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 : )

Coffee in the Desert: Tim Horton's Expanding to Middle East.

Canada's very own Tim Horton's (TSE: THI) will be commencing some rather large expansion plans into the Middle East beginning this year.

There will be as many as 120 multi-format Tim Horton's restaurants opening up in association with Dubai-based Apparel Group. Five of the restaurants will be started in 2011. The 120 possible locations will be opening in the United Arab Emirates, Qatar, Bahrain, Kuwait, and Oman.

For shareholders of Tim Horton's this should be a good thing because the company will not actually be using its own capital or cash for the expansion. Apparel Group of Dubai will be financing the expansion and Tim Horton's will be receiving a royalty, or percentage of sales, in return for their branding and products. Essentially, it is a low risk, potentially high-reward scenario for Tim Horton's.

Of course, Tim's has plenty of room for expansion in the United States, where they have already been experiencing some troubles as stiff competition from Dunkin Doughnuts and McDonald's gives them a run for their money. But nonetheless, as a low-risk way to expand into a diverse market, it is a good strategy. The company will, however, have to make some definite adjustments if they hope to succeed in a very different culture. Apparel Group thinks that they can provide Tim Horton's with this needed expertise.

More on this story:

http://www.timhortons.com/ca/en/about/news.html?c=195616&p=irol-news&nyo=0