AHMA Index shows current sales declining
The American Hardware Manufacturers Association’s AHMA Home Improvement Industry Confidence Index’s Current Situation Index declined in October to 216.7 from 245.8 in September (October 2008 = 100), while the Future Expectations Index increased to 208.6 from 148.3 in September.
In comparing current sales levels with year-ago levels, 52% of respondents said sales were higher in October versus year-ago levels, down from 59% in September, while 19% reported sales were even, and 29% said sales were below year-ago levels.
Looking forward six months, 52% of respondents said they expect sales to be above current levels, up from 36% in September, while 40% of respondents said they expect sales to be even in six months, and 7% expect sales to be below current levels.
Looking forward one year, 69% of respondents project sales will be higher, up from 50% in September, while 26% project sales will be even one year from now, and 5% project sales will be below current levels.
“Many of our members expressed increasing optimism for the future prospects of their businesses during the month of October as political pollsters began to predict the likelihood of the midterm elections producing a change in Congress to a more pro-business atmosphere,” said Timothy Farrell, president and CEO of the AHMA. “It is our hope that the new Congress will eliminate some of the uncertainty concerning the cost effects of federal legislation so that our industry can begin to invest in a more profitable future.”
The October Confidence Index survey asked two supplemental questions of AHMA members. Of the first, regarding the extension of the Bush tax cuts, 81% responded “Yes;” 12% responded “Not Sure;” and 7% responded “No.”
To the second question, regarding the Republican pledge to “repeal and replace” the Patient Protection and Affordable Care Act, 81% responded “Approve;” 17% responded “Not Sure;” and 2% responded “Disapprove.”
Rapid True Value launches chainwide remodel
One of three divisions of Hardware and Lumber, Rapid True Value plans on remodeling other units in partnership with Chicago-based True Value, according to the article. Consumers can expect at least two new products on the store shelves immediately: a premium paint called Painter’s Select, and a new laminated flooring system, Allure. Stores typically measure 6,000 sq. ft.
Rapid True Value’s parent company, GraceKennedy, is in the process of outsourcing its warehousing and distribution, the report said.
“The tenders are being evaluated now,” said Don Wehby, GraceKennedy group chief operating officer. “We have received four expressions of interest, all from local companies, and we expect a management company to be in place before the end of the financial year. We hope to see significant savings from adopting a similar approach to the outsourcing of this activity as with the management of our distribution center.”
In January, GraceKennedy outsourced the management of its $2 billion distribution center to U.S. transport and logistics company Landstar of Jacksonville, Fla.
Rona’s acquisition mission
Boucherville, Quebec-based Rona announced it has signed a deal to purchase dealer-owned, wholesale distributor TruServ Canada.
“This proposed acquisition represents an important step in our strategy to accelerate the consolidation of the Canadian renovation-construction industry and is exactly in line with our objective to continually strengthen our leadership position in the distribution business, which is the roots of our company,” said Robert Dutton, president and CEO of Rona.
Winnipeg, Manitoba-based TruServ Canada has two warehousing and distribution centers—one 400,000-sq.-ft. facility in Winnipeg and one 250,000-sq.-ft. facility in Kitchener, Ontario, where it supplies more than 40,000 SKUs with another 80,000 direct-shipment options. “By serving 650 new dealers, the acquisition of TruServ Canada would provide instant geographical penetration in many Canadian communities, particularly in Ontario and Western Canada, thus creating important growth opportunities. The proposed acquisition would also diversify the network of dealer stores served by Rona by adding hardware, general merchandising and agriculture-specialized stores and would therefore increase our ability to serve small and mid-size specialized dealers across Canada,” Dutton said.
The transaction is expected to close by the end of the year.
In related news, Rona’s announcement of its intent to purchase Don Park LP, an HVAC distributor and manufacturer based in Ontario, is “another step toward achieving Rona’s objective of establishing a national platform in the commercial and professional market,” according to a company statement released Oct. 7. This hedge against traditional DIY sales may help Rona, Canada’s largest retailer and wholesaler, expand a lot farther south than Quebec.
According to an article in the Telegraph Journal, Rona has recently hired an employee that will help it target similar market opportunities in the United States.
“We’re hoping to have an acquisition in the United States in 2011; it all depends if we identify the right series of targets and the right markets,” Michael Storfer, VP of Rona’s commercial division, told the New Brunswick newspaper.