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CCA member-owners gather in Texas

BY HBSDEALER Staff

Houston Carpet One Floor & Home, the largest floor coverings divisions of CCA Global Partners, held its winter convention in Houston last week.

The Carpet One convention was preceded by the winter convention for Flooring America and Flooring Canada, two more divisions of CCA Global Partners, also held here Jan. 7 to 9. Carpet One’s convention was held Jan. 10 to 12.

On Jan. 11, Carpet One Floor & Home announced a new series of ad campaigns featuring reality show carpenter Amy Wynn Pastor. Wynn Pastor formerly served as a carpenter on the TLC reality show Trading Spaces and has an upcoming home improvement program planned for the DIY Network, called “Make a Move.”

“Amy Wynn Pastor has a lot of credibility with our target consumer,” explained Carpet One president Evan Hackel.

Prior to the show opening, attendees took part in numerous education sessions on current topics in the floor coverings industry. A learning session on “Exotic Hard Surfaces” included a look at cork, bamboo and other luxury hard surfaces, as well as the kinds of customers who demand such items. Other session topics included designing and executing a media strategy and how to ensure profitability in installed services.

Carpet One executives also announced two new programs at the group’s general session, held Jan. 11. The company said it will now offer a trademarked “Beautiful Guarantee” — a warranty option for upper-level carpet and flooring products that includes reinstallation costs of a project if a consumer is dissatisfied. The program will be subsidized by the company’s corporate office, rather than by individual store owners, Hackel said.

Additionally, the company announced a planned “National Green Select Day” on April 19. Carpet One members will have the option of choosing an environmentally themed cleanup project in their hometowns, with branded cleanup materials provided by the company. The project is meant to involve community members in a “grass roots” green movement, while positioning the company’s brand as green, sustainable and community-oriented, said Carpet One chief operating officer Eric Demaree.

“If the green movement is going to be successful, then communities need to get out and be active,” Demaree said. “We want to do more to help promote ways we can all contribute.”

With 2006 sales of approximately $3.9 billion, Carpet One Floor & Home (and its Canadian subsidiary) is one of North America’s largest floor coverings companies. The company has more than 1,000 independently owned specialty stores, with additional locations in New Zealand and Australia.

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Griffith: Investigations produce no surprises

BY HBSDEALER Staff

Ace Hardware CEO Ray Griffith said the company’s $152 million accounting error is embarrassing, but the completed investigations released to members last week show no missing money, no missing inventory and no fraud. In an interview with HCN, he added that Ace now enters “phase two” of its recovery process.

The investigations from Protiviti, an independent risk consulting company, and legal firm Skadden, Arps, Slate, Meagher & Flom indicate a mid-level employee made the initial accounting mistake, and the co-op’s systems and management team failed to catch the error. The investigations concluded the size of the error was $152 million.

Griffith called the conclusion of the investigations a “significant milestone” that represents progress.

“It is always a relief for any president, CEO, board of directors and stock holders to know that no one took any money, no one stole any inventory and there was no fraud committed by anyone,” Griffith told HCN. “Those are not my words, those are Skaddens, as a result of the investigation.”

While maintaining a positive outlook on the investigations, Griffith pointed to a handful of dealer defections that came at least in part because of the accounting error. Through its district managers in the field, Ace is aware of four retailers that have left the co-op, Griffith said. The company has identified a list of about 50 retailers “upset over the accounting issue” to the point where leaving is a possibility, he said.

With the investigations complete, Griffith told HCN the co-op can now move forward into “phase two” of a three-part recovery plan. Phase two will include training and recruitment of talent. “Phase three” will focus on information technology system changes and the expansion of internal audit functions.

As previously reported, the co-op will turn to members to restore its equity to the $320 million level. The co-op set up variance allocation accounts that will be based on each store’s proportionate share of warehouse dividend pool purchases from 2002 through 2006.

Asked about the tone of various postings on Internet bulletin boards from critical dealers, Griffith pointed to day-to-day feedback from retailers supportive of management.

“I’m not so naive to think we still don’t have challenges,” he said. “We do.”

He said management is anxiously awaiting the restatement of financials from KPMG for the years 2004, 2005 and 2006. He anticipates that report to be completed by the end of February. Year 2007 financial report should come out on or before the end of April, he said.

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Weyerhaeuser sells European iLevel division

BY HBSDEALER Staff

Weyerhaeuser announced that it has reached an agreement to sell its iLevel European engineered wood products operations to Finland-based Finnforest. The terms of the sale were not disclosed.

Included in the transaction were approximately 30 sales and technical support associates as well as supply commitments for iLevel wood products.

“This sale will allow iLevel to focus on its core North American residential wood products business,” said Carlos Guilherme, vp-sales for Weyerhaeuser’s iLevel wood products business.

Finnforest provides products and services to targeted customer segments, such as building and construction, transport vehicle industry, other industrial customers as well as building material and DIY chains with operations in more than 20 countries. The company is part of the MetsaliittoGroup, one of the largest forest industry groups in the world.

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