of directors since 2018. The company is initiated a search for a permanent CFO.


Dollar Tree Sales Increase

Dollar Tree, Inc. had consolidated net sales of $5.74 billion for the second quarter of 2019, an increase of 3.9 per cent compared to net sales of $5.53 billion in the second quarter of 2018. Same-store sales increased 2.4 per cent year-over-year. Gross profit for the quarter was $1.65 billion compared to $1.66 billion in the year-ago period. Gross margin was 28.7 per cent of sales compared to 30.1 per cent of sales last year. The decrease in gross profit margin was driven by higher freight costs for both segments, and markdowns and shrink in the Family Dollar segment. Net income was $180.3 million compared to $273.9 million last year.


August 30, 2019

Payroll Taxes Take Bite Out Of Earnings

Payroll taxes are taking a big bite out of employers' and employees' earnings and it is about to get even bigger, says the Canadian Federation of Independent Business (CFIB). This burden is so severe that 77 per cent of small business owners say that payroll taxes are the form of taxation that most severely impedes their growth. Depending on where their business is located, an employer faces between three and seven different payroll taxes, including CPP/QPP, EI, and Workers' Compensation. In Ontario, an employer pays $5,114 in payroll taxes for a $50,000 salary, bringing their total costs to $55,114. The employee pays $3,182 in payroll taxes, leaving them with a net income of $46,818. In Quebec, which has the highest number of payroll taxes, an employer has to pay $56,488 for a $50,000 salary, but the employee only takes home $46,531 (before income taxes), after their $3,469 share of payroll taxes is deducted. "Governments need to move away from payroll taxes if they want to avoid suffocating small businesses and the labour market," says Marvin Cruz, senior research analyst at CFIB. "In the short term, employers usually try to offset their payroll tax costs by raising prices or cutting back on hiring. In the long run, however, payroll taxes lead to lower wages for employees which, in turn, reduces their purchasing power." In ‘Taxing Payroll: A Barrier to Business Growth and Competitiveness,’ CFIB asks all provincial governments to eliminate provincial health and/or education payroll taxes within the next 10 years. In the meantime, governments should introduce an exemption threshold or raise the existing one to at least $2.5 million in total annual payroll and index it to inflation in order to help small firms stay profitable. In addition, CFIB recommends that federal and provincial governments exempt senior employees (over 65) and young workers (under 18) from payroll taxes.


Lowe’s Canada Launches ‘2019 Heroes’ Campaign

Lowe’s Canada has launched its ‘2019 Heroes’ campaign. As part of this campaign, every Lowe’s, RONA, and Reno-Depot corporate store in the country has chosen to support the mission or a project of a local non-profit organization or public school ‒ a hero in its community. From September 1 to 30, customers will be able to make a donation at checkout to support their local organization. Lowe's Canada will match 50 per cent of all customer donations up to $2,000 per store. This year, some 270 corporate stores from the Lowe's Canada network will support over 245 organizations during the campaign.


Steady Growth Forecast For Landscaping Products

The global landscaping products market size is expected to reach US$91.9 billion by 2025 registering a compound annual growth rate of 5.4 per cent during the forecast period, says a report by Grand View Research. Growing importance of outdoor spaces such as lounging areas, entertainment areas, and outdoor kitchens, is driving the demand for products including plants, water fountains, and gazebos. Renovating outdoor spaces not only brings aesthetics to the infrastructure, but also increases its value, which is also one of the key factors responsible for rising demand for these products. Rapidly expanding real estate industry is also expected to have a positive impact on the market growth over the forecast period. The planting material segment held the largest market share in 2018 and is expected to retain its market position over the forecast period. Moreover, rising focus on increasing the sustainability of the infrastructures will support the market growth in this segment.


Companies Bid For Masco Cabinet Business

Private equity firms Bain Capital and American Industrial Partners and Clearlake Capital Group LP and W.W. Grainger Inc. are among the bidders for Masco's cabinet-making unit, says Bloomberg. The division is expected to sell for about $1.2 billion. The business unit had $488 million in sales for the first half of 2019. Masco announced in June that it wanted to divest the business unit. However, Bloomberg says that the company may decide to keep the business. Masco says the decision to consider selling the cabinet-making unit was part of its strategy to reduce its cyclicality by increasing exposure to the repair and remodel segment of the housing market. Thus far, it has already spun off its installation business. The business unit that is up for sale offers more than 300 styles of cabinets for kitchens and bathrooms under the Cardell, KraftMaid, Merillat, and QualityCabinets brands.


Norbord Launches Framer Campaign

To champion framing as a viable career option, Norbord Inc. is launching U.S. ‘#BECOMEAFRAMER’ campaign to get more framers onto job sites. The campaign enables young Americans to learn about the opportunities the construction industry offers, the training required, and schools in their area. The campaign builds on its ‘#THANKAFRAMER’ campaign that the company launched two years ago to raise awareness and train framers to alleviate the labour shortage.


McKenna Named General Merchandise Manager

Greg McKenna is merchandise manager, general merchandise, with Home Hardware Stores Limited. He has nearly 10 years of experience in category management and strategic sourcing, most recently at Sobeys Inc.


August 29, 2019

Golf Tournament Celebrates Importance Of Vendors

On Monday, August 26, Castle Building Centre staff and its vendor partners gathered for the annual ‘Castle Vendor Appreciation Golf Tournament.’ Over 150 guests, including Castle board members and vendor partners from across Canada attended the annual event and enjoyed a fun-filled day of golf, camaraderie, and charity golf challenges. The participants had the opportunity to donate to a worthy cause, win great prizes, and enjoy a spectacular day at an award-winning course. “Castle recognizes the importance of acknowledging the contribution of our vendor network and appreciates the dedication and commitment required to be successful in this industry. It is important to show gratitude to our suppliers for their dedication and their commitment to Castle,” said Ken Jenkins, Castle president The golf tournament participants raised an all-time record amount of $35,000 in charitable donations for SickKids Foundation.


Canada Launches Rebate Program For Ontarians

The government of Canada has launched its 'Energy Savings Rebate' program in Ontario. Through the program, a total of $200 million of support over two years will be provided to Ontario retailers to offer up to 25 per cent off the purchase price of specific energy-saving products. These products can help Ontarians reduce their energy use by up to 60 per cent. Products include washers, dryers, dishwashers, refrigerators, water heaters, heat pumps, and electric vehicle chargers. Participating retailers include RONA, Lowe's, Canadian Tire, Best Buy Canada, and Tepperman's. The program is funded from a portion of Ontario's Low Carbon Economy Leadership Fund allocation. Ontario residents can take advantage of this program in-store or online through eligible retailers. For more information, visit Energy Savings Rebate program


Cybersecurity Breaches Continue To Rise

The cost of data breaches will rise from $3 trillion each year to over $5 trillion in 2024, an average annual growth of 11 per cent, says a report from Juniper Research. The rise will primarily be driven by increasing fines for data breaches as regulation tightens, as well as a greater proportion of business lost as enterprises become more dependent on the digital realm. Cybercrime is increasingly sophisticated; the report says that cybercriminals will use AI (artificial intelligence) which will learn the behaviour of security systems in a similar way to how cybersecurity firms currently employ the technology to detect abnormal behaviour. However, in spite of cybersecurity becoming increasingly part of corporate culture, it is not necessarily gaining traction with system users. As a result, Juniper Research expects that security awareness training will become an increasingly important part of enterprise cybersecurity practice. The gains that can be made by increasing human awareness of cybersecurity can make more efficient use of cybersecurity spending, which Juniper Research expects to rise by only eight per cent per annum in the forecast period.


Canfor Implements Further Curtailments

Canfor Corporation is implementing additional operating curtailments which will reduce production capacity by 75 million board feet between September 3 and the end of the year. Its Houston, Polar, Prince George, and Fort St. John sawmills in British Columbia will be curtailed the week of September 3. In addition, Canfor’s Plateau and Houston, BC, mills will transition to a four-day work week in September, which will remain in effect until market and economic conditions support a return to the full operating schedule of five days per week.


Nighbor Elected President Of ICFPA

Derek Nighbor has been elected as president of the International Council of Forest and Paper Associations (ICFPA). He is currently the president and chief executive officer of the Forest Products Association of Canada (FPAC) and will serve as ICFPA president for the next two years in conjunction with his role at FPAC.


Slight Sales Increase For James Hardie

James Hardie had net sales of $656.8 million for the first quarter of its 2020 fiscal year, an increase of one per cent compared to the first quarter of its 2019 year. Group adjusted net operating profit was $90.2 million for the quarter, an increase of 13 per cent over the year-ago period. EBIT was $124.4 million, up 16 per cent year-over-year. The North American fibre cement segment volume increased four per cent over last year with an EBIT margin of 25.1 per cent. The exteriors business grew five per cent in volume compared to the prior year quarter.


August 28, 2019

Cabinet Shoppers First Researching Online

As kitchen cabinet customers seek to make aesthetic upgrades to their homes, they are doing research to determine which brand will best deliver on their vision, says J.D. Power in its '2019 Kitchen Cabinets Satisfaction Study.' "Kitchen cabinet shoppers are quite open-minded as they start to shop for the brands they are considering as there is not as much brand awareness with cabinets as there is with some other major home improvement categories," says Christina Cooley, at home intelligence lead at J.D. Power. "Therefore, manufacturers must focus on establishing a presence online, making it easy for shoppers to understand their options, the value behind the brand, and how to purchase. If manufacturers can differentiate from the competition earlier in the shopping process, it facilitates a positive relationship with customers from the get-go, thus driving positive overall satisfaction."


High-end Materials To Lead Countertop Demand

Global demand for countertops is anticipated to reach 540 million square metres in 2023, says research from the Freedonia Group. While more basic materials such as solid surface and laminate are expected to remain the most widely installed countertops, higher end materials such as granite and engineered quartz will continue to account for a significant amount of demand. In fact, engineered quartz is forecasted to increase its share of the market, partly at the expense of granite. Granite has historically been seen as an aesthetically pleasing material with excellent performance properties and its higher cost has made it the countertop of choice for more upscale applications. However, granite has begun to lose market share to engineered quartz, which offers both durability and a good appearance at a lower price point. Engineered quartz is also manufactured using natural stone aggregates and resins, which makes it more readily available than granite which must be extracted from a quarry and meet certain standards before being used for countertops.


Giant Tiger Opens Kingston Location

Giant Tiger has officially opened its Kingston, ON, store. The 18,130-square-foot store will be stocked with home and family fashions, brand-name groceries, and everyday necessities.


Worklight Can Be Mounted And Hung

Klein Tools has launched the Rechargeable Personal Worklight, which is capable of standing, hooking, hanging, or magnetically mounting wherever a professional is working. Additional features include an integrated USB-A port to charge smartphones and other small devices. The tool has two illumination intensities – high at 460 lumens and a nine-hour runtime and low at 175 lumens with a 16-hour run time. The light can be shone in many directions with a head that rotates 360 degrees and a kickstand that rotates 270 degrees. It also features a battery gauge to indicate remaining battery life.


Barbeito Appointed CEO Of Walmart Canada

Horacio (Haio) Barbeito has been appointed as president and chief executive officer of Walmart Canada, effective October. He joined the company 25 years ago and developed his career through leadership roles in Argentina, the U.S., Puerto Rico, and Chile.


Acquisitions Drive Intertape Revenues

Intertape Polymer Group Inc. had revenue of $295.6 million for the second quarter of 2019, an increase of 18.7 per cent over the second quarter of 2019 primarily due to acquisitions and an increase in volume and mix in product categories related to these investments. Gross margin was unchanged from 21.9 per cent. Net earnings were $6.6 million for the quarter, a decrease compared to net earnings of $15.1 million a year ago. Adjusted EBITDA increased 27.6 per cent to $44.2 million for the quarter.


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