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News

November 15, 2019

Small Business Lending Remains Healthy

Overall business credit balances for small businesses in Canada increased year-over-year in September, up 6.1 per cent over the previous year, says the ‘Fall 2019 TransUnion Business Lending Barometer.’ At the same time, lenders also increased the overall number of open credit accounts, up 5.4 per cent for the same 12-month period. Importantly, delinquency rates, defined as accounts with payments 90 or more days past due remained low at 1.95 per cent for September, which represented an improvement of 26 basis points (bps) compared to the same period in 2018. “Although the rate of growth in the Canadian economy has slowed in recent quarters, clearly there is still optimism amongst businesses and the lenders that support them,” says Matt Fabian, director of financial services, research and consulting, for TransUnion Canada. “With many businesses still recording growth, particularly in the small business segment, they are willing to take on credit to help manage their day-to-day operations and invest for expansion. Average balances per business borrower grew over the past year for most categories of credit products. This indicates that businesses have continued demand for credit and that lenders are making additional credit available – a positive formula for growth.”


Laval RONA Opens Renovated Store

RONA Viger-Leblanc has opened after a complete transformation and investment of $400,000. The Lowe’s Canada affiliate store, based in Laval, QC, has renovated the sales floor to add over 3,000 products and redesigned its racking. The store was founded over 70 years ago and was changed from a fruit market to a general store at the end of the 1950s. It became a RONA affiliated store in 1973, although it has changed locations over the years. Serge Viger joined the store more than 40 years ago as a part-time employee. He worked his way up the ladder and finally acquired the business with his wife Manon in 2011. Today, he employs 30 people.


Investor Group To Acquire Bouclair

Alston Investments Inc., a company recently formed by a group of Canadian investors with significant retail experience, plans to acquire a substantial portion of the assets of home decorating retail chain Bouclair Inc. via an asset purchase agreement. Alston plans to focus on Bouclair's successful experiential retail concept while continuing to invest heavily in its online presence. Efforts to promote Bouclair internationally will also be expanded. The proposed transaction would allow it to reorganize and focus on its strengths and to expand eCommerce and digital capabilities. A key priority in the next 24 months will be converting as many as two dozen existing stores and finding new sites for its experiential retail concept, first launched in Brossard, QC, in 2018.


Benjamin Moore Opens Texas DC

Paint and coatings manufacturer Benjamin Moore has opened a distribution centre in Lewisville, TX. The 238,000-square-foot facility will accommodate expansion, enhance service, and provide job opportunities. The company previously operated in a 70,000-square-foot distribution centre in Mesquite, TX, that will continue to serve as its manufacturing facility.


Acquisitions Raise Energizer Sales

Energizer Holdings, Inc. had net earnings from continuing operations of $47 million for the fourth quarter of 2019, an increase compared to net earnings of $1.5 million in the same period in 2018. Adjusted net earnings for the quarter were $68.6 million compared to $50.8 million last year. Net sales were up 57.3 per cent to $719 million due partly to distribution gains and benefit of hurricane activity. The impact of the acquisitions resulted in increased sales of $225.6 million, or 49.3 per cent. Gross margin percentage was 40 per cent versus 45.5 per cent in the prior year.


Pet Care Drives Spectrum Sales

Spectrum Brands Holdings, Inc. had net sales of $993 million for the fourth quarter of 2019, an increase of 1.9 per cent over net sales of $974.4 million in the fourth quarter of 2018. Gross profit for the quarter was $334.7 million, down 3.5 per cent compared gross profit of $346.9 million in the year-ago period. The company had a net loss of $79 million compared to a net loss of $34.7 million last year and adjusted EBITDA increased 5.2 per cent to $163.1 million compared to last year. Net sales for the hardware and home improvement segment increased 1.1 per cent year-over-year; net sales for the home and personal care segment increased one per cent; net sales for the global pet care segment increased 7.9 per cent; and net sales for the home and garden segment decreased 4.3 per cent.


November 14, 2019

Lowe’s Barred From Calling RONA ‘Truly Canadian’

Lowe’s Cos. Inc., the U.S. owners of the RONA home improvement chain, disagrees with a ruling barring it from using the taglines ‘Truly Canadian’ and ‘Proudly Canadian.’ However, the retail company says it won’t dispute the ruling. A complaint to regulator Ad Standards about the slogans triggered the ruling, which was reaffirmed on appeal. “RONA is not owned and controlled by a ‘truly Canadian’ entity,” says the regulator in its decision. “Council concluded, therefore, that the claim ‘Truly Canadian’ conveyed an inaccurate general impression.” RONA, founded in 1939 in Quebec, was Canadian-owned until Lowe’s, based in North Carolina, bought the retailer in 2016. The American company argued that it should be allowed to continue using the slogans because of the Canadian founders and headquarters and number of Canadian executives.


Northern Ontario Dealer Joins Castle

The Mushkegowuk Development Corporation (MDC), owned by multiple First Nations members of the Mushkegowuk Council in northern Ontario, now owns MDC Supply GP, operating as Great North Builders. This new Castle location, which was once part of the community for over 35 years, is coming back with enhanced vigour under new management and with an expanded product assortment to meet the increased consumer demand for certain products. The business was a long-standing fixture in the community and MDC is looking to build on the legacy that founder Jack Hood left behind when he retired and closed the business approximately one year ago. “When we purchased the business, we knew we wanted to grow our brand and take it to new levels. We had the choice to go in any direction but chose Castle not only for the 35-year history in Moosonee, but because of the outstanding experience and recommendations from the previous owner,” says Albalina Metatawabin, general manager of MDC. The store is currently undergoing renovation and will begin to offer products and services to local customers once complete in late November. A public grand opening celebration is planned for February of the new year.


BMR Group Gets Ontario Member

Richmond, ON-based Richmond Building Centre has joined BMR Group. “Working in a highly competitive environment, I was looking for the right partner to help set me apart from the competition,” says Doug Kazda, store owner. “BMR Group offers a program tailored to my business that enables me to achieve all my goals. In addition to supplying high-quality products, BMR will also meet our high demand for building materials, which is one of their greatest strengths.” Over the next few months, the store’s facade will be transformed to the BMR brand and the store name will change to Richmond BMR.


Calgary Housing Market Remains Vulnerable

Calgary, AB’s housing market remains moderately vulnerable due to evidence of overbuilding, says the Canada Mortgage and Housing Corporation (CMHC). The city’s inventory of completed and unsold housing units increased in the second quarter, while absorption of new housing units has been slowing compared to 2018, which has contributed to the oversupply. In a report, CMHC says Calgary remains a buyers’ market, with home prices staying in line with market fundamentals. Apartment units continue to make up the largest proportion of overall housing inventory, though the largest increase from the previous quarter was in single-detached units. Calgary’s resale market increased seven per cent compared to the same quarter last year. The report says there is also evidence of overbuilding in Edmonton, AB, Regina and Saskatoon, SK, and Winnipeg, MB.


Continental Sales On The Rise

Continental Building Products, Inc. had net sales of $127.4 million for the third quarter of 2019, a decrease of 2.9 per cent compared to net sales of $131.2 million in the prior year quarter. Wallboard sales volumes increased 4.6 per cent to 705 million square feet (MMSF) compared to 674 MMSF in the prior year quarter, primarily attributable to stronger demand. Operating income was down 26.3 per cent to $19.9 million, compared to $27 million in the prior year quarter. Net income decreased $5.1 million or 27.6 per cent to $13.4 million year-over-year. The $5.1 million decrease in net income was primarily a result of the decrease in net sales.


Small Increase In HDI Sales

Hardwoods Distribution Inc. (HDI) had sales of $292.5 million for the third quarter of 2019, an increase of 0.7 per cent compared to sales of $290.4 million in the third quarter of 2018. Sales in Canada were up 0.6 per cent to $35.2 million. EBITDA was $20.7 million, up five per cent over $19.7 million in the year-ago period. The company had a profit of $8.9 million for the quarter, up 11.2 per cent year-over-year. Gross profit increased 3.3 per cent to $53.3 million while gross profit percentage decreased to 18.2 per cent from 17.8 per cent.


November 13, 2019

September Building Permits Decrease

The total value of building permits issued by Canadian municipalities decreased 6.5 per cent to $8.3 billion in September, largely due to declines in the residential sector, says Statistics Canada. Gains were reported in four provinces, with the largest increase in Alberta (7.2 per cent). The largest decline was in Quebec (20.5 per cent), mostly due to a drop in the value of permits for multi-family dwellings. The value of residential building permits was down 10.7 per cent to $5.1 billion in September. Permits for multi-family dwellings fell 12.1 per cent with declines in eight provinces, while Nova Scotia and Alberta reported the sole increases. Permits for single-family dwellings decreased 8.7 per cent largely due to a decrease in Ontario following strong growth in August. Commercial permits rose 6.1 per cent while the value of industrial and institutional permits declined.


Canadian Tire Ready For ‘Whoever Comes At Us’

Canadian Tire Corporation’s (CTC) chief financial officer is welcoming the competition from online retailers like Amazon.com Inc., says Dean McCann, CFO of CTC. In an interview with BNN Bloomberg, he says Walmart is the best thing that ever happened to the company, with Target being the second best thing. “I firmly believe that this change that we’re undergoing right now with a new way of doing business will be the next best thing for Canadian Tire over the next couple years.” He says CTC’s 500 store, Canada-wide network gives the retailer an advantage for ‘last mile’ delivery, which is a costly part of doing business. The versatility in pick-up/delivery options allows the company to better cater to the needs of its customers. “There are things that you want; you need it now. There are things that a customer is willing to wait for … Or you can come to the store, click-and-collect, and pick it up there. We’ll have it ready for you. We’re well-positioned to take on whoever comes at us.” McCann’s comments come in response to Neuberger Berman portfolio manager Steve Eisman’s comment that he bet against CTC stock because he believes it would suffer as a result of competition from Amazon as well as potential weakness in its credit card portfolio.


Amazon To Build First Quebec Fulfillment Centre

Amazon Canada plans to open its first fulfillment centre in Quebec. The site will be located in Lachine on the island of Montreal and will launch in time for the 2020 holiday shopping season. “We're excited about our growth in Montreal, which gives us the opportunity to better serve our customers across Quebec,” says Alexandre Gagnon, vice-president of Amazon Canada. The facility will allow the online retailer to pick, pack, and ship items ranging from toys and pet products to small electronics.


Mixed Use Materials To Trend For Exteriors

Mixed use materials will be a trend for home exteriors in 2020, says Royal Building Products. Brick and stone will no longer be the main focal point of exteriors; instead, homeowners will blend materials with the rest of the home’s exterior design features to present a dynamic look that isn’t overpowering. Accents to the gable will run in the opposite direction of the siding. Consumers will also add texture in the gable by adding shake. People will incorporate mixed use of sidings and blendings of various sidings – vertical, horizontal, board and batten – in shades of the same colour family. Siding of different widths will be blended to create a rustic look. People will also use different styles of the same siding, such as a blend of shiplap and cedar shingles of a similar colour, so that the texture becomes the main design feature.


Acquisitions Drive CanWel Sales

CanWel Building Materials Group Ltd. had consolidated revenues of $373.2 million for the third quarter of 2019, an increase of 6.6 per cent over revenues of $350.2 million in the third quarter of 2018. Sales for the distribution segment increased by $24.5 million or 7.3 per cent, largely due to acquisitions and the company’s continuing focus on product mix strategies and target customer base. These improvements in the quarter were partially offset by the impact of construction materials pricing which generally continued on a downward trend until late in the quarter. Gross margin dollars increased three per cent to $52.3 million year-over-year, while gross margin percentage was slightly lower at 14 per cent of revenues versus 14.5 per cent last year. EBITDA was $25 million for the quarter compared to $20.1 million a year ago.


IKEA Canada Sales Grow 6.1 Per Cent

IKEA Canada had sales of $2.53 billion for the fiscal year ending August 31, an increase of 6.1 per cent on the previous year. The home furnishings retailer also reported strong digital engagement with 117.2 million visits to IKEA.ca, representing a 12 per cent increase and contributing to $261.2 million in eCommerce sales. In-store visitation was 31 million customers, an increase of 2.7 per cent.


November 12, 2019

Next Generation Needs Support To Lead Digital Age

Family business next generations (NextGens) view themselves as agents of change for digital transformation, but are looking for greater support and trust from current generation leaders, says a report by PwC. The report says 70 per cent of NextGens are already deeply engaged in family enterprise yet, a significant minority feel they are being held back and frustrated by a lack of opportunity. They are confident in the value they can bring in terms of skills with more than two-thirds agreeing that their strongest attributes (problem-solving and leadership) are essential skills in the future business landscape. Sixty-four per cent say they can add value to ensure future business strategy is fit for the digital age. They are looking for support to develop the expertise and experience they need to succeed. "It's vital to understand the importance of a cross-generational approach. In some family businesses, there may be up to five generations all working together in one company," says Vicki Huff Eckert, U.S. and global leader, PwC New Ventures. "Weaving in the best traits from each generation - knowing when to let the young take the lead and when to rein them in - can make the difference between simply surviving and passing on a thriving enterprise to the next generation."


Toronto, Hamilton Housing Vulnerability Decreases

Toronto and Hamilton, ON, are the latest markets to see a change in their overall degree of housing market vulnerability from high to moderate, says the Canada Mortgage and Housing Corporation (CMHC) in its 'Housing Market Assessment (HMA).' The change brings the Toronto and Hamilton markets in line with Canada's overall moderate vulnerability rating. Victoria, BC, remains the only major centre with an overall high degree of vulnerability rating. The national housing market's overall vulnerability remains moderate for the third consecutive quarter. This follows 10 consecutive quarters of having been flagged with a high degree of vulnerability. Imbalances between house prices and housing market fundamentals such as income and population have narrowed with prices continuing to adjust and fundamentals catching up. Victoria no longer exhibits evidence of overheating while the overall vulnerability of Vancouver, BC, remains moderate as evidence of overvaluation persists. Edmonton and Calgary, AB; Saskatoon and Regina, SK; and Winnipeg, MB, continue to see a moderate degree of vulnerability in the overall assessment, due to evidence of overbuilding. Ottawa, ON; Montreal and Quebec City, QC; Moncton, NB; Halifax, NS; and St. John's, NL, maintain a low degree of overall vulnerability.


Desjardins Capital Acquires SJM Group Shares

Desjardins Capital has acquired the majority of the shares held in three SJM Group companies - Équipement Boni, Etalex, and Produits de Fil et Métal FormaFil. SJM Group provides solutions for commercial fixtures and heavy-duty storage systems. The transaction will boost synergy among the three entities and is consistent with the expertise of the group's managers, who will continue to oversee operations. With Desjardins Capital as an equity partner, the family business can retain its Quebec ownership while handing management of operations over to SJM Group Management Committee. The transaction will allow SJM Group to continue its development while bringing a promising next generation on board.


Masco Completes Business Divesture

Masco Corporation has completed the sale of its Milgard Windows and Doors division to MI Windows and Doors LLC for approximately $725 million. Masco announced the plan to divest its cabinetry and windows businesses in June and found a buyer – MI Windows and Doors – in October. It has not yet announced any buyers for its cabinetry business.


DEWALT Enhances Three Original FLEXVOLT Tools

DEWALT has made upgrades to three products that were part of the original DEWALT FLEXVOLT System, debuted in 2016. The 60V MAX FLEXVOLT 7¼-inch Circular Saw (DCS578), 60V MAX FLEXVOLT 4½- to 6-inch Grinder (DCG418), and 60V MAX FLEXVOLT Reciprocating Saw (DCS389) each offer increased power versus their predecessors. The upgrades mean that the circular saw is up to 47 per cent more powerful than its predecessor, the grinder is up to 30 per cent more powerful, and the reciprocating saw is up to 19 per cent more powerful. Each of these tools achieves this increase in performance via new motors, new software, and new controls. In addition, they will be available as a kit with a 9.0Ah battery. The original FLEXVOLT tools were kitted with a 6.0Ah battery.


AEP Has Gains

Atlas Engineered Products Ltd. had revenue of $10.5 million for the third quarter of 2019, up 106 per cent from $5.1 million in the third quarter 2018. Operating income for the quarter was $735,736 compared to an operating loss of $8,050 in the prior year period. Net income was $531,710. The improvements are due to integration activities such as consolidated raw material supply, improved manufacturing efficiency, productivity gains, and lower cost of sales, says the company.


November 11, 2019

October Canadian Housing Starts Trend Lower

The trend in housing starts decreased in October to 218,598 units; this compares to 223,276 units in September, says the Canada Mortgage and Housing Corporation (CMHC). This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts. Multi-family starts in urban centres trended lower following four months of consecutive gains, offsetting a modest increase in the trend of urban single-detached starts in October. The Vancouver, BC, and Toronto, ON, census metropolitan areas (CMAs) trended lower compared to last month. The Edmonton, AB; Regina, SK, and Gatineau and Sherbrooke, QC, CMAs trended higher. Prince Edward Island housing starts were up 146 per cent year-over-year. The standalone monthly SAAR of housing starts for all areas in Canada was 201,973 units in October, down 8.7 per cent from 221,135 units in September. The SAAR of urban starts decreased by nine per cent, multiple urban starts decreased by 12.5 per cent, and single-detached urban starts increased by 2.4 per cent.


TIMBER MART Honours World War II Vets

TIMBER MART commercial members from across Canada visited the Juno Beach Centre in Courseulles-sur-Mer in Normandy, France

TIMBER MART commercial members from across Canada visited the Juno Beach Centre in Courseulles-sur-Mer in Normandy, France, this fall to honour the Canadian soldiers who lost their lives during the Second World War. The group toured the site on September 24 where more than 14,000 Canadian troops landed on D-Day (June 6, 1944) to liberate France from Nazi control. To commemorate their visit, the group not only made a donation to the centre, but will also have a commemorative brick produced in the spring that will be placed on the beach at the Juno Beach Centre’s memorial kiosks. “Touring such a significant historical site was a humbling experience for us all as Canadians,” says Bernie Owens, president and CEO of TIMBER MART (pictured). “We are so proud of our fallen heroes and grateful for their sacrifice, for it is because of them that we are able to live so freely in this beautiful nation we call home.”


RONA La Crete Building Centre Opens Its Doors

Lowe’s Canada joined dealer-owners Andrew Zacharias and Andrew Neustaeter and their team to celebrate the grand opening of RONA La Crete Building Centre on November 8. Located in La Crete, AB, the store has been displaying the RONA banner since January. For the last 10 months, the owners have renovated the store, tripled the size of the sales floor, and added hundreds of new products. They also hired five additional employees to better serve their community. The 20,000-square-foot store features new product categories such as appliances and seasonal products and a wider selection of products for existing categories that now include brands like Craftsman.


BMR Group Trade Show Launched Products And Services

‘Close-knit and connected’ was the theme for the ‘2019 BMR Group Trade Show’ that ran from November 6 to 8 in Québec City, QC. Dealers were able to learn about new products with four new private brands launched to modernize and strengthen their product offering. They are Botaflora (horticulture), Splendi (high-end products), Fixel (low-end products), and Architek (finishing building materials). These brands will appear in stores in 2020. The show also featured a marketing exhibit that provided information and services to help dealers improve their in-store customer experience. BMR introduced the no-cost Imagine Program as well as a number of planograms promoting products such as a line of zero-waste products, Amazon Alexa products, and Firman generators. BMR also launched the ‘BMR Independent Dealers’ section of La Coop fédérée which offers dealers membership and year-end rebates.


Credit Card Fees To Drop For Small Business

Some of the fees merchants pay on credit card transactions will go down from 1.5 per cent to 1.4 per cent, on average, starting in April as a result of an agreement reached by the federal government with Visa and Mastercard last year. The Canadian Federation of Independent Business (CFIB) says it is pleased by this latest victory for small business but warns independent merchants to protect themselves from misinformation and unfair contracts. In addition, the federal government has promised to eliminate processing fees on HST and GST for credit card transactions, a move estimated to save merchants nearly $500 million per year in fees. While these announcements are very good news, CFIB warns small business owners to be vigilant to ensure the savings are passed along to them. CFIB also says it has started to receive complaints about new credit card processing fees. In particular, Mastercard is introducing a new fee on returns/refunds and pre-authorizations. And while interchange rates for in-store Mastercard transactions are expected to see a meaningful reduction (up to 29 per cent), eCommerce businesses may see increases in the fees they have to pay for some categories of cards.


October Dodge Momentum Index Moves Higher

The Dodge Momentum Index increased 6.9 per cent in October to 152.6 from the revised September reading of 142.7. The index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for non-residential building projects in planning, which have been shown to lead construction spending for non-residential buildings by a full year. October’s increase was due entirely to a recovery in institutional planning projects, which had stepped back over the previous few months. Institutional planning moved 22.8 per cent higher in the month while commercial planning lost 0.5 per cent. Despite the October increase, institutional projects entering planning remain 4.3 per cent lower on a year-over-year basis compared to October 2018. Commercial projects meanwhile are 14.3 per cent higher than October 2018. The overall index is 6.7 per cent higher than a year ago, although its level remains below the July 2018 peak.


Louisiana-Pacific Sales Dip

Louisiana-Pacific Corporation (LP) had net sales of $603 million for the third quarter of 2019, a decrease from net sales of $737 million in the third quarter of 2018. Net income was $2 million compared to $124 million in the year-ago period and adjusted EBITDA was $49 million compared to $193 million. Declines in OSB pricing in all North American operations had a negative impact on results. The siding segment had sales of $259 million compared to $241 million last year; the oriented strand board (OSB) segment had sales of $197 million compared to $349 million; and the engineered wood products (EWP) segment had net sales of $105 million compared to $110 million.


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