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Volume 13, Issue 19, May 15, 2013

Inside This Issue:
• Last Call for CHHMA Quebec Golf Classic
• Last Day to Register for the 44th Annual CHHMA Ontario Golf Tournament
• CHHMA's Team Building Event - Night at the Races – June 12
• Mood Very Upbeat at Maple Leaf Night in Las Vegas
• RONA First Quarter Loss Larger than Expected; Company to Maintain Big-Box Stores
• Canadian Tire Reports Positive First Quarter Results; Plan for $3.5 Billion REIT
• Target Opens First Stores in Western Canada
• Target Tests Whether Facebook Deals Can Help Bring Shoppers Into Their Stores
• Year-Over-Year Home Resales Down in April; Price Gains Lowest in Two Years
• Canadian Job Gains Modest in April as Unemployment Rate Holds at 7.2% 
• Canadian New Housing Prices Rise 0.1% in March
• Canadian Dollar to Fall to 90 Cents By Early 2014: TD Economics
• U.S. Retail Sales Unexpectedly Up in April

Association News

Last Call for CHHMA Quebec Golf Classic
The 38th Quebec Golf Classic is set for next Thursday, May 23 at Le Club de golf Le Fontainebleau in Blainville, Quebec - 11:00 a.m. shotgun start.

The event is always greatly supported by the industry and we are looking forward to another great day out on the links followed by dinner and prize presentations.

We want to thank all the companies that are sponsoring a hole – their support helps make this event a success.

For further details and registration, click here:    French    English

Last Day to Register for the 44th Annual CHHMA Ontario Golf Tournament    
This year’s CHHMA Ontario Golf Tournament is set for May 28th once again at the beautiful Angus Glen Golf Club in Markham, Ontario. Proceeds from the event will help support the Ontario Special Olympics.

Today is the last day to register so sign up now for a fun time with your customers, work colleagues and industry peers and come support a worthwhile cause!
Click here for more details and to register.

If you haven’t already, consider sponsoring a hole and help support some very special athletes!

CHHMA's Team Building Event - Night at the Races - June 12       
For the past 16 years, CHHMA members have used the Night at the Races as an opportunity to team build with their employees, thank their employees for a job well done and engage with customers and their spouses at a fun night of dining and thoroughbred horse racing at the Woodbine Racetrack in Toronto. The CHHMA in-house betting competition also offers an opportunity for attendees to showcase their handicapping (guessing) skills and win some prizes too.  

Get your team together, invite your customers and enjoy a great evening in Favourites Dining Room, which offers a spectacular view of the track, at CHHMA's Night at the Races.
Click here for further details and to register.


Mood Very Upbeat at Maple Leaf Night in Las Vegas
Maple Leaf Night 2013 was held on the evening of May 7th at the Mirage Hotel & Casino in Las Vegas.

Each year, this event held in conjunction with the National Hardware Show, offers an opportunity for CHHMA members to enjoy some friendly conversation over cocktails and hors d’oeuvres with colleagues, fellow members and retailers in town for the trade show.

There was a great turn-out of customers and the mood this year surrounding the show was very upbeat.

We would like to thank everyone for attending and particularly the sponsors for helping to make this event a success.

We look forward to seeing you there next year! 

Click here to see photos from the evening.

Industry News

RONA First Quarter Loss Larger than Expected; Company to Maintain Big-Box Stores    
Rona inc. missed expectations Tuesday as its adjusted loss surged 68% to $22.7 million in the first quarter – a bigger deterioration than analysts had predicted.

The company reported a net loss of 19 cents per share for its first quarter ended March 31, traditionally it’s weakest. This was five cents per share more than a consensus analyst estimate and compared to a loss of 11 cents per share or $13.5 million in the same period last year.

RONA’s consolidated revenues slipped 0.5% or $4.6 million to $929.4 million, while over-all same-store sales fell 0.8% during the quarter, including a 3% drop in sales for retail stores open at least a year.

The company’s distribution segment experienced higher sales but that was offset by declines in revenue from RONA’s retail and commercial segments.

The loss included $17.8 million, or 14 cents per share, in after-tax adjustments for restructuring expenses and the cost of implementing strategic priorities.

Rona attributed the weaker results to disruptions in its operations from the repositioning of its Reno-Depot and Totem banners, increased costs of building materials, difficult market conditions and a late spring.

The company said administrative staff reductions and renegotiation of sourcing agreements have saved $17 million per year in expenses.

RONA said it will announce a recovery plan next quarter after deciding to maintain its big box store network outside Quebec.

The company had been widely expected to unload at least some of the 30 outlets, which represent some 3.3 million square feet of retail space. After a review assisted by advisors McKinsey & Co., it concluded keeping them would be better than other options and will present a recovery plan for the system next quarter.

“2013 is clearly a transition year for RONA and further changes will be required to allow us to return to sustained growth in net income,” stated chief financial officer Dominique Boies.

“The first quarter results are still under pressure, given the current banner repositioning and the weak Canadian housing market. The challenges are significant, but the focus on our strategic and financial priorities will ensure our success.”

New chief executive Robert Sawyer said the company has “a very promising future.”

“Despite the pressure on results, our strong balance sheet and significant operational cash flow give us flexibility in this pivotal period,” he said in the earnings announcement.

“The actions we are taking will make us the top-performing hardware and renovation materials retailer in Canada.”

Source: The Canadian Press


Canadian Tire Reports Positive First Quarter Results; Plan for $3.5 Billion REIT
Canadian Tire Corporation, Limited announced last Thursday that it posted a 2.9% increase in first quarter consolidated profit to $73 million, or $0.90 per share, from $71 million or $0.87 a year earlier. 

Consolidated revenue climbed 1.7% to $2.48 billion in the quarter ended March 20, 2013, from $2.44 billion and consolidated retail sales edged up just 0.8%, or $20.4 million, to $2.4 billion.

“We had a great start for the first 70 days of the quarter but that shifted dramatically in the last two weeks as a result of last March’s early spring temperatures combined with this March’s cold, wintery weather, Canadian Tire CEO Stephen Wetmore said. “That said, the first quarter is our smallest for the retail segment. Financial services [was] the major contributor to our first quarter earnings and it continued its strong performance in 2013.”

Performance was solid in gasoline, FGL Sports and the Mark’s apparel divisions, but fell short in the retailer’s core store network, where sales fell 1.6% and same-store sales declined 2.4%, noting a sharp sales drop in the last two weeks in March. Its Canadian Tire stores saw sales increase in key categories but they were offset by declines in seasonal goods such as gardening and outdoor living as a result of cool weather.

While sales were lower compared with the previous year, gross margin rates were higher due to “active management” of sales and “margin mix,” the retailer added.

Automotive started the quarter with solid sales of light automotive parts and in maintenance categories such as batteries, battery accessories and wipers. The strong performance at the beginning of the quarter was off-set by cooler March temperatures which impacted sales of automotive cleaning products and delayed both spring automotive maintenance and switching over to all-season tires.

Petroleum retail sales increased 3.7% primarily due to increased convenience store sales and gas volumes related to the opening of 10 new sites, including two additional 400/401 series highway sites, and due to higher gasoline prices compared to the previous year.

FGL Sports had a very good start to the year with retail sales growth of 5.6% over the same period in 2012. Same store sales grew by 8.8%, partly due to the planned closure of non-strategic banners such as Sport Mart and Athletes World. Adjusting for store closures, corporate same store sales still grew by a strong 3.1%, notwithstanding the impact of March weather. The core corporate banner, Sport Chek, experienced strong sales in apparel and equipment, particularly in winter-related categories such as hockey, ski and snowboard.

At Mark's, retail sales were up 1.6% and same store sales increased by 1.5% driven by growth in women's casual wear and industrial apparel and accessories sales, particularly in the Greater Toronto region of Ontario. Sales gains were partly offset by lower footwear and men's wear sales due to fewer clearance sales compared to 2012 and cooler March weather.

Financial Services was a very strong performer in the first quarter. Revenue increased 3.4% to $250 million and income before income taxes of $77.3 million increased 5.8% compared to the prior year due to higher credit card charges on higher credit card receivables balances.

Taking a page from Loblaw and HBC, Canadian Tire also unveiled plans to spin off most of its billions in property holdings into a real estate investment trust (REIT).

The REIT would own the chain’s portfolio of some 250 properties, roughly 18 million square feet (valued at $3.5 billion) of its total 25 million square feet of real estate. Canadian Tire would hold 80 to 90% of the REIT, with the rest going to investors through an initial public offering planned for the fall. The portfolio would be comprised largely of Canadian Tire retail stores, broader retail developments anchored by a Canadian Tire retail store and one distribution centre. Stores under review for replacement, development or relocation would not be included. The REIT would have no impact on its agreement with its dealer network, who own the stores they operate but not the land.

“[Last week’s] announcement regarding a REIT would increase CTC’s financial flexibility, providing us with the ability to access funds at an attractive cost of capital as we continue to invest in and grow our business,” said Mr. Wetmore.

The retailer also announced last week that it is making a change at the chief operating officer position of its core Canadian Tire Retail division. Marco Marrone, who had been in the role for just over a year, is leaving the company after 27 years and is being replaced by Allan MacDonald, its senior vice-president of automotive and marketing. Mr. Marrone had previously headed the Financial Services division and was a former chief financial officer for CTC. Mr. MacDonald joined CTC four years ago and has held senior roles influencing all of CTR’s areas of operations including dealer relations, global sourcing, merchandising, supply chain, marketing, digital strategy, store design and vendor management.

Source: Canadian Tire 

Target Opens First Stores in Western Canada
Target Canada announced last week the soft opening dates for its first stores in Western Canada, including 22 locations which opened on May 7 and two locations which opened on May 14. The soft openings include stores in British Columbia, Alberta and Manitoba and follow the opening of 24 stores across Ontario. As previously announced, Target plans to open 124 stores across Canada throughout 2013.

“Target is thrilled to be opening stores in Western Canada, providing a one-stop shopping destination that meets the wants and needs of our guests,” said Tony Fisher, president, Target Canada in a press release. “It was exciting to see the response to our Ontario store openings, which have produced valuable insights that along with our soft openings in Western Canada will help us to continue to deliver on Target’s Expect More. Pay Less. brand promise for guests across Canada.”

Locations which opened to the public on May 7 included:

Alberta (10)
Calgary - Chinook Centre
Calgary - Forest Lawn Shopping Centre
Calgary - Market Mall
Edmonton - Bonnie Doon Shopping Centre
Edmonton - Mill Woods Town Centre
Edmonton - West Edmonton Mall
Grande Prairie - Prairie Mall
Red Deer - Bower Place
Sherwood Park - Sherwood Park Mall
St. Albert - St. Albert Centre

British Columbia (9)
Campbell River - Discovery Harbour Shopping Centre
Coquitlam - Coquitlam Centre
Cranbrook - Tamarack Mall
Delta - Scottsdale Mall
Kamloops- Sahali Centre Mall
Langley - Willowbrook Shopping Centre
Nanaimo - Nanaimo North Town Centre
Vernon - Village Green Mall
Victoria - Tillicum Centre

Manitoba (3)
Brandon - Shoppers Mall
Winnipeg - Kildonan Place Shopping Centre
Winnipeg - Southdale Centre

Locations which opened to the public on May 14 included:

British Columbia
Prince George - Pine Centre 

Calgary - Shoppes at Shawnessy

Target’s first flyer, marking the grand opening of these stores in Western Canada, will be available on May 24.

Source: Target Canada

Target Tests Whether Facebook Deals Can Help Bring Shoppers Into Their Stores   
Target Corp. is rolling out Cartwheel, a service that combines social networking and discounts, the latest attempt by a U.S. retailer to lure shoppers into its physical stores rather that seeing them buy from online rivals.

Target said its new program relies on shoppers using their Facebook accounts. However, shoppers can only redeem the offers they choose in Target’s U.S. stores, not online.

With Cartwheel, shoppers select the deals they want online and then bring a barcode – either on paper or on a mobile phone – to a Target store to get the discounts. Shoppers can see what offers their Facebook friends have chosen, and earn more offers by having their Facebook friends sign up. 

This service comes as traditional retailers try to keep shoppers buying from them rather than from Inc and other online-only retailers, especially as shoppers use their smartphones to compare prices.

Twenty per cent of cellphone owners research products using their phones before they buy, and 18% of them compare prices on their phones before making a purchase, according to Bill Tancer, general manager of global research for Experian Marketing Services.

Cartwheel follows efforts such as Wal-Mart Stores Inc. letting shoppers in some of its U.S. stores scan their goods with their iPhones while they shop and then more quickly proceed through a self-checkout lane. Sears Holdings Corp’s “Member Assist” program gives its loyal shoppers the ability to get personalized shopping advice from in-store personnel without even stepping foot in a Sears or Kmart store.

“It is very fascinating to see the very different approaches that retailers are taking to achieve the same goals,” said Carol Spieckerman, president of newmarketbuilders, a retail strategy firm.

Retailers are using digital tools to better cater to shoppers who love to comparison shop while in their stores. Target and other retailers offer free WiFi, and at one of its Minnesota stores Best Buy Co. Inc. has tested its “Page a Blue Shirt” service that lets customers summon a store associate with a tap on a store iPad.

For chains such as Kmart, Target and Walmart, such issues are increasingly important as their businesses have evolved since each opened its doors in 1962. Their stores used to be one-stop shops for everything from books and movies to photo developing. As such services have waned in popularity with the rise of digital books, movies and photo sharing sites, the chains are doing what they can to figure out new ways to make their stores more attractive to shoppers and, ultimately, more profitable.

Starting on May 8, Target is opening Cartwheel to the public in a beta test, and asking for feedback as it makes changes. The service will initially be advertised on Target’s website, through Facebook and in e-mails to Target’s best shoppers and card holders.
Target did not rule out the possibility of allowing Cartwheel offers to be redeemed on its web site someday.

Target said it worked in a close partnership with Facebook Inc. for about a year. While Facebook has worked on the project, Cartwheel is owned by Target. For now, Target has no plans to extend it to other social sites such as Pinterest.

Linking offers through Facebook will let the retailer know exactly what Facebook can or cannot accomplish for it. While Twitter can be useful to promote timely, limited offers, Facebook is “the dominant platform” for connecting with shoppers and, in turn, with their connections, Spieckerman said.

Target sees the program as a way to extend the trips shoppers take into parts of the store they might normally skip, in order to pick up a promoted item. An app coming in June will let shoppers scan a photo of an item’s barcode to quickly see if an offer is available on that item.

Shoppers using Cartwheel can choose from hundreds of deals on items such as Target’s own Threshold home goods and name brand goods such as M&Ms candy and Coca-Cola soft drinks. The weekly, monthly and quarterly deals include discounts from 5 per cent off to as much as 40 per cent off of certain goods, and differ from other Target offers in circulars or coupon booklets.

Shoppers can share the deals they are picking with their Facebook friends, but offers on more discreet items – from bras to Tums – will not be visible to others.

Source: Reuters

Economic News

Year-Over-Year Home Resales Down in April; Price Gains Lowest in Two Years 

According to statistics released today by The Canadian Real Estate Association (CREA), national home sales edged up slightly on a month-over-month basis in April. Activity has generally held to within short reach of current levels for the past nine months.
However, actual (not seasonally adjusted) sales were 3.1 % below levels reported in April 2012, with transactions down on a year-over-year basis in about 60% of local markets.

That compares to a decline of more than 15% in March, with transactions down in more than 90% of all local markets.

The number of home sales processed through the MLS Systems of real estate Boards and Associations and other cooperative listing systems in Canada edged 0.6% higher on a month-over-month basis in April 2013.

Home sales improved in more than half of all local markets from March to April, led by gains in Greater Toronto, Winnipeg, Calgary, and Victoria.

“The Easter holiday and an extra full weekend at the end of the month lowered March sales activity and the absence of these factors in April helped sales for the month,” said Gregory Klump, CREA’s chief economist.

“Since changes to mortgage rules made in 2012 took effect, national sales have been running nine to 10 per cent below levels posted in the first half of 2012 but they’ve been remarkably steady. April activity was on par with where it stood last August, and month-to-month changes since then have held to within a range of plus or minus two per cent.” Monthly changes in national sales activity have held to within this narrow range over a nine month period only once before since CREA’s seasonally adjusted data began in 1988.

The number of newly listed homes fell 0.9% month-over-month in April. New listings were down in about half of all local markets, led by Montreal and much of rural Quebec, as well as Ottawa and Greater Vancouver.

With sales edging up and new listings edging down, the national sales-to-new listings ratio inched up to 50.4% in April compared to 49.7% in March. This measure has held fairly steady around this level for the past nine months.

Nationally, there were 6.6 months of inventory at the end of April 2013. This was unchanged from the end of March and has also held fairly steady around this level for the past nine months.

The actual (not seasonally adjusted) national average price for homes sold in April 2013 was $380,588, representing an increase of 1.3% from the same month last year.

Fewer sales compared to a year-ago levels in Greater Vancouver and Greater Toronto continue to exert a gravitational pull on the national average sale price.

The MLS Home Price Index (MLS HPI) is not affected by changes in the mix of sales the way that average price is. For that reason, it provides the best gauge of Canadian home price trends. This month, Saskatoon joins the MLS HPI.

The Aggregate Composite MLS HPI rose 2.2% on a year-over-year basis in April.

This marks the eleventh consecutive month in which the year-over-year gain diminished and the slowest growth rate in more than two years.

Year-over-year price gains decelerated for all benchmark property types tracked by the index with the exception of apartment units in April, with the latter rising by less than inflation.

Price growth remained strongest for one-storey single family homes (+3.1%), followed by two-storey single family homes (+2.6%), townhouse/row units (+1.7%), and apartment units (+1.0%).

Year-over-year price growth in the aggregate MLS HPI for all benchmark property types combined was mixed across the markets tracked by the index.

Source: CREA

Canadian Job Gains Modest in April as Unemployment Rate Holds at 7.2%
Statistics Canada reported last Friday that the Canadian economy added 12,500 jobs in April, following a large drop in employment the previous month, as the unemployment rate remained at 7.2%.

Compared with 12 months earlier, employment in Canada is up 0.9% or 163,000 positions, all in full time. The total number of hours worked rose by 1.5% over the same period.

Provincially, employment grew in Alberta, while it fell in Manitoba, New Brunswick and Newfoundland and Labrador.

In April, there were employment gains in manufacturing and public administration. These gains were offset by losses in transportation and warehousing; "other services"; and business, building and other support services.

There were 34,000 more people working in the public sector in April, while there was little change in the number of private sector employees and the self-employed.

Over the previous 12 months, public sector employment increased 2.6% or 94,000, while growth in self-employment was 2.2% (+59,000), the bulk of which was in the first quarter of 2013. The number of private sector employees was little changed compared with 12 months earlier, as gains in the second half of 2012 were offset by losses in 2013.

Employment in manufacturing increased by 21,000 in April, the first monthly gain following a downward trend that began in June 2012. Employment in this industry was down 2.9% or 52,000 from 12 months earlier.

The construction industry gained 500 jobs in April and has picked up 9,800 jobs (+0.8%) year-over-year.

In April, the number of employees in public administration grew by 13,000. Compared with 12 months earlier, employment in this industry was up 2.6% or 25,000, all in provincial and local public administration.

There were 21,000 fewer people working in transportation and warehousing, bringing employment in this industry back to its level of 12 months earlier.

Employment in "other services", such as repair and maintenance or personal and household services, continued its year-long downward trend, declining by 19,000 in April. On a year-over-year basis, total employment has fallen by 7.3% in this industry.

The number of workers in business, building and other support services decreased by 16,000 in April, bringing employment back to a level similar to that of 12 months earlier.

In April, there were 31,000 more people aged 25 to 54 working, mostly men. With this gain, the unemployment rate for this age group fell 0.3 percentage points to 5.8%. On a year-over-year basis, total employment gains were 69,000 (+0.6%).

Among youths aged 15 to 24, employment declined by 19,000 in April, and the unemployment rate was 14.5%. Compared with 12 months earlier, youth employment was little changed.

Employment among people aged 55 and over was little changed in April. However, with more people in this age group searching for work, the unemployment rate rose 0.3 percentage points to 6.1%. Over the 12 months to April, employment for this group was up 111,000 (+3.5%), primarily a result of population ageing.

Source: Statistics Canada

Canadian New Housing Prices Rise 0.1% in March               

Last Thursday, Statistics Canada said its New Housing Price Index (NHPI) rose 0.1% in March, following a 0.2% increase in February. The month-over-month gains in the index have ranged from 0.1% to 0.3% for the past 12 months.

Calgary was the top contributor to the advance in March, up 0.3% from February. Builders indicated that increases in material and labour costs as well as market conditions were the main reasons for higher prices.

For the second month in a row, the largest monthly price advance occurred in Regina (+0.7%). This follows little or no change throughout the second half of 2012. Builders reported higher material and labour costs as the main reason for price increases in March.

Saskatoon and Windsor followed closely, with prices for new homes rising by 0.5% in both regions. This was the largest price increase in Saskatoon since April 2012, and the first increase this year, as builders cited higher land development costs as the primary reason for the advance. The increase in Windsor, the largest since February 2012, comes after nearly seven months of no price changes, with builders reporting they were no longer offering bonuses to stimulate sales.

Prices for new houses were also up from February in Winnipeg (+0.3%), Hamilton (+0.2%), and the region of Toronto & Oshawa (+0.1%).

In March, prices decreased 0.2% in Vancouver, as builders lowered their prices to finalize sales. Prices were unchanged in 9 of the 21 metropolitan regions surveyed.

On a year-over-year basis, the NHPI rose 2.0% in the 12 months to March, following a 2.1% increase the previous month. Annual price increases at the national level have been decelerating since the start of 2013.

The main contributor to the advance was the region of Toronto & Oshawa, where the year-over-year increase in the contractors' selling prices was 3.2%. However, this was down substantially from the 6.2% reported in March 2012, as annual price increases in this region have been generally decelerating.

For the fourth consecutive month, Winnipeg recorded the largest year-over-year price movement in Canada. Prices were up 5.1% in March, compared with a 4.2% advance over the same period in 2012.

In Calgary, annual prices rose 4.3%, following an identical increase in February and several consecutive months of accelerating annual price increases. Other significant year-over-year increases occurred in Regina (+2.9%) and Halifax (+2.7%).

Among the 21 metropolitan regions surveyed, 3 posted 12-month price declines in March. The largest annual decreases were in British Columbia, where new housing prices continued to fall in both Victoria (-1.6%) and Vancouver (-0.7%). Annual prices fell by 0.1% in Charlottetown, the ninth consecutive month of year-over-year price declines for the region. 

Source: Statistics Canada

Canadian Dollar to Fall to 90 Cents By Early 2014: TD Economics

The TD Bank is now forecasting a big drop in the Canadian dollar.

TD economists Craig Alexander, Francis Fong and Leslie Preston released reports last Thursday saying that they have made a substantial revision to their Canadian dollar forecast. They now anticipate the Loonie to trend materially lower over the next year, dropping to as low as 90 US cents in early 2014. 

After a glowing performance during the global economic recovery, the Canadian dollar has more recently lost some of its shine. Since last September, the currency has fallen from above US$1.03 to as low as US$0.97 and has underperformed many of its international counterparts.

Several factors have contributed to the pullback: chief among them being concerns regarding Canada’s medium-term economic fortunes, a downward revision to our expectation for commodity prices and a strengthening US dollar outlook.

Firstly, Canada has lost much of its economic growth advantage. Reflecting a lack of pent-up demand among highly indebted households and slowing housing markets, real GDP growth ground to a halt in the second half of last year. And, while recent data point to a solid rebound of 2.0-2.5% annualized growth in the first quarter of 2013, Canada is expected to underperform the U.S. both this year and next.

Secondly, TD has made material downward revisions to their forecast for commodity prices. Weakening global growth has contributed to a deterioration in supply-demand conditions for commodities of all stripes. In particular, real GDP growth in China for the first quarter came in below expectations at 7.7% year-over-year. The Chinese government also announced a relatively modest growth target in March of 7.5% annually. While markets immediately assumed that China would exceed its growth target, which historically it has, this assumption has been challenged in recent months. It is worth noting that commodity markets are tightly-linked to Chinese growth prospects given that the world’s second largest economy is actually the largest consumer of several primary commodities.

So while gold grabbed the headlines last month after its historic US$140 one-day drop in mid-April, the correction in the precious metal was only one element within a much broader trend. Many commodities have been on a downward slide in recent months. Gold itself has actually lost nearly one-fifth of its value since last October. Other precious metals, base metals and crude oil have also recorded substantial pullbacks since the beginning of this year. As a result, TD has revised their outlook for a broad range of commodities

Lastly, U.S. dollar strength also plays a key role in the outlook for a weaker Loonie. The trade-weighted U.S. dollar has already appreciated by nearly 6% since the Fall, and it is likely to appreciate by an additional 4-5% in the coming quarters. The U.S. dollar
did record a pullback at the beginning of May. This was mainly due to comments by the Federal Reserve that they were prepared to increase the pace of asset purchases should economic conditions deteriorate significantly. However, this is an unlikely outcome. TD Economics remains committed to the view that US economic growth will accelerate in the second half of 2013 to a 2.5-3.0% annualized pace, prompting an end to QE3 by early next year. An end to America’s bond buying program should be unambiguously positive for, the U.S. dollar.

In summary, a host of factors should weigh on the Canadian dollar – though in truth, even at 90 U.S. cents, the TD economists say the
Loonie is still strong. Fair-value estimates of the currency range from the high-70s to the low-90s. TD’s forecast essentially unwinds some of the overvaluation that has persisted in the Canadian dollar for several years now.

With these influences unlikely to change significantly in the coming months, the currency’s recent descent is expected to continue. Canada’s economy is going through a transition in the primary sources of economic growth – away from domestic sources of growth such as consumers, real estate and government, towards exports and business investment. This transition has not been smooth, and Canada’s economy is likely to continue to underperform the United States. Although world economic prospects should improve in the
second half of the year, the overall pace of global economic growth is not expected to support a strong rebound in commodity prices. And, the U.S. dollar should continue to get support from actions of other governments to weaken their currencies (i.e. Japan) and should benefit when the Federal Reserve eventually scales back its bond buying program and then ultimately ends it. As mentioned, TD anticipates the trade-weighted US dollar to appreciate by an additional 4-5% from current levels between now and the end of 2014.

As a consequence, the Canadian dollar is likely to head lower into the US$0.90-0.92 range later this year and into early 2014, before encountering some renewed stability in the second half of next year. Gradual interest rate hikes by the Bank of Canada beginning in the fourth quarter of next year are likely to increase demand for the currency.

From a longer-term perspective, a move down in the value of Loonie into this lower range would bring it more in line with economic fundamentals. Despite trading above parity, estimates of the equilibrium value of currency in recent years have generally continued to land in the US$0.80-0.90 range. A depreciation in the currency towards its equilibrium value would help the competitiveness of Canada’s exporters. For several years, observers have stressed that given record levels of household debt and a move towards fiscal restraint, the economy must increasingly be driven by exports and business investment. A lower Loonie should help facilitate that shift.

Over the past few quarters, the ground underneath the Canadian dollar has shifted, owing to both deteriorating domestic fundamentals and strengthening prospects for the U.S. dollar. TD Economics anticipate that another significant leg of depreciation is in store for the loonie over the next 6-12 months, before some renewed stability sets in.

Source: TD Economics

U.S. Retail Sales Unexpectedly Up in April
U.S. retail sales unexpectedly rose in April as households bought automobiles, building materials and a range of other goods, pointing to underlying strength in the economy.

The Commerce Department said on Monday that U.S. retail sales edged up 0.1% after a revised 0.5% decline in March.

Economists polled by Reuters had expected retail sales, which account for about 30% of consumer spending, to drop 0.3% last month after a previously reported 0.4% decline in March.

So-called core sales, which strip out automobiles, gasoline and building materials and correspond most closely with the consumer spending component of GDP, increased 0.5% after nudging up 0.1% in March.

The increase in core sales, coming on the heel of relatively strong job growth over the last three months, should help to ally fears of an abrupt slowdown in the U.S. economy early in the second quarter even as government austerity is starting to put a strain on manufacturing.

The tone of the retail sales report was mostly firm. Receipts at auto dealerships rose 1.0% after falling 0.6% in March. Excluding autos, sales dipped 0.1% after falling 0.4% in March.

Though falling gasoline prices pushed down receipts at gasoline stations, sales excluding gasoline recorded their largest increase since December.

Stripping out gasoline and autos, sales rose 0.6%.

Sales at building materials and garden equipment suppliers increased 1.5%, the largest gain since September. That reflects gains in homebuilding as the housing market recovery gains momentum.

Receipts at clothing stores rose 1.2%, the biggest increase since February last year.

Sales at sporting goods, hobby, book and music stores gained 0.5%. Receipts at electronics and appliances stores increased 0.8%, while sales at furniture stores were flat. Sales at restaurants and bars also increased.

However, receipts at grocery stores fell.

Source: Reuters

 Upcoming CHHMA Events 

CHHMA Quebec Golf Classic
Thursday, May 23, 2013
Club de Golf Le Fontainebleau, Blainville, Quebec

CHHMA Ontario Golf Tournament
Tuesday, May 28, 2013
Angus Glen Golf Club, Markham, Ontario

CHHMA Night at the Races
Wednesday, June 12, 2013
Woodbine Racetrack, Toronto, Ontario

Industry Memorial Golf Classic
Tuesday, October 1, 2013
Blue Springs Golf Club, Acton, Ontario

CHHMA Industry Calendar

To register for all events visit our website at or call Pam Winter at (416) 282-0022 ext.21.


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"Eye On Our Industry" is published by the CHHMA as an information resource for our members. Member input regarding content and format is welcomed. Please contact Michael Jorgenson by email:, or call at (416) 282-0022, ext. 34. CHHMA is located at 1335 Morningside Ave., Suite 101, Scarborough, ON, M1B 5M4

Canadian Hardware & Housewares Manufacturers Association | 1335 Morningside Ave., Suite 101, Scarborough, ON M1B 5M4
Telephone: (416) 282-0022   Email: