Wal-Mart Invading Urban Canada. New "Wal-Mart Urban 90 Stores" to Attract Even More Buyers.

Wal-Mart (NYSE: WMT) recently announced that it is going to begin opening urban stores in Canada. The first concept store will be opened on an old Zellers property that it will be acquiring from Target. The format of the store will be named "Urban 90," and it will be located in the east-end of Toronto.

The new Wal-Mart's are intended to fill a gap that Wal-Mart experiences in Canada currently. Since the company is usually located on very large suburban lots, they have been unable to reach many dense urban buyers. They hope that the new stores will allow them to expand further into a Canadian marketplace that they have largely saturated.

The new Urban 90 format, being located in dense urban environments, is going to hit the traditional retailers and grocers the hardest. Many Giant Tiger, Loblaws (TSE: L), Metro (TSE: MRU.A), and Sobeys banners are located in urban environments that currently are free from Wal-Mart's tentacles. Soon, however, the ubiquitous yellow smiley face will shower Canada's urbanites as well. Canadian retail investors beware!

Happy Investing, and for more info:

http://www.thestar.com/business/companies/walmart/article/1014669--wal-mart-to-open-urban-store-buys-zellers-sites

Loblaw Earnings Rise $30 Million, but Supply Chain Investments Hurt Results.

According to Reuters News Agency, Loblaw Companies Ltd (TSE: L), owner of Loblaws, No Frills, Zehrs, PC Bank, and other ubiquitous brands, posted a higher quarterly profit on Wednesday. Canada's leading grocer, however, said investments in information technology and supply chain infrastructure weighed on its operating income for the year.


First-quarter earnings rose to C$162 million, or 58 basic Canadian cents a share, from C$132 million, or 48 basic Canadian cents a share, a year ago, but revenue fell 0.6 percent to C$6.87 billion. The quarter, essentially, was not bad, but the company seriously needs to get its infrastructure and supply problems under control as it has been weighing on earnings and disappointing shareholders for years. Rivals, such as Metro (TSE: MRU.A) and Wal-Mart (NYSE: WMT) have not been experiencing the same disruptions in business as of late, and Loblaws' shareholders are suffering as a result. If you are a Loblaws shareholder, the company is still generating reasonable enough profits to maintain your shares, but be careful about more impending supply-chain and management problems going forward.

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 : )

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.