Canadian Retail Thread

[SSLL]

Golf retailer's got game
STRATEGIES In a mere 7 years, Stephen Bebis has turned Golf Town into Canada's
largest golf chain
Nov. 13, 2005. 01:00 AM
SHARDA PRASHAD
BUSINESS REPORTER

Forty-one years of age is a bit late in life to take up any sport, never mind golf, which can drive even lifelong devotees to the breaking point and beyond.
But it didn't take Stephen Bebis long to find a way to combine his new love with his adulthood passion for entrepreneurship.
Five years after picking up his first golf club, he launched Golf Town in 1998. Now it's Canada's largest golf retailer, with 24 stores.
"It was just about opening up a couple of stores," says Bebis, now 53. "I wanted a nice life and I wanted to play golf," he adds, pausing for a moment to see if his bluff was credible.
Then the confession: "The vision was to open 20 to 25 stores and to be the category killer. It was to be number one."
Golf Town is the fourth largest golf retailer in the world and in the third quarter, ended Sept. 30, earned $60.9 million, up 12 per cent over last year.
Golf Town is a big-box retailer that sells golf clubs, bags, clothing and other golf accessories. It also boasts an in-store golf school called the Academy at Golf Town, with driving ranges and CPGA instructors on staff.
Retail consultant John Williams, of the J.C. Williams Group, says the company has succeeded because Bebis understands that Golf Town is not in the "deep discount game." Instead, Bebis gives golf-savvy customers a one-stop shop for clothing, equipment and lessons, with knowledgeable staff.
Not only is Golf Town competing against other retailers, it's also competing against pro shops at golf clubs.
"It's as good as pro shops, but provides the value of a mass retailer," he says.
Bebis says the idea for Golf Town came from former chief executive of Molson Canada Marshall Cohen. The Molson executive saw the success of the U.S. chain, Golf Galaxy, and thought Canada — with one of the largest golfing populations in the world — would be an ideal market for a similar concept.
Cohen and Bebis had worked together when Bebis was with Molson-owned Aikenheads Home Improvement Warehouse. To start Golf Town, they each invested personal capital and joined with other investors, including Manulife Financial Corp., which bought an 80 per cent stake.
"I had made enough money," says Bebis, who made $740,000 last year. "I really just enjoyed (business) and I loved winning."
Despite spending five years at University of Massachusetts, Connecticut-born and Boston-raised Bebis never earned a degree — something about changing majors and not correctly calculating the number of credits required to graduate.
Besides, he adds, winning isn't about academic success, it's about winning in the corporate boardroom.
Bebis held senior positions at U.S. retailers Sears and Grossman's Lumber before becoming a buyer at Home Depot in 1984. Seven years later, he was vice-president.
Shortly after, Molson decided to start Aikenheads in a bid to thwart Home Depot's anticipated Canadian foray.
Bebis was contacted by a recruiter to head up Aikenheads. "At 37 years old I could be CEO," he recalls, thinking about the Canadian opportunity. "I could define the business."
He accepted the offer in 1991. "I had no offices, no phones, I lived in a hotel. I built the company to $1 billion in sales in three years and then Molson's made a fortune (when it sold Aikenheads in 1994)."
Ironically it was sold to Home Depot — the company it had been created to challenge, and Bebis's former employer. Bebis stayed on as head of Canadian operations for two years, then stepped down because he didn't want to lead a subsidiary of a larger company. He wanted his own company.
Returning to the United States, Bebis accepted a stint as the chief executive of an American sports company operating under bankruptcy protection. Then he got the call from Cohen about Golf Town.
Although Bebis initially worried no one would show up on Golf Town's opening day in 1998, his fear was misplaced. The store turned a profit from day one.
It became an income trust in 2004 because, Bebis says, the market was hot for the investment vehicle and the trust offered the best opportunity to go public.
You would think that Bebis would be content that Golf Town has achieved its original goal of being a market leader in Canada. No such luck.
Because Golf Town has a non-compete clause with U.S.-based Golf Galaxy, expanding into the United States isn't an option.
So Bebis's strategy is to build the corporate-promotion side of the business. He recently hired a vice-president in an effort to corner the market in a sector he says is large and fragmented.
Bebis is more than the cut-throat business executive he portrays at first. Golf Town is a strong supporter of the Prostate Cancer Research Foundation. Its annual golf tournament has raised nearly $300,000 in the three years it has run.
"I decided to support the foundation because a large percentage of our customers, men between 40 and 55, are prime candidates for the disease," he said in an earlier interview with the Toronto Star.
This past summer Bebis accepted the position of chair of the board and now gives time as well as money to the cause.
Be it golf, business or charity, Bebis believes in only one approach: have a winning game.

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Winners in Yorkville...
____________________________________
November 17, 2005
Winners moves in on Bloor St. W.

By TED FLETT, TORONTO SUN
Discount clothing may seem an odd pairing with the mix of posh boutiques and department stores on Bloor St. W., but the two will come together today when Winners opens its doors and joins the neighbourhood.

"Bloor St. is a fashion destination and we're a fashion destination"," said Shannon Johnson, Winners' manager of public relations, of the new location at 110 Bloor St. W.

"Our customers are looking for brand names and designer labels so we feel it's a good fit."

But not without some tweaking.

The store, which employs 140 associates, has forgone the trademark raspberry and royal blue sign, opting for a sleeker black and white logo to blend with the street.

Inventory will include men's and women's apparel, footwear and jewelry, omitting children's wear and home decor.

"The timing is great to offer our fashion-savvy customers gift-giving ideas and holiday dressing," Johnson said.

"An additional business means additional traffic," said Briar Delange, general manager of the Bloor Yorkville Business Improvement Area, who isn't concerned that Winners might stick out like a sore thumb.

"I was shocked at first but I'll probably check it out," said Katy Kingsley, 19, of North York.

"I work on Bloor St. but I can't afford to shop on Bloor St. Maybe now I'll start."

"It will probably make Gucci and Prada shoppers annoyed because there will be more traffic but I don't have an issue with it," said Helen Heaps, who lives in the neighbourhood.

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La Senza focus is growth at home
Nov. 26, 2005. 01:00 AM

MONTREAL—Encouraged by yet another positive quarter, lingerie retailer La Senza Corp. said yesterday it will expand its Canadian operations next year and rejected suggestions about converting into an income fund.
"As we continue to expand and develop, we lean against (an income trust proposal)," president Laurence Lewin said in a conference call.
The Montreal-based company will open 15 to 20 stores in Canada next year instead, boosted by the success of three new fashion lines launched this year — La Senza Candy, Spirit and Love — as well as a men's underwear line. The expansion will also include the introduction of La Senza Express stores, which will open at converted Silk&Satin stores.
The chain had ventured into the U.S. market 18 months ago, opening five stores in New Jersey, New York and Massachusetts, but closed them after they failed to generate sufficient ssales volumes.
Those closings helped La Senza post a $2.6 million net profit or earnings of 19 cents per share in its third quarter, ended Oct. 29, compared with a loss of $853,000, or six cents per share, for the same time last year.
Quarterly sales rose to $97.1 million, up 18.3 per cent from $82.1 million for the third quarter of the prior year.
Shares closed yesterday in Toronto at $20.91, up 91 cents.

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HBC rejects Zucker's hostile bid
Board urges investors to postpone making a decision
Holding discussions with other `interested' parties, it says
Nov. 26, 2005. 10:49 AM
DANA FLAVELLE
BUSINESS REPORTER

Canada's oldest retailer says it is in discussions with "a number of interested parties" — which could include a possible financial bidder — about alternatives to wealthy American industrialist Jerry Zucker's hostile takeover bid.
The board of directors of Hudson's Bay Co. also formally rejected Zucker's $1 billion offer yesterday, as expected, saying it undervalues the company.
In a circular to shareholders, HBC urged investors to delay making a decision on Zucker's bid, to give it more time to come up with a better offer.
Hudson's Bay said it's in discussions with several parties who have signed confidentiality agreements and are now looking at the company's books.
"The board is working very hard to attract superior offers for the company," said David Galloway, who chairs the special committee HBC's board struck to explore ways of boosting its share value.
Galloway declined to provide further details as to who these parties are, or what parts of the business they are interested in. He denied rumours there could be a management-led buyout, but he didn't rule out a financial bidder who could include the management team in its offer.
However, "it's too early for that," he cautioned.
HBC's board declined to offer its own estimate of the company's worth, though one major HBC investor has pegged it at $20 a share. Zucker has offered $14.75 a share.
Zucker's spokesperson, Robert Johnston, called the board's response to its Oct. 6 offer a delaying tactic.
"We are obviously very dissatisfied with this response," Johnston said in an email message. "Instead of negotiating with us, they have opted to criticize the bid."
Johnston also dismissed HBC's plans for maximizing shareholder value.
Since Zucker began stalking the retailer, HBC has put its profitable credit card business up for sale and cut 825 employees. But its retail business continues to struggle as its Bay and Zellers' chains lose market share to rival discounters and specialty merchants.
"HBC has spent hundreds of millions of dollars over the past few years on capital improvements, has had at least two series of layoffs, reorganized management roles and announced a major five-year plan, yet the results are materially worse than before," Johnston said.
HBC's board said Zucker's offer undervalues the company when compared to other recent sales of similar North American retailers.
It fails to recognize HBC's unique and "iconic" status as Canada's oldest brand with sales of $6.7 billion last year at 566 stores, and the fact it is an Olympic sponsor and outfitter.
The bid fails to take into account the growth potential at HBC's two newer chains, Home Outfitters and Designer Depot, the board said.
As well, it undervalues HBC's attractive real estate and profitable credit card business, the directors said.
The stores' recent poor performance is mainly due to one-time events, including higher fuel prices and glitches in a new computer system, the directors added.
Still, some analysts said they doubt HBC will succeed in attracting rival offers.
"I was surprised there were any third parties to talk to," said Bob Gibson, an analyst with Octagon Capital Management.
"I don't think there is another bidder," said Ted Whitehead, portfolio manager at Elliott & Page Ltd., which owned 385,436 HBC shares, about half a per cent of the outstanding shares, last June.
"This company has value only if someone can operate the stores profitably. The current management team has had five or six years to try and do that. Clearly they haven't," said Peter Holden, an analyst at Veritas Investment Research Corp.
Still, the prospect a so-called "white knight" may emerge to save Canada's oldest company has kept HBC shares trading slightly above the value of Zucker's bid. The shares closed unchanged at $15.09 yesterday.
HBC also disclosed it has entered a credit card co-branding agreement with a major bank that gives the bank first right of refusal to buy its card business.

[malek]

La senza rocks

[SSLL]

Malek, I posted this article already ^^!

[SSLL]

Sales help lift Forzani's Q3 profits
Dec. 2, 2005. 04:59 PM
CANADIAN PRESS

CALGARY — Sporting goods retailer Forzani Group Ltd. reported an improved third quarter compared with a year ago and a nearly 20 per cent increase in quarterly sales Friday, helped by its acquisition of the Nevada Bob's and National Sports banners.
The Calgary-based retail chain said strong back-to-school sales also helped boost revenue to $306.6 million for the quarter ended Oct. 30, up from $257.4 million a year ago.
"We had a strong quarter in footwear, hockey and clothing which happen in August and early September," Forzani president Bill Gregson told a conference call with analysts.
"We did have a weaker quarter in ski, snowboard and outerwear, which typically happen beginning in October, (but) those trends of tougher sales in ski, snowboard and outerwear have been reversed in November and are positive."
Excluding the acquisition of Nevada Bob's and National Sports sales were up 8.4 per cent at $279 million.
The company's third-quarter profit rose to $6.5 million, or 20 cents per share, from a year-earlier $6 million, or 18 cents per share.
The company said comparable store sales from corporate stores were up 3.2 per cent, while franchise comparable store sales increased by 8.1 per cent.
The corporate store results included an increase in comparable store sales of 4.2 per cent at the firm's SportChek and Coast Mountain Sports banners, and a decline of 0.9 per cent at the company's Sport Mart stores.
During the quarter, the company opened two SportChek stores, closed two Sport Mart stores and assumed the operation of one franchise store.
At the end of the quarter, the company had 256 corporate stores and 198 franchise locations.
"You will see a few less Sport Marts at the end of next year compared to the end of this year," Gregson said.
Looking into the fourth quarter, Forzani suggested it would not have to discount its inventory significantly to clear its shelves and maintain its margins.
"We believe the improvement in margin will continue in through the fourth quarter and with our inventory in a better shape we don't have as much reason to be as promotional or move as much inventory as we have in the prior year," Gregson said.
Forzani shares (TSX: FGL) were down 13 cents at $12.85 on the Toronto Stock Exchange.
The Forzani Group Ltd. operates stores across Canada under the SportChek, Coast Mountain Sports, Sport Mart and National Sports banners.
The company also has online sites and is a franchiser under the banners: Sports Experts, Intersport, RnR, Econosports, Atmosphere, Tech Shop Nevada Bob's Golf, Hockey Experts and Pegasus.

[Hali_user]

More U.S. control of our retail industry.



U.S. parent company bids to acquire all of Sears Canada
Last Updated Mon, 05 Dec 2005 12:10:36 EST
CBC News

The U.S. parent company of Sears Canada Inc. on Monday released a proposal to buy the 46.2 per cent of the company that it does not already own. It's offering $835.4 million for the shares.

The deal would give shareholders $16.86 per share in cash, plus the $18.64 per share distribution (TSX:SCC) that was announced last Friday.

Sears Holdings Corp. (NASDAQ:SHLD) said the offer represents an 8.7 per cent premium on the Friday closing price of Sears Canada's common shares.

Investors responded by sending shares of Sears Canada up more than 6 per cent on the TSX. The stock was up $2.20 at $36.35.

Shares of Sears Holdings dipped $2.86 US to $116.71 US on Nasdaq.

Based in Hoffman Estates, Ill., Sears Holdings has over 57.7 million, or 53.8 per cent, of Sears Canada's outstanding common shares. After the deal is complete, Sears Canada would be a wholly owned subsidiary of Sears Holdings.

"The Sears Holdings proposal represents an excellent opportunity for Sears Canada shareholders to realize a premium and liquidity for their shares," said Sears Holdings vice-chairman Alan Lacy.

"On a stand-alone basis, Sears Canada's retail business faces an increasingly competitive retail environment in Canada, and the principal factor that will determine the value of this business is the prospects for its retail operations," Lacy said.

"We expect to continue to operate Sears Canada as a retail business," he added.

Sears Canada said its board will form an independent committee to handle review of the takeover offer and make a recommendation to investors about whether to accept it.

Last Friday, Sears Canada announced it would return $18.64 per share, or roughly $2 billion in total, to investors in the wake of the sale of the company's credit and financial services business.

[SSLL]

But it was already a US-owned (majority) company. I don't think it will really change anything...
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Sears goes shopping -- for the rest of Sears Canada
December 6, 2005
BY SANDRA GUY Business Reporter

Sears' largest shareholder, hedge-fund guru Edward S. Lampert, left experts scratching their heads again Monday after Sears announced it had agreed to buy Sears Canada and operate it as a subsidiary.

Sears Holdings already owns 53.8 percent of Sears Canada's shares, but most analysts had predicted that Sears would sell its stake in its Canadian sibling rather than acquire it.

Yet the takeover would repeat a common Lampert tactic: Sears shareholders gain a dividend payment, while the retailer pumps out a sharp improvement in earnings and sheds massive amounts of jobs and costs.

Sears offered $718.5 million for the Canadian company's shares, an 8.7 percent premium over Friday's closing stock price. A major Canadian shareholder, Natcan Investment Management, has agreed to support the deal by tendering its stake of more than 9 percent of Sears Canada's outstanding shares. The deal is expected to close in the first three months of 2006.


Click here for latest stock quote
The deal calls for Sears' shareholders -- Lampert is the biggest single shareholder -- to gain a one-time dividend payment from the sale of Sears Canada's credit-card business to JPMorgan Chase & Co.

In many ways, the Canadian deal aims to achieve the same kinds of cost cuts and cost savings as Lampert envisioned when he engineered Kmart's $12.3 billion buy of Sears Roebuck on March 24.

Sears can wield its larger size to squeeze cost savings from suppliers in Canada, and to use the two retailers' North American distribution network more efficiently.

Lampert will take charge, getting rid of many of Sears Canada's executives and their administrative functions.

And Sears Canada will no longer report its finances in the detailed way it did as a standalone company.

The cost-cutting would make Sears a more viable rival in Canada against competitors such as Wal-Mart, Lowe's and Home Depot, which are growing in Canada but aren't as deeply rooted there as they are in the United States.

"If Sears centralizes lots of Sears Canada's functions, it would save a fortune," said Howard Davidowitz, chairman of Davidowitz & Associates, a retail-consulting and investment-banking firm based in New York.

Sears could also save money by putting the same merchandise in its Canadian stores as it does in the United States, and vice versa, opening the way for Martha Stewart Living to take a bigger presence in Sears stores here. Sears Canada has sold Stewart's home furnishings for more than two years.

Sears took a similar step in the United States Monday by naming executives to oversee merchandising for both Sears and Kmart. The executives, Peter Whitsett and Dan Laughlin, will report directly to Lampert.

Analysts played a guessing game Monday about Lampert's other interests in Sears Canada: Lampert may want to fend off a rival suitor for Sears Canada; sell Sears Canada's real estate; set up Sears Canada for a merger with fellow Canadian retailer Hudson's Bay, or simply realize a tax advantage.

Lampert long ago declared he was less interested in sales results than in realizing profits.

Indeed, sales at Sears stores open at least a year -- a key measure of retailing strength -- are expected to have declined when Sears reports earnings today. Sears Canada reported in October that its same-store sales in the third quarter dropped 8.2 percent from a year earlier.

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Wal-Mart fires up supermarket price wars
Consumers set to gain, grocers to lose
By MARINA STRAUSS
Thursday, December 15, 2005 Page B1
RETAILING REPORTER

Supermarket price wars will heat up in the face of discounter Wal-Mart Canada Corp.'s plans to open its first giant superstores, with their expanded grocery section, in the next year or so, observers predict.

Already executives at Canada's two largest grocers, Loblaw Cos. Ltd. and Sobeys Inc., have warned that the competitive retailing landscape will get tougher as more selling space is devoted to the same type of merchandise.

Analysts point to continuing price erosion as consumers demand better value.

"It's going to get more ferocious," Cynthia Rose-Martel, retailing analyst at Jennings Capital Inc., said in an interview. "Regardless of what Wal-Mart does, pricing is going downwards, not upwards."

The arrival of the Wal-Mart supercentre "would only intensify it."

John Lederer, president of Loblaw, sees the consequences in lower profit margins.

"Margins are going to erode over the next few years, and so only the leanest competitor is going to be able to compete," Mr. Lederer told analysts last month.

"So I think we see the competitive landscape heating up as this incredible excess footage comes in," he said.

On Tuesday, Wal-Mart Canada confirmed to The Globe and Mail what retail insiders had been whispering for weeks: that the retailer is finally going to launch massive stores similar to its giant U.S. parent's dreaded supercentres, starting with two or three in late 2006 or early 2007.

The discount supercentres have a full selection of supermarket products along with general merchandise. In the United States, the rapidly expanding supercentres are eating into the business of rival grocers.

In Canada, Loblaw and others have ramped up their discount divisions and lowered prices in preparation for an eventual supercentre assault -- and in a bid to compete more effectively.

It's not only the Wal-Mart supercentre effect. Everyone from drug store chains to discounter Zellers are beefing up on groceries. Bulk seller Costco Wholesale Canada Ltd. has also had an impact.

Sobeys, which runs IGA stores, has been notably fierce in its price-cutting, analysts said.

Chief executive officer Bill McEwan said this week that he expects promotional activity to get a bit more "severe."

Just three months ago, Mr. McEwan had indicated that he thought inflation might continue to inch up.

"Things change in three months and you've got to be fast, fluid and flexible," he said on Tuesday after releasing second-quarter results, which showed weaker profit. "Clearly we have seen some increased competitive activity."

And there will be more, grocery officials warn. "This market is going to change ferociously in the next five years," Mr. Lederer told an investors' conference two weeks ago.

Retailing space will "far outstrip demand," even while consumers seek more "value" pricing, he said. "Consumers want value . . . We think the conventional [supermarket] format will be increasingly challenged."

To respond to consumer demand for lower prices, Loblaw wants to convert more of its traditional supermarkets to discount superstores or other low-priced banners such as No Frills.

Loblaw superstores are much like Wal-Mart supercentres, housing huge supermarkets along general with merchandise under one roof.

Loblaw has talked to union representatives to find ways of reclassifying employee pay scales to help reduce operational costs. The idea is to pass on savings to consumers in lower prices. For years Loblaw, has argued that Wal-Mart and Costco have an edge because they have no unions.

How severe are pricing pressures? CIBC World Markets analyst Perry Caicco points to at least one "meat skirmish" in Ontario recently in which a Sobeys flyer advertised pork loin roast at $2.49 a pound, while Loblaw superstores promoted the same product at $1.49.

On another item, Sobeys pitched prime rib roast at $3.99 a pound, while Loblaw's Zehrs chain had the slightly inferior top sirloin premium oven roast at $3.49 a pound.

"There is published evidence (in the weekly flyers) of Loblaw's new promotional pricing warpath," Mr. Caicco said in a recent report. "One little meat skirmish is not enough to make us more cautious about Ontario results, but there is similar and regular evidence from all over the market of heavy promotional battles and a real struggle to drive sales."

Indeed, he says competition in Ontario is a "bloodbath," even before the arrival of Wal-Mart supercentres. "In order to drive business in this situation, all major competitors have been forced to supplement their weekly flyers with occasional (and responsive) two-day or three-day ads, stacking promotions on top of promotions."

At Loblaw, he added, "prices must drop, and fast."

Mr. Caicco estimated that Ontario supermarket space has increased between 10 and 12 per cent over the past two years. And he pointed to the projected elimination of 3,900 General Motors jobs, which "will send a chill through an Ontario consumer already wobbly from gas price increases."

At Sobeys, prices cuts will likely cause continuing profit problems in Ontario, he predicted in a report yesterday.

On the Toronto Stock Exchange, Sobeys shares were flat at $37.39, while Loblaw fell $1.30 or 2.2 per cent to 56.35 and Metro's class A shares slipped 18 cents to $31.25.
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RETAILING
Supermarkets brace for next Wal-Mart move
Discounter to launch supercentres in Canada that add fresh food to the mix
By MARINA STRAUSS
Wednesday, December 14, 2005 Page B1
RETAILING REPORTER

Discounter Wal-Mart Canada Corp. will launch two or three massive superstores in the next year or so by bulking up on groceries and other items in a move that promises to transform the retailing landscape -- and squeeze supermarkets' businesses.

The advent of the Wal-Mart supercentre has been widely anticipated -- and feared -- in retailing circles for years as the world's largest merchant rapidly expanded its presence in Canada since arriving in 1994.

U.S. supermarkets have been devastated by the impact of parent Wal-Mart Stores Inc.'s supercentres, which combine full supermarkets with general merchandise. In Canada, grocers will feel the pinch, although they are better positioned to handle an onslaught because they already run discount divisions, industry observers say.

"This is a big deal for the supermarket industry as Wal-Mart appears to now be ready to fire a shot at the supermarket leaders," said Rick Pennycooke, president of retail development consultancy Lakeshore Group.

"Wal-Mart doesn't do things in a half-baked way . . . They're not going to do a one-off. It will impact everybody."

Industry insiders agreed. "They're a very strong company and they're doing very well with their supercentres in the U.S.," said Louise Wendling, who heads Costco Wholesale Canada Ltd.

"Whatever moves they're going to make, it's going to affect the market share of all players."

Wal-Mart spokesman Andrew Pelletier confirmed in an interview that it will roll out its first two or three supercentre-like stores in Ontario in late 2006 or early 2007.

The chain has yet to decide on future expansion, or whether to name them supercentres, as they are called elsewhere, he said.

While Wal-Mart already carries groceries at most of its 256 stores, the supercentres will also sell fresh produce and meats, delicatessen and bakery products, he said.

As well, it will add more apparel, electronics and home decor items to supercentres because consumers want more of this merchandise.

"We see this as an evolutionary approach," Mr. Pelletier said yesterday.

"It is very much a work in progress. It will be similar to supercentres in the U.S. We are just referring to them as expanded Wal-Mart stores" for now.

U.S. supercentres are almost twice as big as regular Wal-Mart stores. In Canada, the selling space will range to almost 190,000 square feet, while standard Wal-Marts are closer to 120,000 square feet, Mr. Pelletier said.

The company's key developer, First Pro Shopping Centres, has applied for municipal approvals for a superstore in east-end Toronto and in London, Ont. The latter store would be an expansion of an existing site.

Retailers have been bracing for the arrival of Wal-Mart's supercentres for years.

Loblaw Cos. Ltd., Canada's leading grocery chain, has been preparing by expanding its own superstores, which combine general merchandise and supermarket products.

The No. 2 and No. 3 grocers, Sobeys Inc. and Metro Inc., will feel the pain of the Wal-Mart supercentre the most, Mr. Pennycooke, the consultant, predicted. Loblaw may fare a little better.

Nevertheless, Loblaw has run into snags in developing new systems for its expansion. Its stock price has tumbled this year as profit slumped because of unexpected glitches and delays in its retooling. Shoppers have noticed the problems: Many haven't been able to find in-demand products on the store shelves.

Wal-Mart had originally planned to put one of its Sam's Club warehouse club stores on the Toronto site now slated for a supercentre, a city official said.

Indeed, Wal-Mart has been stalled in its expansion of Sam's Club, having opened only six of them since launching the first ones in the fall of 2003.

Industry watchers have considered that Sam's Club, which carries fresh foods, was the first step to Wal-Mart rolling out supercentres, giving the company the groundwork to move into a full selection of groceries.

"Everyone knows the Sam's Club program is halted," one source said. "They can't get the new ones working."

Some sources have suggested that Wal-Mart may convert its six existing Sam's Club stores to supercentres, although they would need to be reconfigured substantially.

Nevertheless, Mr. Pelletier insisted that Wal-Mart is committed to Sam's Club, and targeting them more to small-business customers looking to buy in bulk.

He denied that Wal-Mart plans to turn Sam's Club stores into supercentres.

Monique Dubord, vice-president of leasing at developer First Capital Realty Inc., said it's no big surprise that Wal-Mart is mapping out supercentres for Canada.

"Certainly it's not unexpected that Wal-Mart would be rolling out the food at some point," said Ms. Dubord, whose company specializes in supermarket-anchored shopping centres.

Wal-Mart has been adding more food to its namesake stores over the past few years, but they don't carry fresh produce or meat, or bakery goods.

And while Wal-Mart had no specific expansion plans for supercentres, retail insiders note that Wal-Mart's newest outlets call for a 45,000-square-foot expansion area -- presumably for a future supercentre.

In the United States, Wal-Mart has more than 1,700 supercentres at an average size of almost 190,000 square feet -- and is rapidly expanding the chain.

[miketoronto]

Forget Wal-Mart.

I am very happy with the improvments at THE BAY.

The other day I got a personalized letter from them in the mail(somehow I got onto their mailing list when I had something ordered in)inviting me to a special "mens shopping day". While Christmas shopping, they offered messages in the West End Lounge on the 2nd Floor. Fashion shows to show you what to get your special lady for Christmas. And you could also sign up for a personal shopper.

I did not attend. But I think that is great, all the events they are doing at the downtown store. They really have gotten things rolling down there this year. Great to see the improvments.

[SSLL]

I was surprised by how good the Olympic merchandise looks and costs! Flying off the shelves...

[SSLL]

Aritzia eyes growth with new investor
B.C. firm plans major expansion
By MARINA STRAUSS
Tuesday, December 20, 2005 Posted at 3:59 AM EST
From Tuesday's Globe and Mail

Hip women's fashion retailer Aritzia LP will expand in Canada and farther afield with the help of new U.S. equity fund partner Berkshire Partners LLC, which is investing between $50-million and $250-million (U.S.) in the fast-growing, Vancouver-based chain.

The deal, which closed yesterday, is yet another instance of U.S. financial firms pouring money into Canadian companies in a hunt for new opportunities. Earlier this month, two U.S. private equity firms invested $108-million (Canadian) in yoga-inspired athletic wear chain Lululemon Athletica, another hot Vancouver-based clothing retailer.

The new partnerships illustrate how Canadian entrepreneurs can build domestic names with a strong following -- but then need deep-pocketed strategic investors to help them become a global force.

Privately held Aritzia generates about $100-million in annual revenue from 18 stores.

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It is looking to at least double those sales in the next five years at almost triple the number of outlets, said chief executive officer Brian Hill.

The company has the potential to eventually expand to more than 100 stores in Canada, the United States, Europe and Asia, added Kevin Callaghan, managing director of Berkshire Partners in Boston.

As well, Aritzia could ultimately branch out into men's wear and extend its appeal to an older demographic, Mr. Callaghan said.

"They're nimble and have managed their supply chain very well," Mr. Callaghan said, pointing to the crucial task of efficiently moving fashions from conception to the consumer. "This is not a flash-in-the-pan company."

Aritzia, founded by Mr. Hill in 1984, has made its mark with in-house designers able to seize on the latest styles quickly, while also updating basics such as T-shirts and duffle coats to give them the latest twist, Mr. Callaghan said.

Aritzia is a so-called vertically integrated retailer, manufacturing most of its lines, which gives it control over production and helps control costs. It also carries some branded goods.

And while other global firms are producing "fast fashion" at cheap prices, Aritzia produces higher-priced goods that, while appealing to customers as young as 15, also attract the interest of 35-year-olds.

T-shirts range to $60, sweaters to $150 and branded jeans, such as the ultracool 7 for all Mankind label, can cost in the $400 range.

"They're quite different," said John Williams of retailing consultancy J.C. Williams Group Ltd. "Aritzia has a West Coast, fresh look to it. It's a little eclectic. It's out of the mainstream."

Mr. Hill said Aritzia will consider launching more stores under the names of some of its private labels, including TNA and Talula. It has already opened one TNA store.

He said he expected to roll out the first Aritzia stores in the United States by 2007.

Berkshire will help provide expertise in building a framework for the retailer's expansion, he added. Essentially, Berkshire is assuming about half of Aritzia's ownership, while Mr. Hill will retain the rest. Mr. Hill will remain CEO with the current management team intact.

Berkshire can tap into its extensive retail and consumer products know-how to help Aritzia in its growth plans, he said. Its investments range from U.S. cosmetics chain Bare Escentuals to children's wear retailer Carter's. It also has a stake in the U.S. parent that owns Value Village second-hand merchandise stores in Canada.

In looking for a partner, Mr. Hill said "we didn't want someone to run the company, and we didn't want someone to sit on the sidelines." He said he was approached by four U.S. private equity firms over the past year. "All of a sudden we started to look at the opportunities . . . It became appealing in fairly short order."

Investment banker Capital West Partners represented Aritzia in the equity transaction. Capital also served as the investment adviser to Lululemon. BNP Paribas and CIBC provided Aritzia with debt financing. Aritzia is an offshoot of Hill's of Kerrisdale, a Vancouver department store owned by the Hill family.

[miketoronto]

I know my thinking is different, but that is just stupid what Aritzia wants to do.

Why do they need to expand to the states.

What makes Aritzia unique is that it is not everywhere. In Toronto if you want Aritzia you have to go downtown or to Mississauga Square One.

Once you start putting it everywhere, it loses some of it's style.

And why must it go to the USA?

Can we not have one store that you can only find in Canada anymore?

The more our stores hop borders, the more boring it is to even shop when you are in a different country, because everything is the same.

$100 million in sales seems fine to me. Why they need even more I don't know. Just focus on the stores they have and make them great. To much expansion reduces the value a company puts into making their stores nice, etc.

[VicHockeyFan]

Today is scheduled to be the busiest retail day of the year in Canada. I would have thought it would be last Saturday. Guess not.

[SSLL]

I count seven Aritzia stores in GTA (three downtown, Square One, Sherway Gardens, Yorkdale, Vaughan Mills), and there's quite a few in their home province (BC), but I think stores don't go into the US and elsewhere to "make it", but to make more money. The US market is tough to crack, but really lucrative due to its size and spending power. I can think of a bunch of Canada-only stores: Bluenotes, Fairweather, Tip Top, Harry Rosen, and of course, Dollarama!

I think Friday's more busy in retail with Saturday being more for family time, and cooking preparation...I don't know, though, I went to Vaughan Mills, Ikea in Vaughan, Yorkville, and Yonge Street, and it seemed less busy!

[miketoronto]

Wow. I did not know Aritzia expanded that much in Toronto. I thought they where only with a couple stores yet.

Harry Rosen actually downsized in the 90's. They use to have stores in many suburban malls in Toronto and other cities.

However it seems they have downsized to only having downtown locations in most Canadian cities except Toronto, where they have kept a couple suburban branches.

[SSLL]

Yeah, I think they've always had the downtown presence except for Toronto, where they have a good portion of their stores (Harry Rosen). I don't think it's a company that should be extended too much. I remember when Scarborough Town Centre had a Harry Rosen...

[SSLL]

Retail sector profits boomed in 2005 for big-box merchants, department stores felt the crunch
RITA TRICHUR
Mon Dec 26,12:58 PM ET
TORONTO (CP) - The Canadian retail sector rang up record profits in 2005 as spendthrift shoppers flocked to contemporary suburban powercentres, forsaking traditional department stores in favour of big-box bargains. The massive expanses of concrete and asphalt have mushroomed across the country over the last decade with more growth to come as a growing roster of international players shakes up the Canadian retail landscape.

"New international retailers keep coming to the Canadian marketplace and raising the standard of competition for the trade," said Peter Woolford, vice-president of policy development and research with the Retail Council of Canada.

"It requires everybody to get just a little bit better at doing their business and that's good for the trade."

Retailers are poised to ring up record profits of $9.5 billion this year, surpassing last year's record high of $9.1 billion, according to a recent forecast by the Conference Board of Canada.

With Canadians increasingly time-starved, big-box retailers have been the big winners, cashing in on the burgeoning trend of one-stop shopping - a charge led by powerhouse discounter Wal-Mart Canada Corp.

"They want the retailer to be a solution provider," Woolford says. "And big boxes have been very good at that."

This summer, American home-improvement retailer Lowe's Cos. Inc. announced its own Canadian expansion plan, vowing to put the screws to big-box rivals Home Depot and Rona (TSX:RON - news) when it opens its first slate of stores in 2007.

The growing popularity of big-box stores, however, continues to come at the expense of long-standing department stores, as intense pricing pressure triggered a fresh wave of consolidation in 2005.

Iconic retailer Hudson's Bay Co. is fighting to keep itself independent after receiving a hostile takeover bid by its biggest shareholder, American businessman Jerry Zucker, that values Canada's oldest company at more than $1 billion.

Established in 1670, HBC (TSX:HBC - news) is Canada's largest department store chain with more than 500 outlets, led by the Bay and Zellers chains.

Nevertheless, nostalgia for the historic retailer has waned in recent years and the company has struggled with poor financial results as bargain-hungry Canadians eagerly shop American to gain more bang for their buck.

Last month, HBC blamed a sales slump and a big restructuring charge for swelling its third-quarter loss to $50 million from $8 million last year. Zucker, a veteran takeover artist, has said HBC's deteriorating performance justifies the need for new ownership.

Arch-rival Sears Canada (TSX:SCC - news) was also swept up in the tide of consolidation this after its American parent company, Sears Holdings Corp., offered to pay $835.4 million Cdn to scoop up the 46.2 per cent of Sears Canada it doesn't already own.

"We believe the benefits that will come from integration will help Sears Canada in its struggle to succeed," says Sears Holdings spokesman Chris Brathwaite, noting the economies of scale currently enjoyed by big-box heavyweights Wal-Mart and Home Depot.

Sears Canada has a network of 188 corporate stores, 180 dealer stores, 67 home improvement showrooms, over 2,100 catalogue merchandise pickup locations, 112 Sears Travel offices and a national home maintenance, repair, and installation network.

Sears Holdings, which merged with Kmart Holding Corp. in March, hopes to boost its pricing power by taking its Canadian subsidiary private.

Analysts, however, speculate the move will set the stage for the division's sale down the road - possibly through a merger with HBC.

"That whole sector is obviously very challenged," says Wendy Evans, president of Evans & Co. Consultants Inc. "Consolidation is definitely what's happening in the retail sector."

In fact, Canada's retailing sector has been in flux for years, leading to the demise of other erstwhile favourites like Eaton's, Woolco, Towers and Dylex.

Now the country's grocery trade is bracing for the onslaught of big-box competition with the introduction of hypermarkets. Originating in Europe, and already a popular fixture in the United States, hypermarkets sell groceries but take one-stop shopping to the next level with offerings of clothes, jewelry, hardware, sports equipment, books, CDs, DVDs and electronics.

While foreign-based retailers like Tesco and Carrefour are rumoured to be plotting a strategy for Canadian penetration, Arkansas-based Wal-Mart has already announced plans to step-up its reach into the country's grocery trade by launching two or three massive super centres in Ontario over the next year.

The arrival of the Wal-Mart super centre has the potential to revolutionize the way Canadians shop. The stores are almost twice as big as regular Wal-Mart stores and will carry a full range of fresh produce, meats and bakery products in addition to general merchandise.

U.S. supermarkets have already been devastated by their impact and leading Canadian grocers have long-anticipated their arrival and have been busy retooling their inventory and supply chain systems over the past year.

Loblaw Cos. Ltd. and Sobeys Inc. have also beefed up their own offerings of general merchandise.

Woolford says a "big battle" is definitely brewing between traditional supermarkets and mass-merchant heavyweights.

"They're really locked in a really heavy struggle for access to that consumer and the opportunity to sell to them," Woolford said.

"We think that will have a very significant impact on the trade over the next five years."

[shreddog]

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."