Loblaws Brings Joe Fresh to Fifth Avenue: First Foray Into the United States in Years.

Loblaws (TSE:L) announced that it is opening four Joe Fresh branded stores in the United States. Joseph Mimran, the brand's founder, declared that many Americans have been requesting the introduction of the clothing line into the United States and thinks it will be a success. The flagship store will be located on Fifth Avenue in Manhattan, adjacent to the New York Public Library.

Historically, Canadian firms are very hesitant to expand into the United States, where competition is steep and competitors are well-heeled and have deep pockets. Loblaws has attempted to expand into the northern United States before, but retreated in the late eighties and early nineties after they decided to focus on expanding and perfecting their Canadian operations. This turned out to be a very wise move, as Wal-Mart and others entered the American market en-masse and brought profit margins tumbling down in the grocery sector. This time, however, Loblaws is entering on a very small scale and in an industry with much higher profit margins than the grocery sector.

Undoubtedly, the rationale for expanding the Joe Fresh line into the United States has less to do with generating a profit on the U.S. stores than it does with simply exposing the brand and Loblaws to an extensive amount of publicity from more fashion conscious consumers. The company has declared that it wants to achieve 1 billion dollars in annual sales soon, and it now appears that it is bent on achieving that goal.

In reality, few Canadian merchants have ever had any success in the United States. Lululemon (TSE:LLL) has had some, as has Tim Horton's (TSE:THI) now, but Canadian Tire (TSE:CTC.A) tried and failed miserably, as have countless others. Loblaws' decision to enter the market again will bring some bad news in the future as sales at the American Joe Fresh stores are probably not what is expected, but the recognition and marketing advantages that they gain from having a store on Fifth Avenue will bode very well for the clothing line and its status in its customer's eyes. As an investment, however, be careful of Loblaws. Debt levels are creeping higher, and many stores are disorganized and under-staffed, which will make competition with Metro (TSE:MRU.A), Sobeys (TSE:EMP.A), and Wal-Mart (NYSE:WMT) more difficult as time goes on.

For some more information on this news:
http://www.thestar.com/business/companies/article/943842--canadian-retailers-go-global

Happy Investing Intelligent Investors : )

Canadian Tire Rewards: A New Plan Long Overdue.

Canadian Tire might finally be in the process of eliminating its iconic Canadian Tire rewards money. The company, listed as CTC.A on the Toronto Stock Exchange, announced that it will be introducing a pilot program for a new points reward card program.

Introduced in 1961, Canadian Tire's loyalty program has been extremely popular and a highly successful way of reinforcing its brand in the consumer's mind. Personally, I remember collecting Canadian Tire money in earnest when I was younger, and many people still have drawers with the loyalty money stored in it for some future purchase. Sometimes, Canadians abroad have even been known to use it in in place of Canadian currency to buy goods from unsuspecting vendors.

Canadian Tire's vice-president stated that the money will not be eliminated in the foreseeable future, but the writing seems to be on the wall now. Other highly successful loyalty programs like AirMiles, PC Points, Aeroplan Miles, Shoppers Optimum Points, and Petro-Points are all handled via Point-of-Sale terminals and plastic cards. Electronic rewards programs are far more effective for marketing purposes because the purchases and buying habits of each customer can be stored and analyzed to help the store serve and target-market each customer segment more effectively. With the current Canadian Tire loyalty program, this valuable information is lacking. In addition, the processing, production, and transportation of the paper loyalty program simply costs the company more to operate than an electronic system without the key benefits of a loyalty program like PC Points or Optimum Points.

As an intelligent investor, it is good to see your business developing better and more efficient methods of attracting and retaining customers. Shoppers Drug Mart (TSE: SC) and Loblaws (TSE: L) have already realized the benefits of an electronic loyalty program, it is about time that Canadian Tire decided to do the same. Other elements of Canadian Tire's business have also been doing well, in particular its finance business, which has grown a great deal in the last 5 years. In addition, it has largely been able to resist the Wal-Mart effect on its bottom-line and kept most other competitors at bay due to its strong association with seasonal activities like hockey and barbecuing in the eyes of the Canadian consumer, as well as an excellent automotive business. To be sure, as a limited element of a portfolio, Canadian Tire is a quality choice. It has very low debt levels and a fair amount of assets in the form of property and cash holdings.

For more information on this topic, just go to:

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/why-we-love-and-hate-canadian-tire-money/article1915577/page1/

Below is Canadian Tire's Assets and Debt Levels, Excellent for a Retailer:

Zellers Sold to Target for $1.8 Billion: The U.S. solidifies its strangle-hold on retail in Canada.

The Hudson's Bay Company has recently sold Zellers to U.S. retailer Target (NYSE:TGT) for $1.8 Billion. Target plans to convert about 150 stores and sell the remaining 70 Zellers locations to another buyer.

Considering that the Zellers chain was on it's last breath following HBC's sale to U.S.-owned NRDC Equity Partners in 2008, the news is not surprising. Rumours have been circling about a sale of the chain to Target for years now, and steep competition from Wal-Mart (NYSE:WMT) left the chain struggling to find customers.

Though the retail market in Canada is thriving, the recent sale of the chain reminds us of the terrible truth that American corporations have a strangle-hold on the Canadian marketplace. Wal-Mart, Costco (NASDAQ:COST), Best-Buy (NYSE:BBY), and a slieu of other global behemoths have largely gobbled up their Canadian competitors. With the exception of Canadian Tire (TSE:CTC.A), Loblaws (TSE:L), and a few others, there are very few Canadian owned retail locations.

Sadly, expansion southwards has not gone as well for Canadian companies. Only Tim Horton's (TSE:THI) and Couche-Tard (TSE-ATD.B) have really been able to crack the U.S. market. There are a number of reasons for this, but much of it is attributable to lacking economies of scale for companies in Canada as compared to the U.S., where there is a ready market 10 times the size as in Canada. U.S. retailers can utilize their large networks at home to leverage their expansion north, whereas Canadian retailers have to leverage a much smaller network to expand into the highly competitive American market.

Interestingly, both Tim's and Couche-Tard are great investments for Canadians, especially considering the prospect for extensive expansion plans and continued growth. Both stocks should be on your watch-list awaiting a dip in their share prices. As for Target, the shares are reasonably priced, but in the retail sector both Wal-Mart and Costco have more potential for continued success.