Canadian Retail Thread

[SSLL]

TODAY CANADA, TOMORROW ... THE U.S.!

If the U.S. is opening night, international retailers see Canada as the dress rehearsal

By Dees Stribling

Tell me, how did you find America?” a reporter asks John Lennon in the movie A Hard Day’s Night. “Turned left at Greenland,” quips the sharp-witted Beatle.

Similarly, retailers from Europe and the Pacific Rim are “finding” America too — by turning left at Canada.

As these retailers seek expansion into the United States, Canada is often the entry point of choice, a stepping-stone from Europe or Asia into one of the very largest markets in the world.

“It’s a little less overwhelming than the United States, but there are still sophisticated markets such as Toronto and Montréal in which you can get your feet wet,” said John C. Williams, founder of the Toronto-based J.C. Williams Group.

Of course, Canada is a hot destination for international retailers in and of itself. According to research by Montréal-based Ivanhoe Cambridge, a leading retail landlord, roughly 110 retailers from 28 countries, including the United States, currently operate in Canada.

There are sound economic reasons for this. With a highly urbanized population of about 32.5 million, the country is wealthy by virtually any measure. The CIA World Factbook reports that Canada’s gross domestic product was just over $1 trillion in 2004, ranking it 13th in the world. Even on a per capita basis, Canada was No. 15, the Factbook says, with GDP at $31,500, placing it ahead of the U.K., Japan, France and Germany, in that order.

Indeed, some European retailers come to Canada and stop there. The country’s long-standing and deep ties to France, for example, concentrated mostly in Québec, have attracted French retailers such as women’s clothier Axara and Fly Furniture, both of which have yet to venture into the U.S. Shoe purveyor Gino Rossi (Poland) and children’s clothier Lapin House (Greece) have similarly crossed the Atlantic to Canada though not, as yet, the border with the U.S.

Many others, however, have followed that exact trajectory. Swedish retail giant Ikea did so as long ago as 1976, when it opened its first store outside Europe in the Vancouver suburb of Richmond, British Columbia, nearly a decade before opening its first U.S. store, near Philadelphia. “My understanding is that Canada offered a smoother transition into the North American market for Ikea,” said Laurence Martocq, a spokesman for Ikea Canada. “Management felt that there were certain similarities between Sweden and Canada so that it was a good place to test the North American waters.”

In 1980 Body Shop, a British retailer nearly as notable for its corporate conscience as for its lines of body care products, pursued a similar strategy by entering Canada eight years before venturing into the United States. “We started in Toronto because it’s our hometown, but that wasn’t the only consideration,” said Margo Franssen, who started Body Shop Canada with her husband and sister as partners, later handled the expansion into the eastern United States and then sold the chain last year for about $22 million. “Canada is a nice jumping off point to the United States, to see how hungry people are for the concept and what kind of people are feeding.”

More recently, a variety of European fashion retailers have taken, or are planning to take, the same path into North America. Dutch retailer Mexx entered Canada in 1995 and the U.S. in 2003 (though, technically, it became an American company when Liz Claiborne purchased it in 2001). Mango, a Spanish clothier, opened its first three North American stores in Toronto last spring and two in Montréal last summer.

Franssen, whose new venture is building Accessorize Canada, a brand of U.K.-based Monsoon, says Monsoon is likely to enter the United States, depending in part on how things go in Canada. Another British retailer in Canada, Next, is also reportedly planning to venture southward. Then there is Daiso. A dollar store with its roots as a ¥100-store in Japan, Daiso established a beachhead in Richmond, British Columbia, in 2003 and is now rolling into California and other U.S. markets.

“The larger markets here [in Canada] are competitive, but not quite like Chicago or Dallas, say,” said retail consultant Williams. “That’s the nature of Canadian retailing. There is competition, and not every brand is going to make it here, but the country isn’t as over-stored as the United States.”

Nurit Altman, manager of national retail at Cushman & Wakefield in Canada, agrees. “The competitive landscape in the United States is more fierce,” she said. “Canada’s a good place to come and not be devoured by your competition right away. If you come to Canada and then the United States, you come to the United States from a stronger position.”

And sources say Canada presents a slower-moving target from a marketing standpoint. Robert Boyle, director of market research at Ivanhoe Cambridge, points to Canadian demographics to prove the point. “One in three Canadians lives in Toronto, Montréal or Vancouver,” he said. “In that sense, market penetration is easier. In the United States, the top three markets represent perhaps 15 percent of the population.”

Not to say that retailers get everything right when entering the Canadian market, not even world-wise Ikea. “Selling in another country always involves that kind of learning curve,” Martocq said. “Ikea didn’t understand that beds are differently sized in North America than in Europe, so selling bed sheets was problematic at first.”

But coming to Canada is about more than just finding a less cutthroat market than the U.S. Retailers cite other reasons, mainly involving cultural factors. It is often said that Canada, culturally speaking, has a more “European” character than the United States. Or perhaps it is more fitting to say “international” character, considering Canadian demographics. According to the Census of Canada, 19 percent of the country’s residents were born elsewhere, a higher number than the 11.5 percent south of the border, according to the U.S. Census Bureau.

“Canadians’ taste for fashion as well as aesthetics in art and culture in general have closer affinities with Europe than, perhaps, other countries around the world,” said José Gómez, Mango’s vice president for expansion in Canada.

“Canada’s more of a mosaic, the United States a melting pot,” said Franssen.

Nevertheless, as attractive as Canada is for that and other reasons, the U.S. is no less appealing to those same foreign retailers — many of which have not taken their eyes off the prize to the south.

[SSLL]

It's not in Canada (yet?), but wouldn't this be great?
________________________________________
£1bn Ikea bid to furnish town centres with outlets
IKEA, the flat-pack furnishing giant, is planning a £1 billion assault on Britain's town centres, creating thousands of new jobs in the process.

The Swedish chain, which specialises in giant out-of-town outlets, said today it was planning to open ten new city centre stores over the next three years.


Ikea did not reveal details of where it plans to open the stores except to say that the first one will open in Coventry next year.

However, in a double blow to other high street furniture chains, Ikea is also planning to launch an e-commerce home shopping service within the next year. Currently, customers can only browse the firm's goods online, not pay for them.

According to Ikea's UK head Peter Högsted, Ikea has been frustrated by the UK planning process in its attempts to build more stores outside key cities.

"The only way we can expand in the UK is close to the city centres and we have decided to do that," he said.

"Our preferred location is outside cities but we have realised we need to comply with UK planning requirements."

Ikea, which already has 14 UK outlets, is to use Coventry as its launch pad for the new store concept after the company gained permission for a 30,000 square metre outlet in the middle of the Midlands city.

"The Coventry decision is the framework for Ikea going forward," Mr Högsted said.

It is unlikely, however, that most of the city centre stores will be as big as Coventry.

Most are expected to be around half-that size, as city stores would be more expensive to open. That could spell the end for the firm's low-price policy in the longer term.

[CMD UW]

Retail: Let Them Shop Chic
by Jeff Sanford, Canadian Business Magazine

When discount retailer Winners set up shop on Toronto's upscale Bloor Street West, some eyebrows were raised. But the buyers have spoken: cross-shopping is hot.

2005-12-26

When a Chapters bookstore gave up its lease at 110 Bloor St. W.--a prime bit of property along the upscale shopping district between Yonge Street and Avenue Road in Toronto--few guessed the new tenant would be popular mass-retailer Winners.

But it was. And the arrival of the "off-price" retailer on this exclusive stretch of real estate (Tiffany's is across the street) provoked an amusingly mixed reaction from local proprietors. "I can see them bringing in more traffic," the manager of a nearby Prada boutique, Kin Wong, was quoted as saying at the time. "[But] obviously, they're not our clients."

He's partly right. Many of Winners' clients are middle-class Canadians who appreciate the retailer's modestly appointed stores, where prices are generally 20% to 60% lower than anywhere else. But there is another Winners shopper, says Shannon Johnson, a spokesperson for the chain. She points out that it is often the same person who shops both at designer boutiques and at Winners. "The Winners shopper is someone who loves designer labels," says Johnson.

Welcome to retailing 2006, where the middle ground is giving way to a mixture of up- and downscale shopping. Consumers will pick up designer items along with discount lower-price goods, mixing a little cachet in with a lot of affordability. And Winners on Bloor is just one example of this. Consider groceries: a one-stop trip to Loblaws no longer cuts it. Instead, people head to organic food stores for a few quality items, and Costco for the low-cost bulk stuff.

"Twenty years ago peo-ple went down or up market. Now they cross-shop," says John Williams, a senior partner at J. C. Williams Group, a retailing consultancy. "We're seeing the popularization of high-end fashion districts. H&M and Gap are on 5th Avenue in Manhattan; [Winners] is on Bloor Street."

Perhaps this helps explain the ongoing struggles at Hudson's Bay Co., and Sears Canada Inc., two traditional department stores that represent the classic middle point of Canadian retailing. Neither are doing so hot in the revenue department; the trend to cross-shopping might be part of the reason why. After all, a trip to Sears won't guarantee cachet, but will pack a substantial bill for the everyday stuff (as compared to Winners' deep discounts).

Torontonians have caught on to the new trend. A recent visit to Bloor Street's Winners revealed packed aisles, and a 20-minute wait for the change room. The people have spoken: they want their chic--for cheap.

[SSLL]

Good article! I went to the Winners on Bloor, and on the outside, it's more sleek than usual (even different signage), but upstairs it's the same. I hate the layout though. Menswear is on the third floor, and it's just a clumsy layout. I do see that there is a market for such a store in the main shopping strip, but it's still such a high-profile spot!

[SSLL]

Saturday, January 14, 2006
Business Briefing

REGIONAL NEWS

Taco Del Mar, B.C. developer to expand chain into Canada

SEATTLE -- Taco Del Mar, a Seattle-based quick-service restaurant chain, has completed negotiations with British Columbia-based TDM Federal Holdings Inc. to develop franchises across Canada. The deal could produce 300 Taco Del Mar franchises in Canada over the next four years, and nearly double that by 2014.

Currently, there are 22 Taco Del Mar restaurants in British Columbia, where the franchise development is headed by the same people under a separate partnership. The 2006 focus will be to launch Taco Del Mar in Alberta, Manitoba, Saskatchewan and Ontario.

[SSLL]

Onex, developer eye HBC bid
Deal would keep retailer in Canadian hands; rival offer could come from U.S. firms, RioCan
By MARINA STRAUSS
Tuesday, January 17, 2006 Posted at 4:42 AM EST
From Tuesday's Globe and Mail

Takeover powerhouse Onex Corp. has teamed up with shopping centre developer Mitchell Goldhar to seriously consider making a joint bid for Hudson's Bay Co., industry sources say, a prospect that would keep the retailing icon in Canadian hands.

As well, U.S. private equity firm Cerberus Capital Management LP is mulling an offer for HBC in partnership with RioCan Real Estate Investment Trust -- a key Canadian rival to Mr. Goldhar's First Pro Shopping Centres Inc. -- and Kimco Realty Corp. of New Hyde Park, N.Y., the sources say.

Hudson's Bay shares soared Tuesday, jumping 95 cents or 6.5 per cent to $15.60 in late morning trade on the Toronto Stock Exchange.

The groups are in various stages of doing due diligence to see whether they can top South Carolina financier Jerry Zucker's $1.1-billion hostile offer for the department store operator, which owns the Bay, Zellers and specialty chain Home Outfitters.

Two other parties have been in the recent race for HBC: One is composed of financial firms Bain Capital LLC and Gordon Bros., both of Boston; the other is investment company Sun Capital Partners Inc. of Boca Raton, Fla. The latter may have recently bowed out of the competition, some say.

"It's a challenging thing," one source familiar with the talks says.

The presence of the country's two largest big-box mall developers among those chasing a stake in Canada's oldest merchant underlines the importance of HBC's real estate in any potential deal.

The company's prime sites across the country would give a new owner the opportunity to shrink HBC considerably and find other retailers -- such as giant discounter Wal-Mart Canada Corp. -- to assume many of the store leases.

First Pro, which helped Wal-Mart Canada set up shop in this country, has worked closely with the retailer and formed a joint venture to develop some of its Canadian sites.

Hillary Stauth, an HBC spokeswoman, said the company couldn't comment, adding "we've got a robust auction process under way."

Some suggest that the Cerberus-RioCan-Kimco camp has tried to lure the savvy U.S. discounter Target Corp. to come to Canada and operate its stores at the best HBC locations.

RioCan is the single largest landlord of Zellers outlets, and Target has considered in the past a deal that would see some Zellers stores converted to Target.

But sources doubt that Target would come any time soon, although it may eventually after a deal were done.

As such, the race between First Pro and RioCan is a compelling one, observers say.

"These guys are extremely aggressive, and direct competitors with one another," one industry insider says. "It would spice it up for everyone . . . It would be very interesting."

He predicted that First Pro would convert some Zellers and Bay stores to Wal-Mart superstores.

Mr. Goldhar, owner and chief executive officer of First Pro, would not comment, nor would an official at Sun Capital, which has an interest in a number of U.S. retailers. Others believed to be involved in the discussions did not return telephone messages.

Wal-Mart Canada is on the cusp of a major expansion in this country. It plans to roll out massive supercentre-like stores in Canada, beginning at the end of this year or early 2007, carrying a wide array of products and services, including a full supermarket.

Sources said Onex and Mr. Goldhar would be equal partners in the proposed HBC takeover company, and be extremely "hands on" in operating Zellers and the Bay.

The Onex-Goldhar team would probably close a number of the almost 400 Zellers and Bay stores and find other retailers to take the space. Industry observers have said for years that there are too many of those outlets. "There may be opportunities for Wal-Mart and others," a source says.

Analysts have valued HBC real estate at between $700-million and $900-million.

Retailers such as Loblaw Cos. Ltd., Home Depot Canada and the soon-to-arrive U.S.-based Lowe's Cos. Inc. are believed to be interested in picking up some of the stores.

The various groups that are considering an HBC bid are poring over leases, overhead costs, management expenses and a raft of other details to see whether they can make the numbers work. Some of those involved have said the leases and other matters are very complex.

While some have suggested that the Bain-Gordon Bros. group may have dropped out, one source says that while it has "some concerns about the performance" of HBC, it's still "a serious player . . . Just because they've stepped back once, doesn't mean that they've stopped dancing."

In late October, when Mr. Zucker first unveiled his intentions, the HBC stock price shot up above his $14.75-a-share offer price. However, more recently, the shares have dropped to below the bid level. Yesterday, they closed at $14.65, up 7 cents on the day, getting a lift in the last few minutes of trading after The Globe and Mail broke the story about the suitors on its website.

Late last month, Mr. Zucker extended the deadline for his bid by a month, to Jan. 31, after HBC finally agreed to give him access to its books, which the retailer had previously granted to other potential bidders.

Some observers have questioned whether Mr. Zucker, HBC's largest shareholder, really wants to acquire the whole company or, rather, simply hold out for someone else to be more generous.

More shoppers for HBC

The M&A sweepstakes are heating up for the takeover of Canada's venerable retailer. Jerry Zucker was the leading contender but he has now been joined by other interested bidders who are kicking the tires.

THE BIDDER

South Carolina financier Jerry Zucker began quietly acquiring Hudson's Bay Co. shares in mid-2003 when they were trading in the $9 range. On Oct. 28, he announced that his takeover company, Maple Leaf Heritage Investments Acquisition Corp., intended to bid $14.75 a share, or $1.1-billion, for the entire company, which it subsequently did. At that point Mr. Zucker held 18.8 per cent of HBC shares.

THE SPOILERS Onex Corp. headed by takeover heavyweight Gerry Schwartz, is considering buying HBC along with Mitchell Goldhar, owner of First Pro Shopping Centres Ltd. It is one of Canada's major big-box developers, has worked closely with Wal-Mart Canada and formed a joint venture to develop some of its Canadian sites.

Bain Capital LLC and Gordon Bros. are mulling a bid for HBC, although they are believed to have had some recent concerns with the retailer's financial performance. But they're still a player, one source says.

Cerberus Capital Management LP, a U.S. private equity firm, has teamed up with RioCan Real Estate Investment Trust, a key mall rival to First Pro, as well as Kimco Realty Corp. of New Hyde Park, N.Y. The group is believed to have tried to lure Target Corp. to take over some of the space that would be vacated by the new HBC owner.

Sun Capital Partners Inc. is a U.S. private investment firm which specializes in leveraged buyouts of companies that rank first or second in their respective industries. It has a history of acquiring an interest in underperforming firms.
_____________________________________
HBC sets Friday bid deadline
Alternative offers to be sifted this weekend, although doubts remain one will emerge
By MARINA STRAUSS
Wednesday, January 18, 2006 Posted at 3:42 AM EST
From Wednesday's Globe and Mail

Hudson's Bay Co. has set a Friday deadline for bids to counter Jerry Zucker's hostile $1.1-billion offer, industry sources say, turning up the heat on would-be suitors.

The move means that those poring over HBC's books and its array of complex store leases have three more days to figure out whether they can make the math work -- a process that so far appears to have eluded them.

If other bids do emerge, HBC's financial advisers probably would spend the weekend reviewing them, negotiating with the parties and "playing each off the other," possibly leading to an announcement early next week, one source suggested.

An HBC spokeswoman would not comment.

Among those considering topping the offer is Gerry Schwartz's takeover company Onex Corp. along with mall developer Mitchell Goldhar, The Globe and Mail disclosed this week. Another group looking at making an offer is U.S. equity fund Cerberus Capital Management LP in partnership with RioCan Real Estate Investment Trust and Kimco Realty Corp. of New Hyde Park, N.Y., sources say. RioCan is the major Canadian rival to Mr. Goldhar's First Pro Shopping Centres Inc.

News about the would-be suitors sent HBC shares up almost 9 per cent yesterday before they fell back. The shaares closed at $15.73, up $1.08 or 7.3 per cent, in heavy trading on the Toronto Stock Exchange. That raised the stock above Mr. Zucker's $14.75-a-share offer.

Other parties that have seriously mulled an offer are financial firms Bain Capital LLC and Gordon Bros., both of Boston, as well as investment firm Sun Capital Partners Inc. of Boca Raton, Fla., sources say.

Despite the jockeying, it is possible that ultimately no one will come forward with a better offer than that of the South Carolina industrialist, analysts warn. That would leave Mr. Zucker to decide whether to adjust his bid.

Robert Johnston, vice-president of Mr. Zucker's InterTech Group Inc., said in an interview that he is looking at boosting the bid, but not at lowering it. "We're considering our options right now."

If a substantially better bid emerges, Mr. Zucker, who holds almost 19 per cent of HBC shares, could tender to it, Mr. Johnston said. However, he cannot sell his shares in the open market because he has an offer on the table.

He could walk away, analysts say, because his offer contains conditions that may be difficult to fulfill.

Some analysts are skeptical that the other potential bidders will come through with a counteroffer.

"I'm not holding my breath," said Robert Gibson, retailing analyst at Octagon Capital Research. He said the other players have had ample time to come forward.

Mr. Gibson believes that Mr. Zucker will ultimately raise his bid. The U.S. financier was finally granted access to HBC's confidential data in late December.

The emergence of two major mall developers as would-be players underscores the importance of HBC's real estate in any potential deal.

They would probably close some Zellers and Bay stores and find other retailers to fill the space, such as giant discounter Wal-Mart Canada Corp., sources say.

Mr. Goldhar, who is part of the Onex camp, is chief executive officer of First Pro, which is closely tied to Wal-Mart. If successful, the group probably would convert some HBC stores to Wal-Mart, sources say, adding that other chains interested in picking up HBC locations include Loblaw Cos. Ltd. and Home Depot Canada.

Mr. Gibson suggested that the Onex/Goldhar group may also sell some of the real estate to Calloway Real Estate Investment Trust, of which Mr. Goldhar is the largest shareholder. In recent years, First Pro has sold about 95 properties to the REIT.

RioCan, meanwhile, is the single largest landlord of Zellers, which is the discount arm of HBC. Sources suggest that the Cerberus/RioCan/Kimco camp would have liked to have lured U.S. discounter Target Corp. to Canada to take over HBC sites, but Target currently is not interested.

Analysts have said for years that HBC has too many Zellers and Bay stores, which now number almost 400.
_______________________________
Wednesday » January 18 » 2006

Too weak, too long: Hudson's Bay Co.'s days are numbered

Mark Anderson
The Ottawa Citizen

Wednesday, January 18, 2006

After more than three centuries in business, the end game is coming for Hudson's Bay Co., Canada's oldest retailer -- scratch that, Canada's oldest company, period.

As with the demise of the T. Eaton Co. five years ago, nationalists are already bemoaning the imminent loss of yet another historic corporate landmark.

For many, the pill will be especially bitter if the company's assets go to an American -- in this case, South Carolina businessman Jerry Zucker, who's currently offering $1.1 billion for the remainder of HBC's shares.

Interestingly, however, the prospect of a competing bid from Canadian companies -- Onex Corp. and First Pro Shopping Centres are rumoured to be mulling over a bid of their own -- might prove more damaging to the Canadian retail industry in the long term. That's because some analysts are speculating Wal-Mart Canada, the Canadian division of U.S. giant Wal-Mart Stores Inc., might be waiting in the wings, eager to occupy HBC floor space in the event of a successful Onex/First Pro bid.

Should this scenario come to pass, it's reasoned, Wal-Mart Canada could move far more quickly on its plan to roll out a suite of massive retail-grocery supercentres, putting pressure not only on our sole remaining department store chain -- Sears Canada -- but also on our major grocery chains: Loblaws, Sobeys and Metro Inc.

The rationale behind this particular theory is two-fold. First, HBC's real estate has been valued at anywhere from $700 million to $1 billion. Since Zucker's bid for the entire company is a mere $1.1-billion, it stands to reason that HBC's retail operation, brand equity and other assets are seen as virtually worthless.

This, in and of itself, isn't surprising, giving that HBC has reported losses in seven of its past eight quarters, including a whopping $50.3-million, 72-cents-per-share loss in its most recent quarter (analysts had expected a comparatively tiny loss of three cents per share).

If Zucker covets HBC primarily for its real estate, other bidders will surely have the same goal in mind. And since First Pro has a decade-long relationship with Wal-Mart Canada -- 90 of First Pro's Ontario big-box malls have freestanding Wal-Mart stores -- it makes sense that Wal-Mart would be one of the main beneficiaries of a successful First Pro-Onex bid.

The problem with this scenario, however, is that very little of HBC's real estate is suitable for regular Wal-Mart stores, let alone supercentres. Virtually without exception Bay department stores are not freestanding, but enclosed within larger shopping complexes, a model that doesn't mesh with Wal-Mart's standalone footprint.

HBC does own freestanding Zellers stores, but these are generally too small to be of use: the largest are 90,000 square feet, whereas Wal-Mart requires a minimum of 130,000 square feet for its regular stores, and close to 200,000 square feet for its supercentres. Of course, there is value in the zoned land -- it generally takes a minimum of three years, and sometimes as long as a decade, for Wal-Mart stores to line up the necessary zoning approvals -- but most of the sites would still be too small to accommodate Wal-Mart's massive acreage.

A more likely scenario would be for the Zellers stores, many of which are state-of-the-art and well-situated, to be sold to a chain with a similar footprint. Toronto retail consultant John Winter suggests the U.S. discount retailer Target, which has been eyeing Canada for some time, would be a logical fit.

Either way, whoever buys the Hudson's Bay Company will almost certainly break it up and sell it piecemeal. Which is a shame because, according to Winter, the company is not beyond repair.

"I think it's still salvageable. I go to Bay stores, and I've never seen them operating better than they are today. They've been working diligently to integrate their computer systems and supply chain, to get some new clothing lines and to capitalize on their Olympic cache. These are all solid, sensible steps."

Unfortunately, they're steps that needed to be taken 10 or 15 years ago, when Sears Canada undertook its major restructuring, the benefits of which are apparent today in per-foot sales almost double those of Bay and Zellers stores.

In the end, it comes down to productivity. The weak always get culled in the retail industry, and Hudson's Bay Co. has been too weak for too long.

Given time, it might be able to turn itself around. After 335-years in business, however, time appears finally to have run out on Canada's oldest company.

[SSLL]

Ivanhoe Cambridge plans super-regional retail-entertainment center

Ivanhoe Cambridge says it plans to build a super-regional retail and entertainment center in Rocky View, Alberta.
The Montréal-based REIT is still working out details, including the name and the merchandise mix, says John Scott, vice president of development. The initial proposals call for 1.4 million square feet of retail, restaurant and entertainment space, with 12 to 15 anchor tenants, each ranging from 20,000 to 150,000 square feet.

What makes this announcement especially noteworthy is that, with the exception of Toronto's Vaughan Mills, which Ivanhoe Cambridge and The Mills Corp. opened in 2004, there have been no regional malls, let alone super-regionals, rolled out in Canada since the early 1990s.

Plans call for a ground-breaking this summer and an opening in the fall of 2007, says Scott. Although these plans could change, Ivanhoe Cambridge is intent on creating a destination project in Rocky View, he says.

“We really are going to look at combining the best attributes of an enclosed regional shopping center, a power center, an outlet mall and an entertainment center,” said Scott.

Located just north of Calgary, Rocky View is a fast-growing bedroom community of 50,000, but it has very little retail outside of local service-oriented stores, says Scott. There is “much less in terms of destination retail, such as we are proposing.”

Ivanhoe Cambridge is coordinating its development schedule so that the center opens at the same time as a horserace track being planned nearby. The track is a project of the United Horsemen of Alberta, which promotes equestrian events in the province. It will go up on an adjacent 150-acre site and will contain dining rooms and a simulcasting area. According to published reports, the project is expected to cost about C$78 million ($66.6 million) and will feature a Las Vegas–style casino with about 5,000 slot machines.

“That will dovetail quite nicely with portions of the shopping center,” said Scott. “One of the really unique aspects of this is it will be associated with one of two class-A horseracing facilities in Alberta.”

[big W]

^ Basically lets add to Calgary sprawl.

[jeffwhit]

“We really are going to look at combining the best attributes of an enclosed regional shopping center, a power center, an outlet mall and an entertainment center,” said Scott.

I wonder if he's referring to the agrivation of driving to and parking at a power centre, or the crushing loss of humanity I feel whenever I go to a mall, or both?

[SSLL]

Retail space: Calgary's hot new commodity
Pent-up consumer demand and more disposable income have merchants looking to expand
By CINDA CHAVICH
Tuesday, January 3, 2006 Page B6
Special to The Globe and Mail

When upscale kitchen retailer Williams-Sonoma opened in Calgary's Chinook Mall last summer, the resulting frenzy had the store staff focused as much on crowd control as on customer service.

The 4,500-square-foot store posted the second-highest opening-day sales in the company's history -- only the massive 22,000-square-foot store in New York did better when it opened, general manager Debra Horton says.

"The Calgary store is already in the company's top 10 in sales" among 260 stores, Ms. Horton says.

It's evidence of the pent-up demand for consumer goods in Calgary and the reason why retailers are keen to get into the market. Double-digit increases in retail sales in Calgary in the first half of 2005 -- more than double the growth in Ontario -- have led to an unprecedented expansion in commercial space.

"Calgary is leading the country in retail sales increases, staking its claim as the capital city of Canada's retail sector," says Michael Kehoe, a broker with Fairfield Commercial Real Estate who helps connect retailers with appropriate space in the city. "Retailers are looking for venues to expand," he says.

Three million square feet of retail space is under construction, with an additional 6.5 million square feet to be added in the next few years, says William Partridge, president of the Calgary branch of the Building Owners and Managers Association of Canada.

But even adding all of that new shopping potential to the city's 28 million square feet of retail space may not be enough. Vacancy rates remain extremely low, between zero and 3 per cent, and large retailers looking to move into the city have few choices.

"There is a shortage of sites," Mr. Partridge says. Retailers are setting up shop in such nearby towns as Airdrie and Okotoks, he says.

One of the drivers of retail sales is home ownership, and with more head offices per capita and a highly educated and salaried work force, Calgary has the highest rate of home ownership in the country. "Calgary is a unique opportunity for retailers because of the younger population and more disposable income," says Sandy McNair, president of InSite Real Estate Information Systems, a Toronto-based firm specializing in market research for the real estate sector. "Home ownership is significantly higher here, and that is material to retail sales."

Calgarians also have been "under-retailed," Mr. McNair says, with less retail space per capita compared with other Canadian cities.

But there has been a flurry of construction and renovation of shopping centres and big-box retail developments in recent years.

The latest retail behemoth to open in Calgary is Deerfoot Meadows, a "power centre" with 1.4 million square feet of retail space, including a 300,000-square-foot IKEA store and such retailers as EQ3, Ecco Shoes and luxury car dealers Lexus, Mercedes-Benz and BMW.

Construction on the 360-acre site, developed by Heritage Partners LP on reclaimed industrial land, is continuing. The next phase, to be complete by fall 2007, is the Village at Deerfoot Meadows, 500,000 square feet of outdoor retail, green space and restaurants designed to look like an old-fashioned town. "This style of development is one of the real innovations in retailing, and Alberta is at the centre of that hotbed," Mr. McNair says. "We will see a lot more of that type of retail happening."

The proposed First Pro Calgary East retail development at Barlow Trail and 16th Avenue N.E. will have the city's first Sam's Club, the wholesale membership arm of Wal-Mart Stores Inc. In the far-flung suburbs, at least seven new big-box retail developments have opened, are under construction or are in the preleasing phase.

At the same time, such established community shopping centres as Brentwood Village and Westbrook Mall have found new life by being repurposed to include such larger tenants as Linens 'n Things, Sears Home and Pier 1 Imports. North Hill Centre, the city's first shopping mall, built in 1958, has been rejuvenated with a $26-million retrofit that includes retail and office space, new tenants and two eight-storey residential towers with 175 luxury condominiums.

Cadillac Fairview Corp. and partner Ivanhoe Cambridge Inc. recently completed a $90-million renovation and expansion of Market Mall in the city's northwest quadrant, adding 150,000 square feet of retail space. And in the northeast, Ivanhoe Cambridge is in the midst of a $47-million facelift of Sunridge Mall, adding 30,000 square feet.

Cadillac Fairview's $300-million renovation of Chinook Centre has put the city's largest enclosed mall at 1.2 million square feet of retail, restaurant and entertainment space.

Retail business is flourishing downtown, too, Mr. Kehoe says. He anticipates that an increase of 7,000 residential units in the downtown core by 2010 will draw more shoppers to a redeveloped Eau Claire Market and other inner-city shopping districts.

In Bridgeland, a downtown neighbourhood, the focus is on smaller, boutique-style tenants. A three-phase project known as the Bridges is being built on city-owned, reclaimed hospital land. It will combine high-density residential development with street-level retail in a pedestrian-friendly setting. The first phase has been completed, luring small retailers, coffee shops and service providers to the nearly 54,000 square feet of retail space. By the time the project is finished in 2010, with room for 2,500 new residents and more than 73,000 square feet of retail space, more small, boutique-style tenants are expected to follow.

"The goal was to revitalize the main street and the inner-city neighbourhood with new residents and businesses," says Colleen Roberts, project manager for the Bridges. To date, retailers include a wine boutique, a candy shop and a store selling healthful home products.

With the oil and gas business running hot and Calgary's population projected to increase by 83,000 over the next four years, most experts don't foresee an end to the city's commercial real estate boom.

Labour shortages, however, could eventually stall economic growth, Mr. McNair says.

"Calgary has momentum, and momentum drives confidence, but when everyone agrees that everything is perfect, it's often time to be nervous," he says. "The elephant in the room is a shortage of labour, both construction personnel and office workers. Labour may be the constraint to growth."

Mr. McNair cautioned builders at a recent conference in Calgary: "Everyone is going fast and wants to go faster, but we are going to have some bad years, so be careful. You can add to [real estate] inventory intelligently, but it takes quite a bit of discipline."

[SSLL]

Saturday » January 21 » 2006
HBC mum as deadline for bids passes
Rita Trichur
The Canadian Press

Saturday, January 21, 2006

TORONTO - Hudson's Bay Co. stock dipped yesterday as Canada's oldest company remained silent about whether a white knight has emerged to fend off a hostile takeover offer for the national retailer.

The Toronto-based company, according to media reports, had set 5 p.m. ET yesterday as deadline for competing bids. The company has said in the past there are other interested parties but hasn't commented on the process.

Its shares shed 31 cents yesterday, or about two per cent, to close at $15.39 on the Toronto Stock Exchange. The stock hit a 52-week high of $16.05 on Tuesday.

Established in 1670, Hudson's Bay has more than 500 retail outlets, led by The Bay and Zellers chains.

U.S. businessman Jerry Zucker, who already owned just under 20 per cent of HBC, put the company in play last fall when he made an unsolicited takeover offer that values the Toronto retailer at over $1 billion.

Speculation about a white-knight suitor took flight this week on word that various parties were thumbing through HBC's finances and mulling competing takeover bids.

Topping that list, industry sources said, is conglomerate Onex Corp., which is reportedly partnering with privately held First Pro Shopping Centres on a due diligence review.

Neither company has commented.

First Pro was instrumental in bringing big-box giant Wal-Mart to Canada in the 1990s, and sources say Canada's largest retail developer is now interested in acquiring HBC's real-estate portfolio to help Wal-Mart set up its highly-anticipated supercentres in this country.

Analysts estimate HBC's real-estate assets have a market value of between $700 million and $900 million.

There were suggestions, however, that "continued-operation clauses" built into the leases of most Bay and Zellers stores were posing a potential obstacle.

Other rumoured suitors include U.S. private equity firm Cerberus Capital Management and Canadian shopping-mall owner RioCan Real Estate Investment Trust, Zellers' biggest landlord.

"We're obviously watching this," said Robert Johnston, Zucker's spokesman and vice-president of strategy at South Carolina-based Maple Leaf Heritage.

Zucker's offer of $14.75 a share, plus debt, expires Jan. 31. The clock is ticking, but in the absence of a competing bid, Mr. Johnston expects HBC's stockholders to tender their shares to his boss's offer next week.

[SSLL]

Pricey Abercrombie & Fitch lands in thrifty Canada
By MARINA STRAUSS
Friday, January 20, 2006 Page B6

U.S. fashion retailer Abercrombie & Fitch Co. opened its first three stores in Canada yesterday, bringing its hip but pricey casual styles to a market known for its thrifty consumers.

In its first foray outside of the United States, Abercrombie launched one store under its namesake and two Hollister outlets -- which carry less expensive lines -- in the Toronto area, enjoying a "massive" response, said Tom Lennox, spokesman for the company.

"It exceeded our expectations tenfold," he said. "It's huge."

It plans another A&F in Toronto and one A&F and a Hollister in Edmonton this year, bringing to six the number of stores in Canada this year. "If the response continue as it has in the first day, we think there is a huge opportunity," he said.

Industry observers point to higher prices at A&F that may scare some penny-pinching Canadian shoppers away.

Still, the young affluent target customer will be drawn to the cachet of the A&F name, John Williams of retail consultancy J. C. Williams Group said. Many teenagers buy A&F apparel at its U.S. stores.

"It doesn't appeal to everyone," Mr. Williams said.

"Some may find it intimidating. They appeal to mid- to up-market young people."

Hollister serves a younger market at a lower price level -- 30 per cent lower than A&F.

It's similar to Gap Inc.'s divisions of higher-priced Banana Republic and mid-priced Gap stores.

Despite the higher prices, Abercrombie enjoyed a strong financial performance last year despite some tough years of declining or flat sales at stores open at least a year at the beginning of the decade.

The chain is known for its flashy, sensual marketing that tends to show a lot of flesh and sometimes attract a lot of controversy.

The Ohio-based retailer, with about 840 U.S. stores, has pitched thongs for preteen girls and published a R-rated magalog featuring naked models.

But it outperformed competitors during the past holiday shopping season with its focus on what it calls "casual luxury" for college-age customers who pay $198 (U.S.) for a pair of jeans and $250 for a hooded parka trimmed with faux fur.

ANF (NYSE) fell $1.26 to $61.70.

[MTL-514]

Originally Posted by SSLL

Pricey Abercrombie & Fitch lands in thrifty Canada
By MARINA STRAUSS
Friday, January 20, 2006 Page B6

U.S. fashion retailer Abercrombie & Fitch Co. opened its first three stores in Canada yesterday, bringing its hip but pricey casual styles to a market known for its thrifty consumers.

In its first foray outside of the United States, Abercrombie launched one store under its namesake and two Hollister outlets -- which carry less expensive lines -- in the Toronto area, enjoying a "massive" response, said Tom Lennox, spokesman for the company.

What newspaper was this from? The Toronto Globe and Mail?

Their research skills are questionable...

Abercrombie & Fitch had a large store here in Montreal for at least a couple of years when the Place Montreal Trust shopping mall opened on Ste-Catherine Street and McGill College Avenue at the end of the 1980s.

[big W]

Originally Posted by MTL-514

What newspaper was this from? The Toronto Globe and Mail?

Their research skills are questionable...

Abercrombie & Fitch had a large store here in Montreal for at least a couple of years when the Place Montreal Trust shopping mall opened on Ste-Catherine Street and McGill College Avenue at the end of the 1980s.

I also recall a store in West Edmonton Mall and that they are opening one in downtown.

[ibz]

Yeah as discussed in the other thread, A+F did have some stores in Canada for a very short time several years back, in fact I think someone on this forum has mentioned that it was some sort of venture with Woodwards that ended up failing quite miserably.

[SSLL]

^These stores were before what A&F were before. It had an almost Eddie Bauer outdoorsy theme that was less youth and trends-oriented than now. And they were licensed in Canada, not A&F itself. The article is from the Globe & Mail, yes.

[SSLL]

Onex makes move on Hudson's Bay
Last-minute bid came in lower than Zucker's but has fewer strings attached
By MARINA STRAUSS
Monday, January 23, 2006 Page B1
RETAILING REPORTER

Buyout powerhouse Onex Corp. and mall developer Mitchell Goldhar have submitted an offer for Hudson's Bay Co. that is lower than Jerry Zucker's, industry sources say, a move that puts the retailer's board in an awkward position.

The latest development leaves HBC with the U.S. financier's $1.1-billion, or $14.75 a share, highly conditional offer, as well as the Onex/Goldhar proposal, which is below $14.75 but contains fewer, more standard, conditions, the sources said.

The exact value of the Onex team's offer was unclear.

Mr. Zucker's conditions, such as an unusually steep requirement of 90-per-cent shareholder backing, would allow him to walk away from a deal very easily, observers have said. HBC has rejected the Zucker bid as being "inadequate," partly because it is so conditional.

The weekend revelations mean that the outcome of the almost three-month bitter takeover battle appears to be largely in Mr. Zucker's hands.

Mr. Zucker provided no hint of his next move.

Robert Johnston, vice-president at Mr. Zucker's South Carolina InterTech Group Inc., said in an e-mail yesterday that his group was not in talks with HBC or its representatives over the weekend. There is "nothing to do or know until tomorrow," he said, adding he couldn't comment until then.

If the wealthy U.S. businessman is determined to win the fight, he could raise his offer or soften some of his conditions, observers say.

On the other hand, he is under no pressure to increase his price, and may even suggest dropping it, they say. He was only granted access by HBC to its books in late December, and could argue the confidential data prompted him to redo his math.

Whatever the outcome, investors will be anxiously awaiting some news this morning. HBC had set last Friday at 5 p.m. as the deadline for counterbidders to top Mr. Zucker's offer, which expires Jan. 31. Investors may expect the country's oldest retailer, owner of the Bay, Zellers and Home Outfitters, to unveil new suitors before the stock market opens today.

No news would be bad news, observers say.

HBC spokeswoman Hillary Stauth would not comment.

HBC's shares shot up last week on the Toronto Stock Exchange, eclipsing Mr. Zucker's $14.75-a-share offer after The Globe and Mail disclosed that the Onex camp, led by Onex chairman Gerry Schwartz and Mr. Goldhar, had been seriously considering a counteroffer, along with three other groups. The shares slipped by week's end, closing Friday at $15.39, still higher than the Zucker bid, after The Globe reported that none of the parties had yet been able to make the numbers work at $14.75 or more.

Sources said that no one else submitted a bid. One group interested was U.S. private equity firm Cerberus Capital Management LP in partnership with RioCan Real Estate Investment Trust and Kimco Realty Corp. of New Hyde Park, N.Y. RioCan is a key rival to Mr. Goldhar's First Pro Shopping Centres Inc.

Another group that mulled a bid was an alliance between financial firms Bain Capital LLC and Gordon Bros., both of Boston.

The prospect of two major shopping mall developers in the race reflects the importance of real estate to the would-be bidders. After all, HBC occupies about 47 million square feet -- almost 10 per cent -- of the mall space in Canada. A new owner could try to put the space to work more productively by closing some of the almost 400 Bay and Zellers stores and finding another tenant or tenants to replace them.

Analysts say that HBC, which has struggled for years to improve its financial performance, runs too many Bay and Zellers stores, which now number close to 400.

The Onex/Goldhar team may have an extra incentive to try to do an HBC deal because Mr. Goldhar's First Pro has close ties to giant discounter Wal-Mart Canada Corp., which is believed to be interested in picking up some of the real estate.

It may be easier for Wal-Mart than for some other retailers, such as Home Depot, to assume some of the HBC store leases. That's because a number of the leases give the landlords considerable sway in deciding whether a store's use, or structure, could change. Wal-Mart and Zellers both run discount department stores.

HBC leases most of its real estate, although it owns what analysts estimate to be $800-million of it as well.

Another challenge to an HBC deal is potentially huge employee severance costs to close stores. The tab could come to "hundreds of millions of dollars, not tens of millions of dollars," one source said, depending on the number of stores being shut.

U.S. players among the would-be suitors were surprised at the "generosity" of Canada's employment laws, the source said.

In contrast, the Zucker team has said it intends to run HBC largely intact, although it, too, would close some money-losing Zellers stores.

[slide_rule]

does anyone have information, or at least speculation about wal-mart and their supposed plans to begin expanding into, or consolidating their existing stores into canadian supercenters?

[SSLL]

There's an article a few pages ago about Wal-Mart Supercenters. Nothing's been said so far, but I think a lot of the newer Wal-mart stores can be expanded into Supercenters. And if the Onex consortium do end up buying HBC, I reckon there will be lots of Zellers spaces for Wal-Mart to choose from.

[SSLL]

Cabela's chooses Montreal for its first Canadian retail store

JANUARY 24, 2006 -- Outdoor gear retailer Cabela's, Sidney, Neb., announced yesterday that it expects to open a Montreal, Canada, retail store as early as late fall 2007 or spring 2008. The large-format retail store, located in the Lac Mirabel mixed-use project, will be developed by Connecticut-based Gordon Holdings Group and Rubin Stahl, and would be Cabela's first store built outside the United States. Design features of the store will include Aa huge mountain replica, the centerpiece of the store's open showroom, including trophy animals in re-creations of their distinct habitats; a gigantic freshwater aquarium stocked with fish native to the area; museum-quality representations of many wild-game species; a gun library, providing gun collectors and aficionados the opportunity to browse through a collection of examples of the gun-making art; indoor archery range where archers can test and fine-tune their equipment; Bargain Cave, featuring discount prices on returned and discontinued merchandise; and a unique interior featuring ruggedly beautiful accents and furnishings.
_________________________
Cabela's to build in Canada
SIDNEY, Neb. - January 23, 2006

Cabela's announced today plans to open its first Canadian retail store in Montreal by spring 2008.
The company said that although planning and discussions are in early stages, it expects to open the Montreal retail showroom in fall 2007 or spring 2008. The large-format retail store, located in the Lac Mirabel mixed-use project, will be developed by Connecticut-based Gordon Holdings Group and Rubin Stahl.

The store will be Cabela's first store built outside the United States.

The Lac Mirabel development, which will encompass more than 14 million squarefeet and include 2.2 million square feet of retail space. The project also will include man-made lakes, a sports complex, a 100,000 square-foot Caldea Therapeutic Spa from Andora in Europe, a 70,000-square-foot Kid Tropolis educational indoor city for children, a 140,000-square-foot Montreal Aquarium, hotel facilities, a conference center and additional entertainment and shopping.

Product offerings would include a special assortment of hunting, fishing, camping, hiking, boating and wildlife watching gear tailored to the Canadian market, as well as outdoor clothing and outdoors-styled gifts and furnishings.

Cabela's currently has 14 retail locations in the United States.

The Cabela's Montreal store would be outfitted in Cabela's decor mixing animal displays with dioramas, aquariums stocked with native fish and a centerpiece indoor mountain displaying trophy animals in realistic recreations of their natural habitats.