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CHHMA NEWS

CHHMA - EYE ON OUR INDUSTRY
Volume 18, Issue 5, March 9, 2018

Inside This Issue:

• 2018 Industry Hall of Fame Inductees Announced
• Great Line-Up of Speakers and Topics at this Year’s CHHMA Spring Conference & AGM - April 3rd
• Last Call for Canada Night in Chicago
• Don’t Miss Out on An Exclusive (Complimentary) Opportunity to Tour the Home Hardware Distribution Centre and Meet with Key Executives - March 20
• HR Info Session April 10: Update on Bill 148 – Fair Workplaces, Better Jobs Act Three Months In, Where Are We At?
• Learn How You Could Reduce Your Cost of Distribution at Seminar on April 19th
• Sign-Up Now To Be a Sponsor at Maple Leaf Night in Las Vegas
• Retirement Celebration for Vaughn Crofford
• Canada Housing Starts, Building Permits Rise on Condo Strength
• Bank of Canada Keeps Key Interest Rate at 1.25%, Underlines Trade Uncertainty
• Toronto Home Sales Plummet 35% from a Year Ago as New Mortgage Rules Bite
• Greater Montreal Home Sales Rise 5% from a Year Ago
• Canada’s Economy Post 1.7% Annual Growth in Q4, 3% for All of 2017
• Lowe’s Latest Quarterly Results Fall Short of Estimates
• No Web Presence? No Problem: How the Owner of Winners and HomeSense Continues to Defy Amazon
• Amazon Reportedly Set to Pick Up Doorbell Startup Ring for $1 Billion
• Loblaw Signs Deal to Allow Customers to Pick Up Orders at GO Transit Stations



2018 Industry Hall of Fame Inductees Announced

CHHMA President Sam Moncada is pleased to announce the 2018 Industry Hall of Fame inductees.

The Hall of Fame was established in 1984 to recognize the achievements of our industry’s leaders and pioneers. Since that time 65 industry icons, inventors, business founders and builders from the retail and manufacturing sectors have received the honour.

In this, the 34th year, the CHHMA is honoured to serve as the custodian of the hall and is pleased to announce that three more deserving industry veterans will be inducted on April 3, 2018 at an industry luncheon sponsored by the CHHMA:

Mr. Gerry Byle (retired, former President of several companies in the industry including Kaz Canada, the Canadian Division of Honeywell Consumer Products and Bionaire; he was also a former CHHMA Board Member & Chairman of the Board);

Mr. Vaughn Crofford (retired, longest serving President of the CHHMA, prior to his time at the Association he had a lengthy retail career where he was Director of Marketing at Federated Co-operatives and managed various Co-op retails throughout Alberta and BC);

M. Yves Gagnon (retired, former President & CEO of Groupe BMR).

The luncheon will be held in conjunction with the annual CHHMA member Spring Conference and is included in the conference package. Tickets for the Hall of Fame Lunch will also be available for purchase individually. To view the entire list of those previously inducted into the Hall of Fame, or the criteria to nominate someone for next year’s award, visit : https://www.chhma.ca/Public/Hall-of-Fame.



Great Line-Up of Speakers and Topics at this Year’s CHHMA Spring Conference & AGM - April 3rd

This year’s CHHMA Spring Conference & Annual General Meeting is set for Tuesday, April 3, 2018, 7:30 a.m. to 3:00 p.m., at a New Venue – the Mississauga Convention Centre, 75 Derry Road West in Mississauga.

 For the first time, key retail customers are welcome to register for the Full Conference Program (excluding the CHHMA AGM portion of the day) at a reduced conference rate. Take this opportunity to invite your customers to join you at the conference. 

The Line-up of Speakers and Topics include:

Brian DePratto, Senior Economist, TD Bank Group
A graduate of the University of British Columbia, Brian began his career with the Bank of Canada before joining TD Bank in 2014. In addition to producing the Canadian economic forecast, Brian also focuses on the day to day issues facing Canadians. He also contributes to a number of TD publications, and his commentary is frequently featured in financial media. Brian also has a keen interest in the intersection of environmental issues and economics, and was honoured as one of Canada’s 2016 Clean50 Emerging Leaders for his work in this space.

Brian will provide a Review of the Global, U.S. and Canadian Economies over the past year, as well as highlight the key factors, forecasts and risks going forward.

What’s Next? How Our Future Will Be Affected by the Megatrends Ahead – and What You Can Do About It
Housewares and hardware manufacturers, like every business related to the retail industry, has been buffeted by massive changes over the past decade, including the lingering effects of the Great Recession, and the e-tailing revolution. Are we due for calmer times ahead?

Futurist Richard Worzel is a Chartered Financial Analyst as well as a business visionary who nevertheless works in the real world. In this presentation he looks at both what forces will drive change, and how CHHMA members should prepare for what’s to come, including:

• How consumers’ use of technology is likely to change, and therefore how they will want to be served by retailers;
• Which technologies are likely to expand or emerge over the next 5-10 years – and how manufacturers can anticipate the changes they will produce;
• The Wild Cards likely to create uncertainty in our economic outlook, and what you can do to offset or even capitalize on that uncertainty; and
• How stable the world is likely to be, both in terms of the global economy, and in geopolitical terms, with an unpredictable president in the White House.

Richard will end with an overview of the futurist’s toolkit, with emphasis on tools that you can use to improve your ability to think strategically, and innovate to overcome uncertainty.

Conversation with a Futurist: How to Make Future Uncertainty Work for You
Following lunch, Mr. Worzel will host an interactive conversation about how to make use of the futurist tools he described in his morning session. “No one can completely predict the future,” Richard says, “But that doesn’t mean you’re helpless to prepare for it.”

Intended as a more informal discussion focusing on the specific questions or needs of the participants, this hands-on discussion will help you become more sensitive to the future, and to be better prepared for the uncertainties to come.

Marketing to Millennials
Andrew Au is the co-founder and President of Intercept Group, a marketing agency that helps global brands win the head, hearts and hands of Gen-Y and Z’ers across North America.

The marketing landscape has evolved. Marketers are making a big shift from mass to millennial. Every brand is competing to win this single largest living generation. 17-37 years of age today, millennials are in the thick of life’s biggest moments. Careers. Side hustles. Families. Home ownership. They are claiming their new position as head of household, and every brand is vying for their attention. So, how do you break through? Andrew shares the winning formula for millennial engagement based on proprietary research and experience working with some of the largest brands including Microsoft, Intuit, 3M, Scotiabank, 7-Eleven and more. This rich keynote sheds light on the latest lifestyle habits, psychographic insights, social media trends, shopping habits, top brands and breakthrough marketing strategies.

Key Highlights:

• Optimizing your message for millennials
• Core values and psychographic insights
• Social media trends and engagement strategies

Click here for all the details and to register online.  

Click here for a PDF brochure on the Spring Conference & AGM which includes a registration form.  

So join us for this valuable day of education and networking with some of your colleagues, peers and retail customers from the industry and find out what’s new with the CHHMA and where the association plans to go in the future!!



Last Call for Canada Night in Chicago

The 69th Canada Night reception is set for this Sunday, March 11, 2018, from 6:00 to 8:00 p.m. at the InterContinental Hotel, Renaissance Ballroom in Chicago.

If you have not purchased your ticket yet you can still do so in advance for $175 CDN per person or pay $225 CDN at the door. All Canadian vendors, agents and suppliers to the industry in town for the International Home+Housewares are free to purchase tickets to the event while Canadian retailers are invited as complimentary guests of the sponsoring companies.

The intent of the evening is to give everyone an opportunity to mix and mingle with peers and customers in a convivial environment celebrating the common bond of being Canadian while enjoying beer, wine, appetizers, a Bloody Caesars Bar and live blues entertainment.

To register online, click here or for a PDF registration form, click here.



Don’t Miss Out on An Exclusive (Complimentary) Opportunity to Tour the Home Hardware Distribution Centre and Meet with Key Executives - March 20

On March 20, 2018, from 1:30 p.m. to 4:30 p.m., Home Hardware will host a tour (exclusive for CHHMA members) of their St. Jacob, Ontario distribution centre followed by an informal presentation by Terry Davis, CEO, Joel Marks, Vice President Merchandising, Rick McNabb, Vice President Marketing & Sales & John Dyksterhuis, Vice President Distribution as they outline what Home Hardware are planning for 2018 and beyond!

This tour and presentation is complimentary to all CHHMA members who have paid their 2018 dues by March 18, 2018.

Note there is a limit of 2 persons per company.

Click here to register online.  

Click here for a PDF registration form.  

Should you have any questions contact Maureen Hizaka at 416-282-0022 ext. 123 or mhizaka@chhma.ca



HR Info Session April 10: Update on Bill 148 – Fair Workplaces, Better Jobs Act – Three Months In, Where Are We At?

At the end of 2017, the CHHMA and COPA hosted an HR information session which discussed several Employment Acts in Ontario that had new regulations taking effect in 2018. We’ll be hosting another follow-up event on April 10thto discuss updates to Bills 148 and 177.

Bill 148 – the Fair Workplaces, Better Jobs Act – changes to the Employee Standards Act (ESA) and Ontario Labour Relations Act (OLRA) including Minimum Wage – effective January 1, 2018

When Bill 148, the Fair Workplaces, Better Jobs Act, came into effect in the New Year, it ushered in sweeping changes to Ontario’s labour and employment laws. Accordingly, it is absolutely crucial for employers to become familiar with the amended provisions and their potential impact on doing business in Ontario. Amendments will impact areas including minimum wage, vacation entitlement, holiday pay, overtime and personal emergency leave. In this session, we will be reviewing where we are at with this Bill, three months in.

We will also be reviewing other Employment Law changes that were announced after our December 2017 HR presentation.

Topics:

1.Bill 148 – Meeting Compliance under the ESA – Viki Scott
2.Bill 148 – Minimizing Risk of Unionization – Bill Anderson
3.Bill 177 – Changes to OH&S noncompliance fines

Speakers:

Viki Scott RC (c); BSc OccHealth; RRP; CHRM; MBA; ADR(c)
Scott & Associates Inc. – President and Principal

William D. Anderson LL B
Blaney McMurtry LLP’s – Partner, Labour and Employment

Event Details:

When: Tuesday, April 10, 2018, 8:30 a.m. – 10:30 a.m. (Registration @ 8:00 a.m.)
Where: Centre for Health & Safety Innovation (CHSI), Conference West Room, 5110 Creekbank Rd, Mississauga, ON L4W 0A1
Price: $129.99 + HST (CHHMA Members), No Charge for Members of the CHHMA-COPA HR Peer Group

Info on how to register will be sent out next week or you can check the CHHMA website at Upcoming Events.

If you are interested in becoming a member of the CHHMA-COPA HR Peer Group or would like some further information, please contact CHHMA President Sam Moncada at 416-282-0022 ext.125 or smoncada@chhma.ca.



Learn How You Could Reduce Your Cost of Distribution at Seminar on April 19th

CHHMA and COPA will be holding a seminar on the morning of April 19 at the Centre for Health & Safety Innovation (CHSI) in Mississauga on What You Need to Know About Today’s Distribution Industry.

The seminar will be complimentary for CHHMA members.

Come out and hear how the supply chain and distribution has changed the way companies get their products to market.

The session will look at the impact of 6 key components that will reduce your cost of distribution and improve your bottom line.

Learn to address the following issues when selecting your carriers/couriers:
  • What impact does your overall volume and velocity have on your costs.
  • Choosing between different modes of transportation and why.
  • What impact does density have on overall distribution costs?
  • Fuel surcharges explained and how they impact you.
  • B2B vs B2C business models and costs associated with each.
  • How do your freight rates match up to your competitors and/or other similar industries?
 About the Speaker
 Paul Publow, President , Logistics Solutions & Services Inc.


With over 45 years experience in the distribution and supply chain industry, Paul has worked with almost every supply chain model and mode of transportation. Starting his career in his teens loading trucks he worked his way up to the CEO position of a major Canadian Freight Forwarding and Transportation Group with 24 offices throughout North America.

For the past 24 years he has been President of Logistics Solutions which has provided ongoing supply chain consulting services to members of the CHHMA, The Canadian Office Products Association and the Promotional Products Professionals of Canada. In addition, he has completed logistics and distribution projects for some of Canada’s largest retailers and manufacturers.

His unique approach to the supply chain has saved his many clients millions of dollars. His experience and insight will challenge management to take a deep dive into the mechanics and efficiencies of their current supply chain programs and ultimately improve their organization’s bottom-line.

Click here to register online.  Click here for a PDF registration form



Sign-Up Now To Be a Sponsor at Maple Leaf Night in Las Vegas

Maple Leaf Night is taking place this year on the evening of Tuesday, May 8th, 5:30 p.m. – 8:00 p.m., at the Mirage Hotel & Casino in Las Vegas. This special social event is open to CHHMA members and their retail customers in town for the National Hardware Show which runs from May 8 to 10 at the Las Vegas Convention Center.

Sponsorship is $775 CDN and entitles companies to corporate identification on all tickets, letterheads and event signage. It also entitles your company to one complimentary ticket for the host who will participate in the receiving line and two additional complimentary sponsor tickets.

Additional sponsor tickets can also be purchased for a reduced price of $129 CDN versus regular individual tickets which are $189 CDN or $225 CDN at the door.

Retailers/customers are invited to attend complimentary on behalf of the sponsors.

Click here to sign-up as a sponsor online.  

Click here for a PDF sponsorship request form.  



Retirement Celebration for Vaughn Crofford

Over 80 friends and colleagues from the industry were on hand Tuesday night at Angus Glen Golf Club in Markham at a party to wish Vaughn Crofford all the best in his retirement.

Vaughn’s daughter Sandra and son-in-law Jamie were also in attendance, as were many Past Chairmen and retirees.

Those who came out enjoyed some tasty food, drinks and a slide show of photos from the past 20+ years while reminiscing with Vaughn.

CHHMA Chairman Peter Laing presented Vaughn with a gift on behalf of the Board of Directors and members.

We would like to once again thank Vaughn for the tremendous contribution and leadership he has provided the Association over the past 23 years and we wish him the best of health and happiness during his retirement days.

To see from photos from the evening, click here.



Canada Housing Starts, Building Permits Rise on Condo Strength

Canadian housing starts rose unexpectedly in February and building permits surged in January as demand for condos continued to bolster an otherwise slowing market in Toronto reports showed on Thursday.

Groundbreaking for new homes rose to a 229,737 unit annual rate in February, defying expectations for a flat month, as a surge in construction of new buildings with multiple units, typically condos, more than offset a slowdown in single-detached starts, the Canada Mortgage and Housing Corporation said.

Housing starts in Toronto trended higher last month as groundbreaking on apartments hit a record, the CMHC said.

Condo demand has been strong in Toronto and Vancouver, in part because it is the only affordable housing left after a long boom spurred double-digit price rises in detached housing.

But the introduction of a foreign buyers tax in both cities in recent years as well as tighter mortgage rules that took effect in January and rising mortgage rates are expected to curb overall demand, and analysts were divided over whether the market would crash or manage a soft landing.

"We'll see how much tempered speculative demand and rising interest rates soften activity later in the year, but recent policy measures have largely hit higher-end prices, while underlying demand of for units, especially in the mid-range of the market, remains strong," said Robert Kavcic, senior economist at BMO Capital Markets, said in a research note.

A separate report from Statistics Canada confirmed condo strength, showing the value of Canadian building permits rose by 5.6% in January, the most in eight months, on higher construction intentions for multi-family homes in Ontario.

The increase – significantly greater than the 1.3% advance predicted by analysts in a Reuters poll – was the biggest since a 12.9% jump in May 2017. Statscan revised December's gain to 2.5% from an initial 4.8%.

The value of permits for multi-family dwellings in Ontario soared 71%, more than offsetting a 39.7% drop in December.

Source: Reuters



Bank of Canada Keeps Key Interest Rate at 1.25%, Underlines Trade Uncertainty

The Bank of Canada kept its key interest rate target on hold Wednesday as it pointed to a climate of broadening, important unknowns around trade.

In explaining its decision to maintain its benchmark at 1.25%, the central bank noted that recent trade policy developments have created thickening clouds around the outlook for the Canadian and global economies.

U.S. President Donald Trump recently added threats of steel and aluminum tariffs to an already uncertain context for Canada that includes concerns over NAFTA’s renegotiation and fears over competitiveness, following corporate tax-cut announcements south of the border.

“Trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks,” the bank said in its statement Wednesday.

The Bank of Canada also noted fourth-quarter growth was weaker than expected, largely due to higher imports, and that it’s still assessing impacts on housing markets from new policies, including recent changes to mortgage rules.

But it also said global growth continues to be solid and broad-based, the economy is running at near capacity, inflation is close to target and wage growth has improved, although still remains below where many expect it should be. For the U.S., the bank predicted fresh government spending and the tax reductions would likely lift growth in 2018 and 2019.

Ahead of the announcement, governor Stephen Poloz was widely expected to hold off moving the rate because of weaker economic numbers in recent weeks and the expanding trade uncertainty.

Poloz has introduced three rate hikes since last summer, including an increase in January. The moves came in response to an impressive economic run for Canada that began in late 2016.

Earlier this month, Poloz noted in a speech that central bankers have had to grapple with the ongoing “era of heightened uncertainty.”

“We have been working on the theme of uncertainty since the global financial crisis revealed the limits of our models and our knowledge,” Poloz said in a speech in London, where he accepted the central bank of the year award on behalf of the Bank of Canada.

“Because profound uncertainties are everywhere, we began talking about monetary policy as an exercise in risk management, as opposed to the precision engineering that many believe the practice of monetary policy to be.”

In its statement Wednesday, the bank reiterated it expects more hikes to be necessary over time, but that the governing council will remain cautious when considering future decisions.

The statement could temper expectations that the central bank will raise rates three more times this year. A growing number of analysts now say that a more likely scenario is just one more hike in 2018 – raising the overnight rate to 1.5%. The Canadian dollar fell sharply in the wake of the announcement, trading down about half a cent at 77.05 US cents by late morning.

The council will continue to be guided by incoming data, such as the economy’s sensitivity to higher rates, the evolution of economic capacity and changes to wage growth and inflation, it said.

In monitoring the country’s housing data, the bank said a surge of strong numbers in late 2017 was followed by softer figures early this year. This suggests “some pulling forward of demand ahead of new mortgage guidelines and other policy measures,” the bank said.

The central bank’s next rate announcement is scheduled for April 18, when it will also publish its updated economic projections.

The bank said the impacts on inflation and growth from commitments in last month’s federal budget would be incorporated into its April projections.

Source: The Canadian Press, The Globe and Mail 



Toronto Home Sales Plummet 35% from a Year Ago as New Mortgage Rules Bite

Home sales in the Greater Toronto Area plunged 34.9% in February compared to the same month a year ago as buyers adjusted to new mortgage rules and government policy interventions, the Toronto Real Estate Board (TREB) said.

Prices tumbled too, with the average sales price for all housing types falling 12.4% to $767,818. A total of 5,175 homes sold in the Toronto region during the month, a steep decline from the record 7,955 sales posted in February 2017.

TREB said the declines had been expected due to market-cooling measures brought in by the Ontario government last April and tougher new mortgage rules introduced in January. The board had also warned that figures would be particularly stark in comparison to the opening months of 2017, when a booming market sent sales and prices skyrocketing. The market slowed considerably in the second half of 2017 following the implementation of the Ontario measures – which included a 15% foreign buyers’ tax.

“As we move further into the spring and summer months, growth in sales and selling prices is expected to pick up relative to last year,” said Jason Mercer, TREB’s director of market analysis.

The figures reaffirmed a split in the market between detached houses and more affordable condominium apartments. Prices for single detached family homes fell 17.2% in the GTA to just over $1 million – weighed down by an 18.6% decline to $1.28 million in the city of Toronto, and a 17.8% drop to $911,065 in the 905 region. The number of single detached houses in the GTA fell by 41.2%.

Meanwhile, prices in the booming condominium market continued to surge even as the number of sales took a steep slide. Prices for condominium apartments in the GTA rose 10.1% to $529,782. Sales of condominiums fell by 30.8% overall.

“Expect stronger price growth to continue in the comparatively more affordable townhouse and condominium apartment segments,” Mercer said. “This being said, listings supply will likely remain below average in many neighbourhoods in the GTA, which, over the long-term, could further hamper affordability.”

Source: The Financial Post 



Greater Montreal Home Sales Rise 5% from a Year Ago

The Greater Montreal Real Estate Board says home sales in the region grew 5% year-over-year in February, as the number of active listings dropped 17%.

A total of 4,081 residential sales were made last month across the city's census metropolitan area, marking the 36th straight increase and the busiest month of February since 2012.

As was the case in 21 of the past 24 months, condominiums registered the largest increase in sales, jumping by 14%.

Single-family homes and plexes posted small increases of 1% and 3%, respectively.

The median price of single-family homes across Greater Montreal was $310,000 last month, up 6% year-over-year, while plexes reached $481,500, a 1% increase.

As for condominiums, the median price grew by 5% last month, with half of all units selling for more than $250,000.

The real estate board says acceleration in price growth is a direct result of increasingly tighter market conditions.

Source: The Canadian Press



Canada’s Economy Post 1.7% Annual Growth in Q4, 3% for All of 2017

The Canadian economy expanded at an annual pace of 1.7% in the final months of 2017 as the more rapid  growth seen earlier in the year faded further away, Statistics Canada reported last Friday.

The agency’s latest numbers for real GDP showed the economy grew 3% for all of 2017 — a much-stronger pace compared with 2016 when growth was 1.4%.

Growth in the fourth quarter was driven by a 2.3% increase in business investment compared with the third quarter, and a 0.5% quarter-over-quarter rise in household spending, the report said.

Overall, the fourth-quarter came in higher than the third quarter, which was revised down to an annualized rate of 1.5% from 1.7%.

BMO chief economist Douglas Porter said the solid contents behind the fourth-quarter report, such as the figures for business investment and housing, gave it a “somewhat rosier glow.”

“The main message, though, is that the exciting growth from the middle of 2016 up until the middle of 2017 is now truly in the past, and the economy is back to the drudgery of slogging out something closer to potential of around 2%,” Porter wrote in a note to clients.

Business capital formation grew by an annualized 9.5% in the fourth quarter, largely due to investment in residential structures as both resale activity and new housing construction rose.

Some home buyers rushed to make purchases toward the end of last year ahead of new rules that came into effect in 2018 that included “stress tests” to ensure consumers are able to handle higher interest rates.

Businesses also invested more in machinery and equipment, particularly aircraft and other transportation equipment, while household spending also helped support the economy. Still, companies added less to their inventories than in the previous quarter, weighing on growth.

Although fourth-quarter growth fell below the Bank of Canada’s forecast of 2.5%, economists said they still expected policymakers to raise rates again in the coming months.

“They are going to make sure this more moderate growth rate is maintained, so eventually I think you will see further tightening by the Bank of Canada,” said Paul Ferley, assistant chief economist at Royal Bank of Canada.

The central bank has raised rates three times since last July. Markets see a 72% likelihood of an increase in May, while a hike in July is fully priced in.

For 2017 as a whole, Statistics Canada said household spending easily made the biggest contribution to growth, followed by inventory and business investment. Exports also grew for the second-straight year with gains in both goods and services.

“Much of this growth was attributable to the first two quarters of 2017, with deceleration observed toward the end of year,” the report said.

The 3% figure for 2017 matches the projection by private-sector economists that was included in last week’s federal budget. The budget also predicted real GDP growth of 2.2% in 2018 and 1.6% next year.

Craig Alexander, chief economist for the Conference Board of Canada, said the country had the strongest growth in the G7 last year, but lost momentum and is now entering 2018 on a soft note at an increasingly uncertain time.

“This cooling in Canadian growth comes at a time when there are a host of downside risks to the domestic economy from abroad, particularly U.S. trade and tax policy,” Alexander said in a statement, referring to business fears concerns related to the unknowns of U.S. corporate tax cuts and NAFTA’s renegotiation.

Looking back at the first half of 2017, Canadian growth was even stronger than previously thought. Statistics Canada revised its real GDP numbers upward for the first and second quarters.

For the first quarter, the estimate was increased to 4% from 3.7%; for the second quarter, revised growth was 4.4%, up from its initial reading of 4.3%.

By industry throughout 2017, the report said the growth was “widespread” with 18 of the 20 sectors showing increases.

Goods-producing industries expanded 4.6%, compared to two-straight annual contractions of 0.5% in 2016 and 1.7% in 2015. The biggest contribution to growth from the goods-producing industries in 2017 came from natural resources extraction, which expanded 7.8%.

Services industries expanded 2.8% last year for their highest pace of growth since 2011. It was led by a 7.5% boost from the wholesale-trade sector.

Source: Statistics Canada, The Canadian Press, Reuters 



Lowe’s Latest Quarterly Results Fall Short of Estimates

Lowe’s Companies Inc.’s quarterly profit and margins fell well short of Wall Street estimates last week as the home improvement chain’s heavy spending to convert shoppers’ visits into sales did not pay off as much as expected.

The company’s shares tumbled 9% after Lowe’s forecast a drop in margins this year - due to heavy investment in a very competitive U.S. market.

A forecast that same-store sales growth would also slow this year suggested that investment would not bear fruit soon and left it trailing sector leader Home Depot.

“We made an investment in the third quarter to bolster conversion rates ... we need to make the incremental investments to ensure that we convert that traffic into transactions,” Chief Executive Officer Robert Niblock said on a conference call.

Lowes’s spent on initiatives such as advertising and home deliveries in its fourth quarter. While that pulled in more shoppers, customer transactions fell 0.8%, compared with a 0.7%
rise in the prior quarter.

Lowe’s said that customers bought more appliances, lumber and building materials in the quarter, which BTIG analyst Alan Rifkin said were typically low-margin products.

The company’s gross margins fell to 33.73%, missing analysts estimates of 34.27%, according to Thomson Reuters. Operating margins also dropped and Lowe’s said it expected a drop of about 30 basis points this year.

Still, shoppers who did spend at Lowe‘s, shelled out more on average last quarter, though that was also due to more promotions.

That helped same-store sales rise 4.1%, topping market expectations. That was well below the 7% growth posted by market-leader Home Depot Inc., which also reported higher customer transactions and average spend.

Lowe’s net sales fell nearly 2% to $15.49 billion, but topped estimates of $15.33 billion.

Net income fell 12.5% to $554 million. Its adjusted earnings of 74 cents per share were well below analysts’ estimate of 87 cents.

The results from the home improvement chain come at a time when rising mortgage rates and the impact of the U.S. tax reforms on higher-priced homes have begun to worry investors in construction-related businesses.

For the 52-week fiscal 2017 year, net earnings were up 9.7% to $3.4 billion from $3.1 billion the year prior. Sales were $68.6 billion up 5.5% from $65.0 billion in fiscal 2016. Same-store sales increased 4.0% overall and 3,9% for U.S. stores.

"We achieved comparable sales growth that exceeded our expectations driven by compelling consumer messaging, strong holiday event performance, and our integrated omni-channel customer experiences," commented Robert A. Niblock, Lowe's chairman, president and CEO." As we enter 2018, we are working diligently to improve execution with a focus on conversion, gross margin, and inventory management. Given the rapidly evolving competitive landscape, we are also accelerating our strategic investments leveraging the benefits of tax reform.We continue to build the capabilities required to deliver simple and seamless experiences and strengthen our position as the omni-channel project authority.

Looking ahead to fiscal year 2018, total sales are expected to increase approximately 4%, same-store sales by 3.5% and the company expects to add approximately 10 home improvement and hardware stores.

Source: Lowe’s, Reuters 



No Web Presence? No Problem: How the Owner of Winners and HomeSense Continues to Defy Amazon

TJX Companies Inc., owner of Winners and HomeSense, is one retailer that continues to defy the Amazon odds — it doesn’t sell its goods online or reveal its current line-up of goods on a website, but its performance is consistently strong.

The off-price retailer’s shares leapt 7% last Wednesday after it posted another strong year of sales growth in Canada, up 5% in the period ended Feb. 3.

That followed a robust 2016 where sales climbed 8%, and prompted the retailer to boost its long-term store growth estimates in the country to 600 from a previous target of 500. TJX has 454 stores across Canada.

“We are confident that our excellent merchandise and values will continue to resonate with Canadian shoppers,” chief executive Ernie Herrman told investors on an earnings call. He said customer traffic was up in all of the company’s divisions and was the primary driver behind same-store sales increases.

The news comes amid a general queasiness about the performance of mall-based retailers and in particular big-box stores, whose deep selection of goods has been mimicked by the “endless aisle” of the Internet.

The off-price niche in which Framingham, Mass.-based TJX dominates with more than $35 billion in annual sales has been regarded as largely immune to weakening apparel and décor trends at bricks and mortar stores. That hasn’t helped rival Hudson’s Bay Co., however, whose off-price business in the year ending Jan. 2017 declined 7.4%. Its financial results for the full year ended in January 2018 have not yet been released, but in the first three quarters of 2017, same-store sales in the off-price division fell 6.8%, 2.3%, and 7.6%, respectively.

“TJX has cultivated a particularly loyal and specific shopper over the years,” says Jennifer Marley, a partner at Toronto-based retail advisory firm Sklar Wilton & Associates.

“The Winners shopper loves a treasure hunt and they have come to expect that — they have come to expect quality for less. It’s not unlike what consumers love about Costco.”

About a quarter of consumers enjoy the treasure hunt experience, she said, but the Winners and Marshalls customer might not overlap with patrons of Saks Off Fifth, the off-price chain owned by HBC.

“Saks Off Fifth suggests rarefied goods at an off-price,” compared with a more mid-market and aspirational brand profile at Winners, she said, while general awareness is likely still low for Gilt,” an off-price online retailer purchased by HBC in 2016. In a bid to boost its flagging off-price division, HBC began selling inventory from Saks Off Fifth in the third quarter on Gilt.com, with the rationale that both off-price divisions would benefit from a shared pool of common inventory.

TJX’s same-store sales rose 4% overall in the fourth quarter at the company’s portfolio of stores in North America and Europe. It marked the company’s 22nd consecutive quarter of same-store sales increases and almost doubled analysts’ estimates for 2.1% same-store sales growth in the period.

Neil Saunders, managing director of the research firm GlobalData Retail, said the results prove “the off-price market has not yet run out of steam,” adding that consumer tracking indicates heightened interest in the off-price segment and that that the pool of consumers shopping at off-price stores is growing.

“However, our questions over the long-term health of off-price remain,” Saunders said in a research note. “We do not necessarily see the sector grinding to a halt, but we do see it becoming steadily more crowded and competitive. Ultimately this means growth could be spread more thinly among the various players. Theoretically, TJX has the most to lose as it has the highest market share. However, we remain confident that the company’s unique model and superior buying operation will allow it to outperform.”

Source: Article by Hollie Shaw, The Financial Post




 Amazon Reportedly Set to Pick Up Doorbell Startup Ring for $1 Billion

Amazon.com Inc. has agreed to buy connected-doorbell startup Ring Inc. for about $1 billion (U.S.), a person familiar with the matter said.

The move helps Amazon expand further into the consumer market, including providing security for package deliveries. JPMorgan Chase & Co. advised Ring on the sale, said the person, who asked not to be identified because the matter is private.

Amazon has been pushing for a bigger presence in homes through connected devices such as its Echo smart speaker with the voice-activated assistant named Alexa. Buying Ring gives the e-commerce giant another touch point with customers, said James Cakmak, an analyst at Monness Crespi Hardt & Co.

“For this specifically it A) builds connection for further strengthening trust between the brand and consumers, B) increases market for delivery, and in turn, frequency, C) moves company along path to same day/same hour efforts while everyone else is battling the two day war,” Cakmak said in an email.

Last year, Amazon introduced Amazon Key, a service that incorporates a smart lock that can open doors for verified delivery drivers to deposit packages directly into a shopper’s home. Package thefts from doorsteps have increased in recent years with the spread of online shopping and deliveries.

Ring makes video doorbells and security cameras that connect to users’ phones or computers, letting them see and speak to anyone on their property from afar. The company, based in Santa Monica, Calif., also sells related products such as security systems and smoke detectors.

“Ring’s home security products and services have delighted customers since day one,” an Amazon representative saidin a joint statement with Ring. “We’re excited to work with this talented team and help them in their mission to keep homes safe and secure.”

The acquisition puts Amazon in more direct competition with security-camera makers such as Nest Labs Inc., Honeywell International Inc. and Canary Connect Inc.

“We’ll be able to achieve even more by partnering with an inventive, customer-centric company like Amazon,” a representative for Ring said in the joint statement.

The video surveillance industry is seeing a spell of deals. Motorola Solutions Inc. agreed this month to buy commercial security camera and video analytics maker Avigilon Corp. for about $1 billion, including debt.

Source: Bloomberg News



Loblaw Signs Deal to Allow Customers to Pick Up Orders at GO Transit Stations 

Loblaw Companies Ltd. has signed a deal to allow customers to pick up their online grocery orders at certain GO Transit stations in the Greater Toronto Area.

The grocer is working with Metrolinx to offer the service starting later this spring at five stations with plans to expand in phases to additional locations.

The service will allow customers to place their order online for pick up the next day.
The company says the groceries will come from nearby Fortinos or Loblaws stores and will be waiting in a special delivery truck, in lockers or in an enclosed kiosk.

The first stations will be Bronte, Oakville, Rouge Hill, Whitby and Clarkson.

The service follows the introduction by Loblaw of its click-and-collect model where customers order online and pick up
their order at a store.

The idea is part of a shift among transit agencies around the world to include in their stations businesses catering to the captive and time-pressed consumers that pour through daily. This evolution has been limited so far in the Toronto area, a gap that Metrolinx has been trying to address.

The agency has so far signed deals to have restaurants and shops in its Union Station hub; for a bar, a coffee shop and a branch of the Drake General Store in the adjoining station for its UP Express airport train; and to sell its Presto fare card at Shoppers Drug Mart locations. The new partnership announced Metrolinx and Loblaw will mean that food ordered online would be delivered for pickup at five GO stations – which collectively serve about 60,000 passengers daily – as a way of testing the market for such an offering.

Wendy Evans, founder and president of retail specialist Evans and Company Consultants, said that such an arrangement has benefits for both buyer and seller. For the public, "it's ultimate convenience," while for retailers, "it's about intercepting customers wherever you can."

Loblaw spokeswoman Catherine Thomas called it "the logical expansion" of the company's current online offerings at loblaws.ca and fortinos.ca.

Toronto has lagged in transit retail, even as an enormous range of good and services have become available in stations around the world, in cities such as New York, London and Tokyo.

There are places in other cities where you can drop off dry cleaning during your morning commute and pick it up on the way home. Some bus shelters allow waiting passengers to download e-books. Flowers, groceries and alcohol are commonly available in train stations, as are postal and banking services. There is the full range of restaurants, from fast-food outlets to the three-Michelin-star sushi restaurant Sukiyabashi Jiro, located in a basement adjoining Ginza subway station in Tokyo.

There have been past attempts in Toronto to add retail to stations, including a pop-up store in 2012 that allowed subway users to scan the QR code on the picture of a product, which was then shipped to them. Other experiments included vending machines that dispensed clothing and kiosks for library books, although these have generally been short-lived.

To date, Toronto-area subway stations often have no more than a bare-bones convenience store and GO stations may not have even that.
However, a handful of factors may be making the idea of more diverse station retail increasingly feasible.

Source: The Canadian Press                      
 
  

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