Member Login
Username
Forgot Password
GO

CHHMA NEWS

CHHMA - EYE ON OUR INDUSTRY
Volume 14, Issue 37, October 2, 2014

Inside This Issue:

• Register Now for Information Session on Canadian Data Synchronization 
• Congratulations to Vaughn Crofford for 20 Years at the CHHMA
• Sears to Sell Most of its Sears Canada Stake through Rights Offering
• Sears Canada CEO Resigns After One Year
• XS Cargo Fails to Restructure, Starts Liquidating Stores 
• Muji Plans 7 or 8 Canadian Stores Over the Next 5 Years
• Sears Store Dealers Denounce Changes that Leave Them ‘Doomed to Financial Ruin’
• Canadians Little Affected by Home Depot Data Breach
• Canadian Economy Stalls in July
• Retail Sales in Canada Gaining Strength (Despite What You May Have Heard) 
• Latest U.S. Economic News 


Association News



Register Now for Information Session on Canadian Data Synchronization     
 
Data synchronization is rapidly becoming the product content solution of choice for retailers and distributors in Canada and globally. Data synchronization enables a supplier to populate their product catalogue items into a standard data structure and as they add new items and update existing items the changes are automatically transmitted into the data recipient’s environment within 24 hours – this keeps them and their trading partners on the same page.

In Canada there are two current data synchronization options:

1. GDSN (Global Data Synchronization Network):
• Global network of 28 active GDSN data pools
• 31,998 registered entities
• 789 registered data recipients
• 14,992,799 registered items

2. ECCnet (owned and operated by GS1 Canada):
• Canada-only national product registry
• Product information catalogue service
• Operates outside the GDSN
• Number of registered entities and items not disclosed

ECCnet is an older, Canada-only solution used primarily in the grocery, drug store and general merchandise channels. GDSN is broader in scope and is used globally.

Many vendors have been getting pressure from customers to comply with data synchronization and it will only increase in the coming years. There has been a lot of confusion and misinformation about data synchronization and the inter-operability of various networks. The CHHMA has been lobbying retailers to keep an open and competitive environment and not limit the marketplace to one exclusive service provider for data synchronization in Canada. Costs for setting up your products can be significant, so it is important that you are aware of your various options.

Therefore, the CHHMA will be conducting an information session on Thursday, October 30, 2014, at a Toronto Airport Area location (TBA) to help clarify the situation.

This information session will be interactive and informative. Attendees will learn:
• All the benefits of data synchronization
• All the data sync acronyms
• The differences in cost and value of each system
• Which companies support each system today
• Where industry is headed in the future

Click here for further details and to register.   



Congratulations to Vaughn Crofford for 20 Years at the CHHMA Recipients   

On behalf of the Board of Directors, Staff and Members, Steve Barker, Chairman of the Board, would like to congratulate and thank Vaughn Crofford for 20 years of service to the CHHMA.

Vaughn joined the Association in August 1994 after a successful career in retail. His experience in the industry has steered the CHHMA through many hurdles and today we are a widely respected Association.

We thank Vaughn for his dedication and commitment over the past 20 years. 



Industry News
 
Sears to Sell Most of its Sears Canada Stake through Rights Offering  
 
Struggling Sears Holdings Corp. said Thursday it would raise up to $380-million by selling most of its stake in Sears Canada Inc. through a rights issue, generating liquidity ahead of the crucial holiday shopping season.

Sears Holdings, which holds a 51% stake in its beleaguered Canadian unit, will sell 40 million shares of Sears Canada, leaving it with a stake of about 12%.

Sears Holdings put its stake in Sears Canada on the block in May as a part of the Illinois-based company’s efforts to turn around its business after years of declining sales.

Shareholders of Sears Holdings will have the right to buy one share of Sears Canada for each share held, at a price of C$10.60 per share.

Sears Canada’s shares closed at C$11.12 on the Toronto Stock Exchange on Wednesday.

The rights will be issued to Sears Holdings shareholders on record as of Oct. 20. Sears Canada will also apply for a Nasdaq listing.

Sears Holdings said Chief Executive Edward Lampert and his investment firm would exercise their rights, raising at least $168-million by mid to late October.

Lampert, his investment firm ESL Partners LP and affiliates own about 48.5% of Sears Holdings. ESL Partners provided a loan of $400-million to Sears Holdings in September.

Sears Canada’s market share has been eroding for years. The Canadian chain reported in August its ninth loss in 14 quarters.

Sears Holdings shares closed at $25.18 on the Nasdaq on Wednesday. Up to Wednesday’s close, the stock had fallen about 37% this year.

Source: Reuters



Sears Canada CEO Resigns After One Year     

Troubled Sears Canada Inc. is looking for its fourth CEO in three years after the exit of Douglas Campbell from the top office one year into the job.

Mr. Campbell, a former U.S. Marine pilot and corporate turnaround specialist, has said he will leave the department store chain for “family reasons” by the end of the year, Toronto-based Sears said in a statement last Thursday. Mr. Campbell intends to continue as the CEO until Sears Canada names a replacement, but no later than January 1, 2015.

Whether it was family reasons or displeasure with Sears Canada’s corporate parent that prompted the enterprise’s newest CEO to walk away from the top job, his exit adds up to bad news for a company desperately seeking a buyer that may not materialize.

His move comes less than two weeks after Edward Lampert, the CEO and largest shareholder of U.S. parent company Sears Holdings Corp., made a controversial move to loan the distressed U.S. retailer US$400-million from the hedge fund he owns, ESL Investments. The loans secured by liens on 25 properties owned by Sears, whose shares have plunged 28% since the announcement two weeks ago.

Sears Holdings has been looking to sell its 51% stake in Sears Canada since May amid increasing market concerns that nobody wants to buy it.

Competition in the market has only grown stiffer since the entry of Target into Canada last year, and that chain’s poor performance might complicate matters for an interested buyer, even one who is looking at a handful of leases rather than the whole chain.

“Both Sears Canada and Target Canada are posting substantial operating losses,” retailing analyst Keith Howlett of Desjardins Security wrote in a note to clients Thursday.

“The longevity of one may potentially be prolonged by the demise of the other. Long-term prospects for both of them appear to be very challenging.”

The analyst noted, however that, Target Canada has a modern store network and is growing overall sales off of a low base, while Sears has a shrinking store network in need of reinvestment and its overall sales are declining.

Sears Canada has raised cash in recent years through selling off a number of high-profile leases to its landlords at coveted malls, and has tried to cut costs and outsource non-core operations amid eight straight years of falling sales.

Annual sales dwindled to $3.9-billion in 2013 for the company, which had sales of $6.7-billion in 2001 and has faltered in the face of competition from Best Buy, Canadian Tire and a resurgence at Hudson’s Bay Co.

“Doug brought a focus on creating value for shareholders while taking the cost efficiency and investment steps necessary to produce a viable and profitable Canadian retailer,” Sears Canada chairman Bill Crowley said in a statement Thursday. “We wish the best for Doug and his family.”

Before taking over from Calvin McDonald, who quit abruptly one year ago, Mr. Campbell was chief operating officer of Sears Canada, which he joined in 2012 after working as a principal with Boston Consulting Group specializing in retail turnarounds.

“It is hard to imagine a strong executive leader wanting to stay at Sears over the long-term,” said Antony Karabus, chief executive of Northbrook, Ill.-based SD Retail Consulting. He noted prior CEO Calvin McDonald quit Sears Canada a year ago to run a smaller but healthier business, beauty retailer Sephora Americas, amid rumours of an ideological clash with controlling shareholder Sears Holdings Corp.

“I suspect Campbell’s reason [for leaving] has something to do with what went down in the U.S. — selling off Sears Canada has failed to come through, and that changes its prospects,” said Alex Arifuzzaman, partner in Toronto retail real estate specialists InterStratics Consultants. “They had no takers.”

Source: The Financial Post



XS Cargo Fails to Restructure, Starts Liquidating Stores 

In a sign of the fragile, crowded retail landscape, a cross-country discount chain has succumbed to its difficulties and is closing all its stores.

XS Cargo Co. of Mississauga, Ontario, last weekend started to liquidate all of its 50 stores after filing for protection from creditors in the summer with the goal of restructuring and emerging as a going concern. 

It follows the demise of Big Lots, which operated 78 stores across the country, including 73 under the liquidation world banner.

XS Cargo, which carried a similar lineup of goods, such as housewares, home décor, home electronics and furniture, filed a notice to restructure under Canada’s Companies Creditors Arrangement Act on July 30, reporting assets of approximately $15.8-million and liabilities of $18.7-million. It owed $7.4-million to its unsecured creditors.

In its filing, the retailer’s trustee PWC made a pointed reference to Target’s entry into Canada, which appears to have pushed XS Cargo to a breaking point as it lowered prices to compete head-on with Walmart Canada.

“Unfortunately, efforts to restructure the business did not result in an economically sustainable model,” said Bradley Snyder, executive managing director of Tiger Capital Group. It was named by XS Cargo recently to run the going-out-of-business sale.

The failure to resurrect the insolvent discounter underlines the highly competitive retail market that has seen an array of chains flounder this year as a growing number of foreign players expand in Canada.

U.S. discount giants Wal-Mart Stores Inc. and Costco Wholesale Corp. are aggressively adding new stores and products, while Target Corp. launched here in 2013 and, while facing its own challenges, is squeezing rivals by stealing away business. At the same time, U.S. e-commerce powerhouses such as Amazon.com Inc. are picking up customers as shoppers increasingly shift online.

Domestic chains have felt the brunt of the shifts. This summer, a trio of home décor chains owned by the same family that owns fashion chains Fairweather and International Clothiers, got court protection from creditors. Bombay & Co. Inc., Bowring & Co. Inc. and Benix & Co. Inc. are now working to restructure their operations. A few months earlier, clothier Boutique Jacob Inc. filed for bankruptcy and is closing its 92 stores.

Other chains, such as Reitmans (Canada) Ltd. and Le Chateau Inc., are struggling with declining financial results. U.S.-owned office-supplier specialist Grand & Toy is closing its remaining stores, although it continues to operate online. U.S. clothier Aeropostale Inc is shutting stores here.

XS Cargo, founded, 1996, operates in eight provinces. It purchases and sells prominent brand-name goods from distressed companies in a broad range of merchandise categories including furniture, house wares, electronics, appliances, fashion, sporting goods and health and beauty aids.

XS Cargo’s liquidation sales of up to 40% off the latest prices stand to further squeeze rivals as consumers head for the troubled retailer’s bargains. Mr. Snyder said the retailer is shipping fresh merchandise from XS Cargo’s warehouses daily to the stores.

XS Cargo stores are located mainly in strip malls. The company also runs two distribution centres in Mississauga and Edmonton.

Source: The Globe and Mail, The Financial Post


 
Muji Plans 7 or 8 Canadian Stores Over the Next 5 Years 

Japanese retailer Muji aims to build a network of seven or eight stores across Canada over the next five years, part of a broader plan to generate more revenue outside its home market, a senior executive told Reuters.

Muji, which expects to open its first Canadian store in November in Toronto, wants to have more stores overseas than in Japan within the next two years.

At the end of February, the unit of Ryohin Keikaku Co Ltd operated 255 stores outside of its home country, including 100 in China, according to its website. This compared with 385 stores in Japan.

The retailer would like to see that proportion of domestic to international stores reverse, Toru Tsunoda, president of Muji Canada, said in an interview.

“I hope to open seven to eight (Canadian) stores in the next five years,” he said. “But opening one store a year may be a realistic goal because we want to open (each) new location carefully.”

“When it reaches the certain level, we could accelerate,” he added.

Muji, short for Mujirushi Ryohin, literally means “no-brand quality products.” The chain offers a wide variety of household items, from kitchen appliances to sofas, as well as consumer products and basic apparel.

The retailer has been looking abroad as Japan’s aging population weighs on sales. It has also had to contend with a sales tax increase there in April.

North America now contributes a little more than 1% of group revenue, versus 4.5% in Europe and 15.6% in Asia outside Japan.

Tsunoda said he wanted to see North America’s contribution surpassing Europe’s by 2020.

The company plans to open a second Toronto store before pushing into Vancouver and other Canadian markets. Building a solid foundation in Toronto will help hold down distribution costs, Tsunoda said.

The retailer will offer about 2,800 items in Canada, versus 3,500 in the United States and more than 7,000 in Japan.

Pricing will likely pose a big challenge, he warned, as consumers often compare Canadian and U.S. prices, and operating costs can be higher in Canada.

To keep prices low “we may have to squeeze profit margin,” Tsunoda said, though he noted a lower margin could slow the pace of expansion.

After opening its first international location in London in 1991, Muji waited more than 15 years before breaking into the United States. It now has nine stores in New York and California.

“There is still a lot of room to expand,” Asako Shimazaki, president of Muji USA, said in an interview.

While building brand awareness in North America could be a challenge, the executives noted the company believes in a strategy of spending less on advertising and marketing to keep prices reasonable.

“Stores are the place to advertise and promote,” Shimazaki said. “Experiencing Muji at store is the best way to know about the company.”

Source: Reuters



Sears Store Dealers Denounce Changes that Leave Them ‘Doomed to Financial Ruin’
(Article by Hollie Shaw, The Financial Post)

David Halsey didn’t envision spending his retirement years working as a sales associate at Canadian Tire.

But it’s where the former Sears Hometown store dealer has ended up after walking away from his unprofitable Lindsay, Ontario store a year and a half ago.

“At 67 I’m working for $11 an hour,” Mr. Halsey chuckles. 

“You do what you have to do. We used all of our retirement savings and we sold our house, sold all of the trucks we had for deliveries. We had to get rid of everything and we took a loss on it, but we had no income.”

Mr. Halsey and his wife Darlene are among hundreds of Sears Hometown store dealers represented in a $100-million class action lawsuit against Sears Canada that was certified this month. The dealers allege Sears Canada systematically depleted their livelihoods by changing commission structures and diverting sales away from dealers and towards its online site, Sears.ca.

Sears’ Hometown outlets have long been a fixture of small towns and villages across Canada, but they have plunged in number to 222 from 276 locations in the past two years. Seven of them have closed down this month alone.

The franchises sell power tools, appliances, furniture and home electronics and also serve as a pickup spot for some catalogue and online orders. Dealers say the stores were presented to them as a solid business prospect when they bought in to them.

Dealers do not pay Sears Canada a franchise fee to be in the network, but are responsible for leases, employee and insurance costs, store fixtures and upkeep.

“We were injecting money, everything we had, just to keep the doors open,” says Jim Kay, a former Sears dealer in Woodstock, Ont. and lead plaintiff in the class action certified this month in Ontario Superior Court.

In December, Mr. Kay walked away from his Sears Hometown store, which he took over from another dealer in 2007, after he determined there was no way to operate it profitably.

“You get to know everyone in town when you own one of these stores,” he said. “When things go sour, it makes it hard to keep your head up.”

Sears Canada has been losing revenue for eight straight years and has been slashing costs and raising cash through selling off its best leases to landlords.

The lawsuit is another headache the distressed retailer, whose CEO announced his imminent exit late last week, can’t afford to have.

The statement of claim filed on behalf of 260 Sears Hometown dealers says Sears Canada’s current agreement with its Hometown stores “dooms dealers to financial ruin.”

Majority owner Sears Holdings Corp., which has been trying in vain to find a buyer for its 51% ownership stake, is also named in the lawsuit.

The suit alleges Sears flouted franchise disclosure laws regarding the economics of its dealer network, and failed to disclose important material facts about the dealer stores to prospective owners.

“When we came in 2009, the store was doing $1-million in catalog sales per year and $2-million in dealer sales — items in store like washers, dryers and refrigerators,” Mr. Halsey said, who operated the Lindsay dealer store with his wife Darlene until they gave the keys back to Sears in March 2013. By 2012, he said, his catalogue sales had dwindled to $700,000 and dealer sales were down to $1.2-million. Sears’ corporate division closed the store down on Sept. 19.

He said dealers were upset when Sears reduced its commissions on goods sold, doubling the commission rate on more trivial items such as television cables to 15%, for example, but cutting commissions on televisions to 7% from 7.5%.

“That’s giving us 15% on [sales of] $400 a year in cables versus cutting half a percent off of $80,000 a year [in TV sales].” Sears similarly reduced percentage commission to dealers on garden tractors, he said, but raised it on fabric tractor covers.

“To help us out, it seemed, Sears said they would pay for [dealers’] advertising, when they used to cover two-thirds of our local advertising costs. We thought, ‘great.’ Then they quit advertising.”

Sears performed an internal audit in 2012 on a sampling of Hometown dealer stores, according to Mr. Kay. The audit, shown to dealers at a series of regional meetings, found that 72% of the stores weren’t making enough money to compensate stores owners with minimum wage.

Mr. Halsey and Mr. Kay say dealers were also stymied by Sears’ ongoing efforts to bump up business at Sears.ca, which would offer free shipping to people’s homes during its big promotions.

While dealers are paid a fee for any catalogue or web purchase picked up by a customer at their Hometown stores, Sears Canada gets the full sale for web purchases shipped to customers’ homes.

“Our dealer network is important to us,” Vince Power, spokesman at Sears Canada, said in an interview, adding the department store retailer is not trying to compete with its own dealers.

“In smaller markets they are an important component of the Sears footprint,” he said. “Obviously we want to continue to support them as best we can, and to work as cooperatively as possible.”

Asked why so many dealers have fled their stores, Mr. Power speculated they did so for “various reasons…a very competitive marketplace and the differing economics affecting certain local markets, like consumer confidence.”

Some of the Hometown store closures have occurred when the dealers left and some have closed after Sears Canada took over the operations and closed them down at a later time, as with Halsey’s store.

“For a dealer issue to escalate to the point of a class action lawsuit, and one that actually got certified, things have to be pretty bad,” said Alex Arifuzzaman, partner in Toronto retail real estate specialists InterStratics Consultants.

“Look at Canadian Tire. There have been issues over time with [the corporation and its] dealers, there are always some issues going on — but they always deal with them internally. It doesn’t get to this stage.”

Canadian Tire, however, has set up its online operations so that the dealer located closest to an online customer’s address fulfills the Canadiantire.ca order out of his inventory through an in-store pickup, and the dealer records the sale, not the parent company.

Source: The Financial Post



Canadians Little Affected by Home Depot Data Breach
(Article by Richard Blackwell, The Globe and Mail)

The massive security breach at retailer Home Depot Inc., which affected as many as 56 million debit and credit cards across North America, has not resulted in a substantial boost in fraud in Canada.

Canadian financial institutions say they have so far seen little or no increase in fraud cases involving payment card as a result of the breach, which began in April.

National Bank of Canada said it has “identified a few hundred MasterCard credit cards to replace as a preventative measure,” related to the Home Depot issue. Otherwise the bank is not taking any special measures, said spokesman Jean-François Cadieux said.

Bank of Nova Scotia spokeswoman Patty Stathokostas said her bank has seen “some instances of unusual activity” and it is closely monitoring customers’ accounts. It is working with customers who may have been affected “to ensure their accounts are protected,” she said.

Other financial institutions said they have seen no unusual rates of fraud.

There is “no uptick” in credit or debit card fraud among customers of Canadian Imperial Bank of Commerce, spokeswoman Caroline Van Hasselt said, noting that any clients who are concerned can get their cards replaced.

At Vancouver City Savings Credit Union, the country’s largest credit union, “we are not seeing any unusual increase in credit card or debit card fraud as a result of the Home Depot security breach,” said media relations consultant Lorraine Wilson.

Some banks would not make any specific comments on the Home Depot situation, saying only that they have taken precautions to minimize any impact from the breach.

One reason why Canadians may be less exposed to the Home Depot breach, said TD Bank public affairs manager Meghan Thomas, is the prevalence of “chip and PIN” technology in this country. Most cards in Canada have electronic chips and require cardholders to type in a personal identification number when they buy something, making them less exposed to fraud than clients in the U.S. where that technology is not in as widespread use.

Raymond Vankrimpen, head of the risk management practice at Richter Advisory Group Inc. in Toronto, said the hack of the Home Depot computers didn’t allow the criminals to get PIN numbers, so those cards that have them are less likely to see fraudulent transactions. PIN cards are “more difficult to exploit in big batches like what happened at Home Depot,” he said.

Home Depot said last week that the cause of the breach was “unique, custom-built malware” used by criminals, but the bug has now been eliminated from its computer systems. Enhanced encryption has been completed at U.S. stores and will be in Canadian stores by early 2015.

Security blogger Brian Krebs initially reported the Home Depot breach in early September, when he said an analysis of card data posted on a “cybercrime store” website strongly suggested that a spate of stolen credit card information put up for sale came from the retailer. A few days later he said financial institutions in the United States were reporting a steep increase in fraudulent bank machine withdrawals, and these could be related to the Home Depot breach.

The Wall Street Journal reported last week that the data breach at Home Depot has started to trigger a flood of fraudulent transactions across the United States, as criminals use stolen credit card data to buy goods.

All the Canadian banks have made it clear that customers will not be held liable for an unauthorized or fraudulent transactions on their accounts. They also suggest cardholders carefully monitor their accounts for unusual transactions.

The Canadian Bankers Association said it collects annual credit card fraud stats from Visa, MasterCard and American Express, but it doesn’t track fraud down to the specific incident. That is up to each bank to deal with, a spokeswoman said.

Source: The Globe and Mail



Economic News
 
Canadian Economy Stalls in July   

The Canadian economy stalled in July, after six consecutive monthly gains, as growth in manufacturing and the public sector was offset by declines in energy and utilities output — pointing to no change in interest rates any time soon.

The flat reading in GDP was the weakest performance since December 2013, when the economy fell by 0.4%, Statistics Canada said Tuesday.

Economists had expected a month-over-month rise of 0.3%, driven largely by strong data coming from the manufacturing sector. But Statistics Canada reported that while manufacturing did post a strong 1.0% rise in the month and the public sector contributed a solid 0.5% gain, the country’s big energy sector slumped 2.0%, amid lower production.

On a year-over-year basis, GDP was up 2.5%, below the consensus expectation of 2.8%.

The Canadian economy grew by a modest 0.3% in June and by 0.5% in May. On a quarterly basis, the economy has posted gains of 0.9% in the first quarter of this year and 3.1% in the second three-month period. Many forecasters are looking for growth of 3% or slightly in the third quarter and 2% in the final quarter.

“The Canadian economy seriously stubbed its toe in July,” said Douglas Porter, chief economist at BMO Capital Markets.

The Bank of Canada has been looking for signs of sustained growth before signalling any change in its monetary policy.

“Even with the July stumble, the underlying trend in growth is still running a bit above the Bank’s estimate of potential GDP growth — about 2% — eating into spare capacity and — eventually — setting the stage for higher rates,” Mr. Porter said.

“But, suffice it to say, [Tuesday’s] disappointing report will not move the bank’s tightening yardsticks one inch down the field.

In July, manufacturing and the public sector were the major contributors to growth. Increases were also recorded in construction, professional services and retail trade.

On the other hand, there were notable decreases in mining and oil and gas extraction as well as in utilities. Agriculture, wholesale trade, transportation and warehousing services as well as arts, entertainment and recreation were also down.

Manufacturing output grew 1.0% in July. Durable-goods manufacturing rose 1.6%, as almost all industrial sub-groups recorded growth. Increases were notable in transportation equipment, computer and electronic products as well as furniture and related products manufacturing. In contrast, miscellaneous manufacturing decreased.

Non-durable goods manufacturing grew 0.4% in July, mainly as a result of increases in food manufacturing, printing and related support activities as well as in plastic and rubber products manufacturing. In contrast, the manufacturing of chemical, petroleum and coal products as well as beverage and tobacco products declined.

The public sector increased 0.5% in July, mainly as a result of gains in educational services. Educational services grew 1.5% in July, but was still below normal levels of activity as a result of a labour dispute in British Columbia. Health care and social assistance (+0.2%) also grew, while public administration was unchanged in July.

Mining, quarrying and oil and gas extraction fell 1.5% in July, as all major components receded.

After a 0.8% increase in May and a 1.3% gain in June, oil and gas extraction fell 1.6% in July, as a result of declines in both non-conventional and conventional oil production.

Mining and quarrying (excluding oil and gas extraction) also decreased in July (-1.7%), mainly as a result of declines in coal as well as copper, nickel, lead and zinc mining.

Support activities for mining and oil and gas extraction declined 0.9% in July.

Utilities declined 2.3% in July. There was lower demand for both electricity and natural gas, mainly because of cooler than average temperatures in July in some parts of the country.

Construction grew 0.4% in July, largely because of gains in residential building and repair construction. Engineering construction and non-residential building construction edged up.

The output of real estate agents and brokers increased 0.6% in July, as activity in the home resale market grew.

Wholesale trade declined 0.6% in July. The July decline was primarily due to decreases in miscellaneous wholesaling (which include agricultural supplies) and food, beverage and tobacco wholesaling. The wholesaling of motor vehicles and parts as well as farm products increased.

Retail trade edged up 0.1% in July. Gains were recorded at motor vehicles and parts dealers, furniture and home furnishings stores and, to a much lesser extent, at building materials and garden equipment and supplies stores. On the other hand, there were decreases at clothing and clothing accessories stores, general merchandise stores and food and beverage stores.

Professional services advanced 0.5% in July, led by an increase in legal services.

The finance and insurance sector edged up 0.1% in July. Increases in banking and financial investment services were partly offset by a decline in insurance services.

The transportation and warehousing services sector decreased 0.4% in July, mainly as a result of declines in rail and pipeline transportation services.

Source: Statistics Canada, The Financial Post, The Globe and Mail



Retail Sales in Canada Gaining Strength (Despite What You May Have Heard)      
(Article by Ed Strapagiel, Consultant)

The latest reports are that retail sales in Canada declined 0.1% in July 2014 versus June, but this could be misleading. The result is based on Statistics Canada's seasonally adjusted data, but the seasonal adjustment factors are estimates. For July, the adjustment factor applied was 5.9%, and even a modest misestimate here could significantly change the end result.

Another way of looking at it is the year-over-year change. July 2014 total retail sales on a not seasonally basis were in fact up 6.6% over July 2013, the highest single month gain in 2½ years. More broadly, for the 3 months ending July total retail was up 5.3% year-over-year, another 2½ year high. Furthermore, the 3-month trend continues to track above the 12-month trend, indicating increasing retail sales.

Another positive sign is that the Automotive & Related is now much less dominant as the driver of total retail sales gains. Recent improvements are due to the pick-up in the Food & Drug and Store Merchandise sectors.

Although the numbers are relatively modest, the Food & Drug sector has had sustained retail sales growth in the last few months. The 3-month trend is tracking at a higher level and is pulling up the underlying 12-month trend.

Health & personal care stores (i.e., drug stores) are strong performers in this sector, with retail sales up 6.8% for the 3 months ending July 2014 versus a year ago. Specialty food stores' sales are also increasing at an above average pace, but they account for only a small portion of the dollars in Food & Drug.

Mainstream supermarkets & other grocery stores continue to be one of the slower subsectors in Canadian retail. For the 3 months ending July, year-over-year sales were up 1.3%, well below the overall retail average. This reflects the highly competitive conditions in food retailing. 

Click here to read the full article.     

Source: Ed Strapagiel


 
Latest U.S. Economic News
 
U.S. Home Prices Rise Less than Expected in July
U.S. single-family home prices rose in July on a year-over-year basis but fell short of expectations, a closely watched survey said on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 6.7% in July year over year, shy of expectations for a 7.5% rise.

On a seasonally adjusted monthly basis, prices in the 20 cities fell 0.5 per cent in July. A Reuters poll of economists had forecast a flat reading.  

Non-seasonally adjusted prices rose 0.6% in the 20 cities on a monthly basis, disappointing expectations for a 1.1% rise.

“The broad-based deceleration in home prices continued in the most recent data,” David Blitzer, chairman of the index committee at S&P Dow Jones Indices, said in a statement.

“While the year-over-year figures are trending downward, home prices are still rising month-to-month although at a slower rate than what we are used to seeing over the past couple of years.”

A broader measure of national housing market activity that S&P/Case-Shiller is now releasing on a monthly basis rose at a slower pace year over year, coming in at 5.6%.

The seasonally adjusted 10-city gauge fell 0.5% in July versus a 0.2% decline in June, while the non-adjusted 10-city index rose 0.6% in July compared to a 1.0% rise in June.

Year over year, the 10-city gauge also rose 6.7%.

Source: Reuters

U.S. Consumer Confidence Falls
U.S. consumer confidence fell in September for the first time in five month.

“We’re continuing to effectively struggle,” said Mike Englund, chief economist at Action Economics in Boulder, Colorado. “Some of the optimism that we got in the updraft in consumer confidence in the third quarter was probably a bit overstated.”

The Conference Board, an industry group, said its index of consumer attitudes fell to 86.0 in September from a upwardly revised 93.4 the month before. Economists had expected a reading of 92.5, according to a Reuters poll.

Consumer confidence was hurt by concerns over the job market and expectations that economic growth will slow in coming months.

In a third report, the Institute for Supply Management-Chicago business barometer fell to 60.5 this month from 64.3 in August, falling short of economists’ expectations for 61.9. A reading above 50 indicates expansion in the regional economy.

Source: Reuters

U.S. Consumer Spending Accelerates in August
American consumers spent more in August, a positive sign for the U.S. economy which appears to have shifted into a higher gear.

The Commerce Department said on Monday consumer spending rose 0.5% last month after being unchanged in July. The growth in August was just above the median forecast in a Reuters poll of a 0.4% gain.

“(The data) is a further signal that the positive momentum in domestic activity is being sustained,” said Millan Mulraine, an economist at TD Securities in New York.

Even after adjusting for inflation, spending was 0.5% higher, the biggest gain since March. Growth in personal income ticked higher to a 0.3% gain, in line with forecasts. Some of the strength in spending came from a decrease in the saving rate, which eased back from a 1-1/2-year high in July.

The data reinforces the view that the U.S. economy will finish this year firing on nearly all cylinders, and the dollar pared an earlier decline following the report’s publication.

Most investors are betting the U.S. Federal Reserve could raise interest rates next year to keep inflation in check, though Monday’s data gave little sign of growing price pressures.

The Fed’s preferred gauge of inflation was up 1.5% in August from a year earlier, down slightly from the reading in July, the Commerce Department data showed. A measure of underlying price pressures which strips out food and energy held at 1.5%. That reading had dipped to 1.2% earlier this year.

Some policy makers at the U.S. central bank remain concerned that inflation remains stuck well below their 2% target. Chicago Fed President Charles Evans said on CNBC television on Monday that the Fed should patiently seek to push inflation up to its target so it doesn’t have to “backtrack” after raising rates.

Data on Friday showed the U.S. economy grew at its fastest pace in 2-1/2 years in the second quarter with all sectors contributing to the jump in output.

Relatively strong consumer spending during the period was taken as a sign the economy’s recovery from the 2007-09 recession is becoming more durable.

Source: Reuters

U.S. Pending Home Sales Fall More than Expected in August
Contracts to purchase previously owned U.S. homes fell more than expected in August, pointing to a still shaky housing sector.

The National Association of Realtors (NAR) said on Monday its Pending Home Sales Index, based on contracts signed last month, fell 1.0% to 104.7. Economists polled by Reuters had expected a decline of just 0.1%.

Despite the drop, pending sales were still at the second-highest level of the year. In July, sales had risen 3.2%, a touch softer than the previously reported 3.3% gain.

The index plunged last year after mortgage interest rates spiked, but have been on a rising trend since this past March.

Contracts signed last month declined in all major regions, except in the West, where they rose for a fourth straight month, the NAR said.

Source: Reuters

U.S. Second-Quarter Growth Revised Up to Brisk 4.6% Pace
The U.S. economy grew at its fastest pace in 2-1/2 years in the second quarter and activity was broad-based, in a bullish signal for the remainder of the year.

The Commerce Department last Friday raised its estimate of GDP to show the U.S. economy expanded at a 4.6% annual rate. The best performance since the fourth quarter of 2011 reflected a faster pace of business spending and sturdier export growth than previously estimated.

The stronger growth profile provides a firmer base for the third quarter. So far, economic data such as manufacturing, trade and housing suggest that much of the second-quarter momentum spilled over into the third quarter. Growth estimates for the July-September quarter range as high as a 3.6% pace.

GDP was previously estimated to have advanced at a 4.2% rate in the second quarter. The revision was in line with Wall Street’s expectations. The economy contracted at a 2.1% pace in the first quarter.

There were upward revisions to all categories, with the exception of consumer spending, where stronger healthcare outlays were offset by weaknesses in recreation and durable goods spending.

Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, was unrevised at a 2.5% rate.

Business spending on equipment was raised to an 11.2% pace from a 10.7% rate. Businesses also invested more in non-residential structures, such as gas drilling, as well as in research and development.

Domestic demand increased at a brisk 3.4% rate, instead of the previously reported 3.1% pace.

The fastest pace since the second quarter of 2010 suggested the economic recovery was more durable after growth slumped in the first quarter because of an unusually cold winter.

The strong pace of domestic demand growth helps to explain the robust job gains during the quarter, as well as the sharp decline in the unemployment rate.

The strong labour market performance during the quarter was also supported by a surge in gross domestic income, which measures the income side of the growth ledger.

GDI surged at a 5.2% rate, revised up from the previously reported 4.7% pace.

Businesses accumulated $84.8-billion worth of inventory in the second quarter, a bit more than the previously reported $83.9-billion. That saw restocking contributing 1.42 percentage points to GDP growth rather than 1.39 percentage points.

Still, there is little sign of an inventory overhang, a positive signal for third-quarter GDP growth.

Though trade was a drag for a second consecutive quarter, export growth was raised to an 11.1% pace, the fastest since the fourth quarter of 2010, from a 10.1% rate.

Housing market-related spending was revised up as was government spending.

Corporate profits rebounded a bit more strongly than previously reported from a decline in the first quarter that had been spurred by the expiration of a depreciation bonus.

Source: Reuters

 

 Upcoming CHHMA Events 


Canadian Data Synchronization Information Session
Thursday, October 30, 2014
Toronto Airport Area Location (TBA), Mississauga, Ontario

Industry Cocktail
Thursday, December 11, 2014
Casino de Montreal, Montreal, Quebec

Canada Night
Held in Conjunction with the International Home+Housewares Show
Sunday, March 8, 2015
InterContinental Hotel, Chicago, Illinois

CHHMA Spring Conference & AGM
Wednesday, April 8, 2015
International Centre (Conference Facility), Mississauga, Ontario

CHHMA Maple Leaf Night
Held in Conjunction with the National Hardware Show
Tuesday, May 5, 2015
The Mirage Hotel & Casino, Las Vegas, Nevada

CHHMA Ontario Golf Tournament
Tuesday, May 26, 2015
Angus Glen Golf Club, Markham, Ontario

CHHMA Industry Calendar

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


CHHMA Links


Freight Logistics Savings
No Obligation Consultation



Discount Cellular
Phone Rates



Long Distance &
Telecommunications Savings



Discount Gas & Diesel Rates


Logo Apparel &
Promotional Products




Office Product Discounts


"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: mjorgenson@chhma.ca, or call at (416) 282-0022, ext. 34. CHHMA is located at 1335 Morningside Ave., Suite 101, Scarborough, ON, M1B 5M4 www.chhma.ca

If you would no longer like to receive our newsletter, please click here: Unsubscribe

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