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News

November 19, 2019

Retail Bucks Business Insolvency Trend

The slowing Canadian economy has resulted in the first year-over-year increase in business insolvencies in almost two decades, says data by the Office of the Superintendent of Bankruptcy (OSB). The number of businesses that failed in the past 12 months to September was up 4.1 per cent compared to the same period in 2018. On an industry level, mining, oil, and gas extraction as well as the information and cultural industries were the main drivers of the rise in corporate insolvencies. Both sectors experienced an increase in business insolvency filings of over 40 per cent. The finance and insurance (27.6); professional, scientific, technical services (20.6 per cent), and real estate, rental, and leasing (14.7 per cent) sectors also experienced significant challenges. A few sectors, such as retail trade with 5.8 per cent fewer bankruptcies. Increases were greatest in Newfoundland and Labrador and British Columbia while Saskatchewan was the only province to experience a decline over the past 12 months but, for the past three months, realized a 14.9 per cent increase compared to the same quarter last year. OSB says the number of consumer insolvencies is also increasing, up 8.5 per cent compared to last year.


Black Friday Shopping Gaining Popularity

The traditionally American retail holiday of Black Friday is continuing to gain popularity in Canada and has become the most popular shopping event among Canadians, says the Retail Council of Canada in its second annual ‘Holiday Shopping Survey.’ Forty-three per cent of Canadian consumers plan to open their wallets on Black Friday, the day after American Thanksgiving, compared to 40 per cent last year. In contrast, 34 per cent plan to shop on Boxing Day. The study confirms that Black Friday isn't a passing trend in Canada. In fact, Canadians who plan to shop on Black Friday plan to spend a greater share of their 2019 holiday budget on Black Friday (38 per cent of holiday budget) compared with those who shop on Boxing Day (30 per cent of holiday budget). Consumers still like shopping in physical stores as well, with 72 per cent of holiday shopping budgets to be spent in-store with the remaining 28 per cent to be spent online. Possible reasons include a majority of Canadians agree that finding the right gift can be challenging (67 per cent) and they prefer to shop in-person so they can see and touch the products (65 per cent). When it comes to price, however, 36 per cent believe they get better deals online than in-store during the holidays. Not surprisingly, more than two in five Canadians (44 per cent) say Cyber Monday deals are better online, while a similar amount (40 per cent) think Boxing Day deals are better in-store.


Walmart Canada Launches Blockchain Freight Network

Walmart Canada and DLT Labs have launched a blockchain-based freight and payment network. The system uses distributed ledger technology to track deliveries, verify transactions, and automate payments and reconciliation among Walmart Canada and its carriers, which deliver inventory to over 400 retail stores across Canada annually. All Walmart Canada's third-party carriers are scheduled to be live by February 2020. The solution is accessible using a web portal and mobile application. The network manages, integrates, and synchronizes all the supply chain and logistics data in real time, aggregating the data between Walmart Canada and its fleet of third-party trucks on a shared ledger. It also automates the myriad necessary calculations enabling real-time invoicing, payments, and settlement. It integrates with each company's legacy systems so organizations can continue to follow their existing processes without retraining or investment in technology.


Henkel Opens Technical Centre of Excellence

Henkel Adhesive Technologies has opened a technical centre of excellence for flexible packaging adhesives and coating applications in New Jersey, NY. Focused primarily on Loctite adhesive and coatings, the facility includes labs for evaluation, design, and testing, full-scale equipment, and state-of-the-art customer training facilities to support the needs of converters and brand owners. With packaging being a critical element in expanded shelf life and food safety, and increasingly important for sustainability, Henkel is investing in delivering innovative solutions to meet the ever-increasing demand driven by consumers and retailers.


Weyerhaeuser Completes Timberlands Divesture

Weyerhaeuser Company has completed the sale of its Michigan timberlands to Lyme Great Lakes Holding LLC, an affiliate of the Lyme Timber Company LP. The transaction, which was announced in September, includes 555,000 acres of timberlands in northern Michigan. "This transaction is part of our ongoing effort to strategically optimize our timberlands portfolio," says Devin W. Stockfish, president and chief executive officer of Weyerhaeuser.


November 18, 2019

Canadian Home Sales Hold Steady

National home sales were unchanged from September to October, says the Canadian Real Estate Association (CREA). This follows a string of monthly increases that began in March. Activity is now almost 20 per cent above the six-year low reached in February 2019, but remains seven per cent below heights reached in 2016 and 2017. There was an almost even split between the number of local markets where activity rose and those where it declined. Higher sales in Greater Vancouver, BC; Fraser Valley, BC; and Ottawa, ON, offset a monthly decline in activity in the Greater Toronto, ON, Area (GTA) and Hamilton-Burlington, ON. Actual (not seasonally adjusted) activity rose 12.9 per cent year-over-year. As well, the number of newly-listed homes fell by 1.8 per cent in October, with the GTA and Ottawa posting the largest declines. Almost a third of all housing markets posted a monthly decline of at least five per cent, while about a fifth of all markets posted a monthly increase of at least five per cent. Steady sales and fewer new listings further tightened the national sales-to-new listings ratio to 63.7 per cent. This measure has been increasingly rising above its long-term average of 53.6 per cent. Its current reading suggests that sales negotiations are becoming increasingly tilted in favour of sellers; however, the national measure continues to mask significant regional variations.


Black Friday Shopping Gaining Popularity

The traditionally American retail holiday of Black Friday is continuing to gain popularity in Canada and has become the most popular shopping event among Canadians, says the Retail Council of Canada in its second annual ‘Holiday Shopping Survey.’ Forty-three per cent of Canadian consumers plan to open their wallets on Black Friday, the day after American Thanksgiving, compared to 40 per cent last year. In contrast, 34 per cent plan to shop on Boxing Day. The study confirms that Black Friday isn't a passing trend in Canada. In fact, Canadians who plan to shop on Black Friday plan to spend a greater share of their 2019 holiday budget on Black Friday (38 per cent of holiday budget) compared with those who shop on Boxing Day (30 per cent of holiday budget). Consumers still like shopping in physical stores as well, with 72 per cent of holiday shopping budgets to be spent in-store with the remaining 28 per cent to be spent online. One possible reason is that a majority of Canadians agree that finding the right gift can be challenging (67 per cent) and they prefer to shop in-person so they can see and touch the products (65 per cent). When it comes to price, however, 36 per cent believe they get better deals online than in-store during the holidays. Not surprisingly, more than two in five Canadians (44 per cent) say Cyber Monday deals are better online, while a similar amount (40 per cent) think Boxing Day deals are better in-store.


Lowe’s Canada Network Stores Honoured

Three Lowe’s Canada network stores received ‘2019 Outstanding Retailer Awards.’ Lowe’s Crowfoot was named ‘best large surface retailer’ for showing how great things can be accomplished by working together. RONA Gatineau (La Plateau) received the Marc Robichaud ‘community leader’ award for its commitment to social engagement. Ace Victory Building Centre received the ‘industry spirit’ award. This award was presented to a store that particularly stood out to the jury.


Masco Signs Agreement To Sell Cabinetry Division

Masco Corporation has entered into a definitive agreement to sell Masco Cabinetry to ACProducts, Inc., a manufacturer of cabinetry products owned by American Industrial Partners. The closing of the sale is expected to occur during the first quarter of 2020, subject to customary closing conditions and regulatory review.


eCommerce Drives Walmart Earnings

Walmart Inc. had total revenue of $128 billion for the third quarter of its 2020 fiscal year, an increase of 2.5 per cent over revenue of $124.9 billion for the same period in the previous year. U.S. comparative sales increased on a two-year stacked basis by 6.6 per cent and U.S. eCommerce sales increased 41 per cent year-over-year with strong growth in online grocery. Net sales at Walmart International were $29.2 billion, an increase of 1.3 per cent compared to the year-ago period. Overall net income was $3.3 billion for the quarter, up 92.3 per cent compared to net income of $1.7 billion last year.


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.


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