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News

November 1, 2019

Cash Payments Continue Decline

Cash payments continue to decline in favour of digital payment types, says the annual ‘Payments Pulse Survey: Small Business Edition’ from Payments Canada. The survey says nearly 80 per cent of small businesses are conducting fewer than 25 per cent of their transactions in cash, compared to 65 per cent in 2018. The year-over-year jump signals that cash is continuing to lose ground as a preferred method of payment as consumers increasingly choose alternative payment options. However, despite this decrease in the number of cash transactions, most (71 per cent) small businesses still feel an obligation to continue accepting cash as a method of payment and more than half (61 per cent) consider accepting cash as a key to their success. Businesses say the most efficient forms of payment methods to process are non-cash transactions, including eTransfers (27 per cent), cheque (17 per cent), credit card (19 per cent), automated funds transfer/direct deposit (14 per cent), and debit (six per cent). As well, 68 per cent of small businesses could be encouraged to adopt digital payments within their business, particularly if they have a clear return on investment (36 per cent).


Castle Launches Hockey Giveaway

Castle Building Centres Group Ltd. has launched its ‘Canadian Hockey Giveaway’ with a prize of two tickets to the Canadian 2020 NHL game of the winner’s choice. Contestants must follow Castle on Instagram and tag three friends to be entered into the draw. The contest is open from November 1 to 30 and the winner will be selected on December 2. Visit Castle’s Instagram page


HDI Completes Pacific Mutual Door Acquisition

Building products distributor Hardwoods Distribution Inc. (HDI) has completed its previously announced acquisition of Pacific Mutual Door Company. “This strategic acquisition brings with it a highly profitable business model and increases our existing presence in the attractive door and related millwork product category,” says Rob Brown, president and CEO of HDI.


ADP Launches Payroll Platform

ADP Canada has launched its ‘Workforce Now On the Go’ platform to help small business owners run payroll and manage time on their mobile phone, tablet, or desktop. The platform enables business owners to generate key insights into earnings, deductions, and taxable benefits to verify payroll. Employee hours and payroll data at both the company and employee level can also be viewed using the solution’s summary dashboard.


All Segments Down At Weyerhaeuser

Weyerhaeuser Company had net sales of $1.7 billion for the third quarter of 2019, a decrease over net sales of $1.9 billion in the third quarter of 2018. Net earnings for the quarter were $99 million compared to $255 million in the year-ago period. Adjusted EBITDA was $308 million versus $505 million. The timberlands segment had sales of $523 million for the third quarter, down from $532 million in the second quarter. The real estate, energy, and natural resources segment had net sales of $69 million compared to $81 million in the second quarter. Wood products had net sales of $1.2 billion compared to $1.3 billion.


Ingersoll-Rand Has Increase

Ingersoll-Rand plc had net revenues of $4.34 billion for the third quarter of 2019, an eight per cent increase over net revenues of $4.03 billion in the third quarter of 2018. Operating income for the quarter was $623 million with an operating margin of 14.3 per cent, up six per cent and down 30 basis points, respectively, over operating income of $587 million with an operating margin of 14.6 per cent last year. The climate segment had a seven per cent increase in revenues and the industrial segment had a 10 per cent increase in revenues. Revenue was strong in both commercial and residential HVAC.


October 31, 2019

BoC Maintains Overnight Rate

The Bank of Canada (BoC) maintained its target for the overnight rate at 1¾ per cent. The bank rate is correspondingly two per cent and the deposit rate is 1½ per cent. The BoC kept the rate static due to the state of the global economy which further weakened as ongoing trade conflicts are restraining business investment, trade, and global growth. Growth in Canada is expected to slow in the second half of this year to a rate below its potential, says the BoC. This reflects the uncertainty associated with trade conflicts, continuing adjustment in the energy sector, and the unwinding of temporary factors that boosted growth in the second quarter. Business investment and exports are likely to contract before expanding again in 2020 and 2021. At the same time, government spending and lower borrowing rates are supporting domestic demand and activity in the services sector remains robust. Employment is showing continuing strength and wage growth is picking up, although with some variation among regions. Consumer spending has been choppy, but will be supported by solid income growth. Meanwhile, housing activity is picking up in most markets. The BoC continues to monitor the evolution of financial vulnerabilities in light of lower mortgage rates and past changes to housing market policies.


Canfor To Go Private

Canfor Corporation has decided to become a privately-held company. The Vancouver, BC-based forest products company has entered into an arrangement agreement with Great Pacific Capital Corp., based on the recommendation of an independent committee of Canfor’s board of directors. Great Pacific Capital is a bank holding company for the Jim Pattison Group, also based in Vancouver. Under the terms of the agreement, Great Pacific, which along with its affiliates owns approximately 51 per cent of the issued and outstanding common shares of Canfor, will acquire all of the Canfor shares it does not already own by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia). The companies plan to hold a meeting in December to consider the transaction. The transaction is subject to shareholder and court approval. Canfor shares will be cancelled from trading on the TSX following closing of the transaction, which is expected to be before year-end.


Value, Performance Drivers For Coating Products

Demand for protective coatings and sealers is projected to increase 5.1 per cent per year to $25.2 billion in 2023, says the ‘Global Construction Chemicals’ study by Freedonia Group. Growth will be boosted by ongoing gains in construction activity globally, as well as increasing demand for higher value, better performing products with improved functionality. Demand for products manufactured with more environmentally friendly solvents and low or no VOCs in order to improve indoor air quality will also drive demand as will the continued trend for sustainability. Products that are easy to apply, dry quickly, and last longer will lead in market share. Innovation such as self-cleaning and biocidal products will help maintain growth in this market.


National Gift Card Rebrands As NGC

National Gift Card, a provider of automated prepaid technology, has rebranded as NGC. The Chicago, IL-based company serves the B2C and B2B gift card marketplace by sourcing, delivering, and managing over 500 physical and digital retail brands across North America for the loyalty, consumer reward, healthcare, financial, and insurance industries in Canada and the U.S. With over half of its card activations coming from its eGift portfolio, NGC anchored the new branding on its digital technology expansion which powers its proprietary gift card ordering portal, gift card API platform, mobile fundraising program, and B2C and B2B eCommerce websites and mobile apps for merchants. When the company acquired Benefit Mobile in 2018, it added an array of branded currency service solutions, such as gifting and self-use features, 'shop & earn' integrations for loyalty programs, mobile wallet integration, and gift card malls. Additionally, the company will launch a state-of-the-art gift card API service in early 2020.


Schneider Electric Launches Electricity Monitoring System

Schneider Electric has launched Wiser Energy, an integrated monitoring system for residential homes. The internet-connected device tracks and monitors energy activity and use to provide real-time, easy-to-understand data so homeowners can make their homes greener and more efficient – all through a mobile app. The product will help Canadians identify extra electricity consumption, understand how much electricity is being used, and remotely monitor appliances. The unit connects to a residential electrical panel and Wi-Fi network. Over time, the system learns about a home to identify appliances and energy use patterns. The app can help homeowners determine how they can change their habits to use energy smarter. The system can also provide instant customizable alert notifications.


Trex Sales Up 17 Per Cent

Trex Company, Inc. had consolidated net sales of $195 million for the third quarter of 2019, up 17 per cent over net sales of $166 million in the third quarter of 2018. Trex Residential Products net sales increased 24 per cent to $183 million and Trex Commercial Products contributed $12 million to consolidated third quarter sales. Consolidated gross margin for the quarter was 42.4 per cent, representing gross margins from Trex Residential Products and Trex Commercial Products of 43.4 per cent and 26.5 per cent, respectively. Net income for the quarter was $42 million, up 42 per cent over net income of $29 million in the year-ago period. Gross profit was $82 million compared to $67 million.


Lower Pricing Reduces Dow Sales Results

Dow had net sales of $10.8 billion for the third quarter of 2019, a decrease of 10 per cent over net sales of $12.7 billion in the third quarter of 2018, driven primarily by lower energy prices. Operating EBIT was $1.2 billion for the quarter with EBIT margin of 10.4 per cent compared to $1.6 billion and 12.7 per cent. The packaging and specialty plastics segment had net sales of $5.1 billion versus $6.2 billion in the year-ago period. The performance materials and coatings segment had net sales of $2.3 billion versus $2.6 billion last year. Volume growth for the segment in Asia Pacific and the U.S. and Canada was more than offset by local price declines in all geographic regions.


October 30, 2019

GTA New Home Market Continues Recovery

Single-family home sales, with 954 detached, linked, and semi-detached houses and townhouses (excluding stacked townhouses) sold in the Greater Toronto, ON, Area (GTA), were up 283 per cent from last September and just five per cent below the 10-year average, says the Building Industry and Land Development Association (BILD). There were a total of 3,061 new home sales for the month, up 73 per cent from September 2018 and six per cent above the 10-year average. Condominium apartments in low, medium-, and high-rise buildings, stacked townhouses, and loft units accounted for 2,107 new home sales, up 39 per cent from September 2018 and 12 per cent above the 10-year average. With a number of new projects coming to market, remaining inventory increased from the previous month to 18,745 units. Remaining inventory includes units in preconstruction projects, in projects currently under construction, and in completed buildings. BILD says the degree of improvement in both new home sales and new project openings this year has been contained, however, and there are no signs of overheating in the market.


Consumers Want To Be Understood During Holidays

Consumers want to be understood by brands, especially during a hectic shopping period like the holiday season. Specifically, 75 per cent of consumers wish retailers better understood their preferences and used that insight to send personalized offers, says research from customer data and engagement technology provider RedPoint Global. Personalization is also proven to drive purchases. Nearly 60 per cent of consumers are more likely to purchase from retailers who send them personalized content and offers. Shoppers have higher expectations for brands when they are members/subscribers. Of consumers that are loyalty members, 74 per cent expect brands to understand their needs and expectations better than other retailers where they are not a member. Getting to know consumers pays off, however. Over a third of consumers remain loyal to their ‘go-to’ brands for holiday shopping. This group say they exclusively purchase from retailers that they have shopped with in the past.


Amazon Canada Offers Business Services

Amazon Canada is now offering its Amazon Business and Business Prime across the country. Companies of all sizes can use the platforms to manage procurement and purchase supplies where Amazon Business is available. Selling partners have the opportunity to grow their businesses by reaching customers across nine countries. Amazon Business features offers, pricing, and quantity discounts, as well as tax exemption, for qualifying purchases. Selling partners also benefit from Amazon's eCommerce expertise, gain visibility of their full product catalogue on an established online store and have greater access to business customer decision-makers to help grow sales. Business Prime is an annual membership program designed for Amazon Business customers and features premium delivery services on their business account. Amazon Business is now live in Canada, the U.S., Germany, the UK, France, Italy, Spain, Japan, and India.


DEWALT Relaunches ToughSystem

DEWALT has launched the ToughSystem 2.0 Radio & Charger, the first product in an upcoming relaunch of the original ToughSystem product line, first announced in 2011. More information will be available on the rest of the line in early 2020. The radio features dynamic range control that gives users the optimal sound for indoor or outdoor use, via selectable settings. It incorporates four integrated, high-performance full-range speakers, an active subwoofer, and passive bass resonator, all driven by a 55W RMS amplifier to provide audio clarity. Compatible with all existing ToughSystem and future ToughSystem 2.0 modular storage solutions, the radio interface is intuitive and with robust stacking and locking side latches, it’s easy to assemble and disassemble. Integrated Bluetooth connectivity enables the radio and music from mobile devices to be controlled remotely via the DEWALT Sound Systems mobile app. A 2.1A USB port is included on the radio for mobile device charging while a large compartment on top provides storage and protection for a battery, phone, and the included AC power cable.


Architectural Segment Drives AWI Sales

Armstrong World Industries, Inc. (AWI) had net sales of $277.1 million for the third quarter of 2019, an increase of six per cent over net sales of $260.5 million in the third quarter of 2018. Sales were driven by higher volumes in the architectural specialties segment and higher mineral fibre average unit value (AUV). Operating income for the quarter was $113.3 million, up 39 per cent over operating income of $81.3 million in the year-ago period. Earnings from continuing operations were $90.7 million compared to $64.2 million, up 41.3 per cent. EBITDA was up 13.4 per cent for the quarter to $114 million and net income was up 14.8 per cent to $68 million. The architectural specialties segment EBITDA was up 18.1 per cent year-over-year and the mineral fibre segment EBITDA was up 12.7 per cent.


3M Sales Decline

3M had sales of $8 billion in the third quarter of 2019, down two per cent over sales of $8.2 billion in the third quarter of 2018. Total sales grew 4.7 per cent in the healthcare segment and 1.7 per cent in consumer, with declines of 4.4 per cent in transportation and electronics and 5.7 per cent in safety and industrial. Sales in Canada grew 0.6 per cent. Third-quarter operating income was $2 billion for the quarter, consistent with the prior-year period. Operating margins were 25.2 per cent. Net income was $1.6 billion for the quarter versus $1.5 billion last year.


October 29, 2019

Executives Not Prepared For Recession

Operations, supply chain, and finance functions were the first functions to be affected in the 2008 economic downturn. And, even though almost all of company executives (96 per cent) believe a recession will materialize over the next year, only eight per cent feel well-prepared for it, says a study from Russell Reynolds Associates, a leadership advisory and search firm. The study, ‘Preparing for economic uncertainty: Are your operations teams ready?’ says the need for preparation for a recession is necessary based on how companies have performed during previous recessions. Businesses need to look beyond just cost-cutting to pursue a balanced approach in order to recover more quickly following a recession, says the report. Russell Reynolds says business owners must first evaluate their operations, supply chain, and finance functions. Then, they should develop a plan, identify gaps in the team, and address those gaps with effective talent strategies, culture, and leadership. The disruption will require talent to be comfortable with agility and to be nimble, empowered to act, and be able to quickly respond.


CPCA, ACA To Update Category Rules

The Canadian Paint and Coatings Association (CPCA) is working with the American Coatings Association (ACA) to develop sustainability programs, product category rules (PCRs), and sustainability reporting standards to stay aligned with green building standards as the industry continues to evolve. The ACA has developed a PCR for both architectural coatings and resinous floor coatings while continuing to explore other approaches on sustainability reporting in concert with members. As part of this ongoing effort, CPCA will seek to align efforts with that of ACA as it moves toward a robust sustainability reporting program to highlight the many strides made by the coatings industry with respect to sustainability. The organizations will come together for a webinar to discuss architectural and industrial maintenance (AIM) VOC regulations at a webinar. The presenters include Gary LeRoux, president and CEO of CPCA and David Darling, vice-president, health, safety, and environmental affairs at ACA. It takes place November 14 from 1 to 2 p.m. For more information, visit CPCA


Tnemec Acquires Tex•Cote

Industrial and architectural protective coatings manufacturer Tnemec Company, Inc. has purchased the assets of Textured Coatings of America, Inc. (Tex•Cote). Established in 1961, Tex•Cote manufactures high-performance, water-based coatings for use on commercial and residential projects. Tnemec will provide Tex•Cote with operational and managerial support for growth within its current markets and customer base. The company has sales throughout North America and internationally to more than 23 countries. Tex•Cote’s products will now also be available through Tnemec. The company has representatives in the U.S., Canada, the Dominican Republic, Puerto Rico, Trinidad, and China.


Sobeys Pilots Intelligent Shopping Cart

Grocery store company Sobeys has launched an intelligent shopping cart – the Sobeys Smart Cart – at its Oakville, ON-based location. The Smart Cart is a technology-enhanced shopping cart that aims to reduce line-ups at in-store checkouts. The cart is able to scan and weigh products as customers place them in the cart, display a running tally of purchases while the customer shops, and allow customers to pay on the spot with the cart. Equipped with artificial intelligence (AI) and machine learning technology, the cart will continually evolve to improve beyond a speedy checkout. The cart also has a screen which will eventually help customers navigate the store to complete a shopping list, highlight promotions, and make product suggestions. Going forward, the cart will evolve from scanning product to identifying product. It includes multiple high-resolution cameras that capture 120 images per second as product is placed in the cart, which allows the cart to learn how to identify each grocery item. Supported by the cart's sensitive weight measures, customers will eventually be able to toss their items into the cart without having to enter any information or scan barcodes.


Amazon.com Sales Up, Income Down

Amazon.com, Inc. had net sales of $70 billion for the third quarter of 2019, an increase of 24 per cent over net sales of $56.6 billion in the third quarter of 2018. Operating income decreased to $3.2 billion in the quarter, compared with operating income of $3.7 billion in the year-ago period. Net income decreased to $2.1 billion compared with net income of $2.9 billion last year.


Canadian Restructuring Impacts Grainger Earnings

Grainger had sales of $2.9 billion in the third quarter of 2019, an increase of four per cent versus sales of $2.8 billion in the third quarter of 2018. On a daily basis, sales were up 2.5 per cent. Gross profit margin was 37.3 per cent versus 38.1 per cent year-over-year. Operating earnings were $338 million for the quarter, up 78 per cent compared to $189 million in the year-ago period, while adjusted operating earnings were up two per cent. Operating margin was 11.4 per cent, up 48 basis points over last year. Net earnings were up 123 per cent to $233 million for the quarter compared to last year. The company says the 2019 results include restructuring, primarily in Canada, resulting in a negative $1 million impact to operating earnings.


October 28, 2019

Retail Sales Headed For 10-year Low

Canadian retail sales growth continues to weaken, says Ed Strapagiel, a retail consultant. For the three months ending in August, retail sales gained a mere one per cent year-over-year on a not seasonally adjusted basis. Year-to-date Canadian retail sales are up only 1.8 per cent compared to a year ago. Current trends imply things are going to get worse before they get better. The three-month sales growth trend continues to decline, while the underlying 12-month trend is at another new low. At current rates, retail sales growth in 2019 could end up at around 1.3 or 1.4 per cent, which would make it the worst year since 2009 and the so-called ‘Great Recession.’ Most of the bad news, however, is coming from the automotive and related sector, due to declining gasoline station sales combined with very modest growth at new car dealers. The food and drug sector has also gone into a funk in the last several months. Electronics and appliance stores’ retail sales were down 10.2 per cent year-over-year for the three months ending August. By comparison, the store merchandise sector is not doing too badly and is managing to keep its head above water. eCommerce sales were up 29.9 per cent year-over-year for the quarter. This was much higher than for location-based retail which gained just one per cent.


ASSA ABLOY Forms Divisional Structure

ASSA ABLOY Group is forming a divisional structure around four business segments to enable continued and accelerated growth of its entrance systems division. The four segments are pedestrian, industrial, residential, and perimeter security. Perimeter Security is currently part of the opening solutions Americas division and will be transferred to the entrance systems division to create new opportunities to scale up and potentially drive a global expansion. The business segments will be the highest responsible operational entities reporting to the division. This will increase the focus on the operation and enable further synergies within respective business segments. The changes are planned to take effect early 2020.


HBC To Go Private

Hudson's Bay Company (HBC) has, based on the unanimous recommendation of an independent special committee of its board of directors, entered into a definitive arrangement agreement with a group of HBC shareholders to take the company private. The common shares of HBC not held by the shareholder group (who collectively own approximately 57 per cent of the common shares of the company on an as-converted basis), will be purchased. The shareholder group comprises individuals and entities related to, or affiliated with, Richard A. Baker, governor and executive chairman of HBC; Rhône Capital L.L.C.; WeWork Property Advisors; Hanover Investments (Luxembourg) S.A.; and Abrams Capital Management, L.P.


U.S. Holiday Sales Forecast To Rise

U.S. retailers can look forward to another cheerful holiday season, says Deloitte in its ‘2019 Holiday Retail Survey.’ While some headwinds are forming, the average household is planning to spend nearly $1,500 this holiday. More than three-quarters of shoppers say they are likely to spend the same or more than last year. Sales are expected to grow by roughly five per cent over last year, with eCommerce sales for the season expected to grow by 14 to 18 per cent. Over two-thirds of holiday shoppers plan to research online and buy at least some gifts in-store. Nearly two-thirds of consumers plan to shop at online retailers this year; over half plan on visiting a mass merchant. These two formats have remained at the top for the last five years. With high spenders - those who plan to spend more than $2,100 - accounting for 60 per cent of this year’s total holiday spend, understanding them becomes a priority for retailers, says the survey. But across the board, quality, value, and convenience are still what attract consumers the most.


Sales Strong For Lawson Products

Lawson Products, Inc., a distributor of products and services to the MRO marketplace, had net sales of $94.8 million for the third quarter of 2019, an increase of 7.1 per cent compared to net sales of $88.5 million in the third quarter of 2018. B.C.-based Bolt Supply House, which represents approximately 12 per cent of consolidated sales, increased 15 per cent over the prior-year quarter, reflecting strength across multiple product categories and new customers. Gross profit increased $2.5 million to $50.6 million compared to $48.1 million in the third quarter of 2018. Consolidated gross profit as a percentage of sales was 53.4 per cent compared to 54.3 per cent. Operating income for the quarter was $6.4 million compared to an operating loss of $2.3 million in the prior-year quarter. Adjusted EBITDA was $10.3 million, up 40.9 per cent over the year-ago period.


Craftsman Rollout Drives Stanley B&D Sales

Stanley Black & Decker had net sales of $3.6 billion for the third quarter of 2019, up four per cent compared to net sales of $3.5 billion in the third quarter of 2018, due to positive contributions in volume, acquisitions, and price. The gross margin rate for the quarter was 34.3 per cent, down 120 basis points compared to the year-ago period. Net earnings were $231 million compared to $248 million last year. Sales in the tools and storage segment increased four per cent year-over-year, driven by the rollout of the Craftsman brand. Industrial sales increased 13 per cent year-over-year, and security sales declined four per cent.


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