[SSLL]

No easy fix seen for Zellers and Bay stores
Retail consultants say what's needed is a culture that will drive innovation
By KEITH MCARTHUR
Saturday, October 29, 2005 Page B2

If Jerry Zucker is going to be able to turn around Hudson's Bay Co., he will have to take some drastic steps to rethink the company's flagship Bay and Zellers brands, retail consultants said yesterday.

Like most department stores, the Bay is caught in a vice-grip with Wal-Mart Stores Inc. on one side and specialty chains such as Home Depot and Winners on the other.

And Zellers is having a tough time competing with the Wal-Mart onslaught.

David Gray, a retailing consultant at Sixth Line Solutions in Vancouver, says the brands require a complete rethinking that goes far beyond introducing new clothing lines and tinkering with store layout.

"It's not about the cosmetic outcome. It's not about saying the stores need to look different or the merchandise has to change," Mr. Gray said.

"I think right at the core of the business, there has to be some sort of change that builds in a structure and a process and a culture that will really drive innovation," Mr. Gray said.

Many observers expect that if Mr. Zucker is successful, he will break up the company and sell the pieces. But executives working for Mr. Zucker said yesterday that they like most -- but not all -- of HBC's current strategy.

HBC's management team has embarked on a five-year plan to expand its business.

Last year, some Bay stores introduced departments with designer products at discount prices, and its flagship Queen Street store in Toronto opened a grocery store.

The Bay also has an agreement with Federated Merchandizing Group -- the parent of U.S. department stores Macy's and Bloomingdale's -- that gives it the exclusive right to carry private brands such as Style & Co. in Canada.

Zellers has also introduced a number of exclusive brands including Cherokee, Alfred Sung Home and Stuff by Hilary Duff.

More recently, HBC began rolling out new-look Zellers stores with wider aisles, improved lighting and specialty areas such as grocery sections, enhanced cosmetic areas and takeout restaurants.

"The strategy's okay, but it needs to go beyond tweaking," said John Williams, a retail consultant at J.C. Williams Group.

"The concept needs reinvention. A department store is a grand old thing, but it doesn't excel at any one thing the customer wants."

Mr. Williams said he thinks Zellers is losing so badly to Wal-Mart that there's little hope for saving the brand. Instead, he expects Zellers to sell out, possibly to Target Corp., the U.S. retailing giant that specializes in "cheap chic" designer goods.

Mr. Williams thinks there's more hope for the Bay, but said there's no easy fix.

Department stores around the world are getting squeezed from the top and the bottom. Still, the size of the Canadian market prevents the Bay from being able to move too dramatically up-market, Mr. Williams said.

"There's not enough people in that income bracket to become a Bloomingdale's or a Nordstrum," he said.

"At the same time, they can't go down-market because the guys from Bentonville [Wal-Mart] will chew 'em up and spit 'em out. It's a very tricky situation."

All retail consultants seem to agree that HBC needs to get smaller. In particular, downtown Bay stores are far too large, with the Toronto Queen Street store occupying 809,000 square feet. "How do you fill one million square feet on Queen Street? How do you find enough fashion to go in there?" asked retail consultant Wendy Evans.

She says the Bay could move more upscale in some of Canada's biggest cities, and needs to do more in streamlining its product mix.

As for Zellers, Ms. Evans sees it becoming more like Target, which has thrived in the United Sates alongside Wal-Mart.

"To win against Wal-Mart is not what they want to do. They don't want to go head-to-head in terms of price and brand," Ms. Evans said.

Mr. Grey said that by taking HBC private, American businessman Jerry Zucker would be able to avoid the pitfalls of pleasing investors quarter by quarter and make the long-term investments necessary to reinvent the department store for a Canadian audience.

"At the end of the day, you have to ask: If a concept has played out its lifespan, is making some incremental changes really going to save you or is it just going to prolong the situation?"

Mr. Gray says HBC needs to recruit people from outside of the traditional retail ranks -- people with big ideas in areas such as marketing, technology and customer relationships.

"I think there is an opportunity to really rethink the department store. Wal-Mart obviously did that but you don't want to go out and just copy Wal-Mart."

Reinventing an icon

HBC's brands need to evolve to survive. While management is taking steps to turn the stores around, retail consultants say more drastic changes are needed.

HBC five-year profit and revenue

Sales ($billion)

2001: $7.3

2002: $7.4

2003: $7.3

2004: $7.3

2005: $7.1

Profit ($million)

2001: $90

2002: $47

2003: $85

2004: $60

2005: $60

The BayCategory: Department store targeting middle- to upper-income customers who are fashion and value conscious.

Locations: 98 stores

Store size: Ranges from 16,000 square feet in Banff to 809,000 square feet in downtown Toronto.

New concepts

In 2002, entered into exclusive agreement with Federated Merchandising to stock clothing offered at Macy's and Bloomingdales.

In 2004, introduced "Style Outlets," smaller stores within the Bay featuring designer label merchandise at discount prices.

Zellers

Category: General merchandise store targeting women between 25 and 55 who shop frequently for staple clothing and household needs.

Locations: 298 stores.

Store size: Range from 48,000 square feet to 161,000 square feet with an average size of 97,000 square feet.

New Concepts:

In 2004, Zellers launched Hilary Duff's new line of merchandise "Stuff by Duff."

Zellers is renovating stores to a new prototype format with wider aisles, improved presentation and new product offerings.

Home Outfitters

Category: A kitchen, bed and bath superstore focused around everyday low pricing.

Locations: 47 stores.

Store size: Range from 27,000 to 42,000 square feet.

[SSLL]

Oct. 29, 2005. 08:46 AM
Just what is Jerry Zucker's game?
DAVID OLIVE

What's his game?
Jerry Zucker is an unlikely saviour for a Canadian retailing icon that surely needs one. If Hudson's Bay Co. is to continue as a retailer.
When Zucker, a South Carolina merchant banker, first began accumulating his 18.8 per cent stake in HBC, his plan seemed merely to goose the value of his investment by raising hopes of an auction of the chronically ailing retailer.
That ploy didn't work. HBC's performance has continued to disappoint, and things are so bad the firm has chosen to no longer give "guidance" to the Street on anticipated future results. And no wonder: the company has consistently failed to meet its targets, quarter after quarter and quarter.
If its approach to merchandizing wasn't so unremarkable — it fits nowhere on the spectrum of the dull-but-safe Reitmans or the exotic Selfridges, which experiments with instore rock-concert halls and tattoo parlours — HBC could be a case history in anti-retailing. Analysts fault HBC for poor execution, as Zucker did yesterday. But how could the company not fail to execute on strategies that are so muddled in the first place?
HBC has two potential powerhouses — its Zellers discount chain and its Bay stores, both badly in need of rejuvenation. So, under the direction of chief executive George Heller, to what has HBC devoted its time? Why, going head-to-head with Home Depot, Restoration Hardware and their ilk with his fledgling Home Outfitters chain (a name that suggests a cross between a drapery store and a bait shop), a fledgling Designer Depot chain predestined to fail against an entrenched Winners; and, most recently and incredibly, an overhaul of its small-town Fields general stores, which account for all of 2 per cent of HBC's total revenues.
Meanwhile at Zellers, which accounts for about two-thirds of HBC's sales, a dawdling HBC has so far gotten around to renovating just 60 per cent or so of the discounter's outlets.
To mask its strategic miasma, HBC is unrivalled in summoning excuses: Volume is habitually sabotaged by unseasonably hot or cold weather. Back-to-school sales were slower than expected. Soaring oil prices will dampen pre-Christmas sales this year, Heller warned in August; and a new computer system has wreaked havoc with inventory controls.
Robert Johnston, frontman for the elusive Zucker, effusive in his praise of Heller two years ago, finally threw up his hands in despair in an interview a few months ago — a distant early warning of yesterday's bid which, if successful, could put Heller on the street.
There's no question that on some level, Heller, 57, has become delusional after six years at the helm. At the June annual meeting, he told reporters asking the inevitable question of how HBC means to counter the Wal-Mart threat that, "There have been the equivalents of Wal-Mart before and nobody remembers their names."
Let's assume for a moment that the world's largest corporation, with $288 billion (U.S.) in sales, doesn't up and disappear, as Heller seems to anticipate. What are Zucker's options then, as sole owner of HBC?
Game Plan A: With his Friday bid for all of HBC, Zucker triggers an auction, happily tendering his 18.8 per cent stake to the highest bidder. Well, good luck. The widely held HBC has for years been a sitting duck for reputable North American retailers who've found better things to do than take on the mess at HBC.
Game Plan B: Zucker, 55, follows through on his vow yesterday to take the reins at HBC and "enhance operational effectiveness and shareholder value."
Uh, no. With zilch merchandizing experience, Zucker is not about to succeed where Don McGivern, George Kosich, Bill Fields and George Heller have failed. He could recruit Paul Walters, a turnaround whiz at Sears Canada before leaving the company after stumbling with a failed Eaton's makeover. But HBC is such an incoherent congeries of good and lousy store locations across the entire country, and of promising and dud retail banners, that it could take even the Henry Ford of retailing at least half a decade to figure out how to make it all work.
Game Plan C: Bust up the 335-year-old company, parcelling out its 500-plus locations to expansion-minded Winners, H&M and Williams-Sonoma, and to U.S. retailers potentially interested in cracking the Canadian market, including Target and Crate & Barrel. But, alas, Zucker has not proved himself as an asset stripper, either, having steered his Polymer Group Inc. textile conglomerate into bankruptcy protection in 2002.
When Zucker first popped up on the Canadian scene in December 2003, I wished he was for real. HBC occupies too much of the retail landscape, taking up space from which more deserving merchants should be peddling their wares.
But judging from his cursory bid yesterday — not really a bid, even, but phrased more as an expression of interest — one can't help thinking he still isn't for real. There are people skilled in this game, scavengers like Wilbur Ross and Carl Icahn, who strike decisively and have their way with their prey rather than futzing about for two years as their investment languishes.
Zucker falls into the latter camp. I still don't think he's for real.

[SSLL]

I don't know what will happen. If there is backlash to selling HBC to non-Canadian parties, and people boycott it, where can be go? I mean, Wal-Mart, Sears, basically the only general merchandisers are American as well. I think if they just sold Zellers, no one would have a problem. I think it's just the Bay that people wouldn't feel comfortable with.

[SSLL]

Oct. 30, 2005. 10:04 AM
With a suitor on the prowl, time seems to be running out for the world's oldest continuously capitalist enterprise still in operation
DAVID OLIVE
BUSINESS COLUMNIST

In its 335-year history, the Hudson's Bay Co. has never come so close to facing its demise as it does today.
The only thing that has spared it from being merged out of existence or dismantled by now, ironically enough, is the same chronically poor financial performance that has kept it unattractive to potential buyers among its peer retailers, and now makes it vulnerable to a scrapyard dog.
Respected merchant bankers, including Gerry Schwartz's Onex Corp. in Toronto and renowned U.S. buyout specialist Kohlberg Kravis Roberts, have kicked the tires at HBC, but neither they nor mooted buyers among America's retail giants, including Target Corp. and Federated Department Stores (owner of Macy's and Bloomingdales), have shown more than a passing interest in HBC.
Which leaves HBC open to the predations of Jerry Zucker, a secretive South Carolina merchant banker with no retail experience, who last Friday announced his intention to buy the 80 per cent or so of HBC shares he does not already own.
Zucker began accumulating HBC shares two years ago in hopes of putting the company in play, but while his mere arrival and the prospect of a bidding war for HBC did generate a nice bounce in the stock, no bidding contest materialized, and HBC's financial performance has continued to disappoint.
So Zucker has taken the next step of attempting to buy the whole company — only the beginning of what is probably the last chapter in the history of the world's oldest continuously capitalist enterprise still in operation.
HBC once held sway over a region 10 times the size of the Holy Roman Empire at its height, and exerted more influence in shaping North America than peers like the East India Co. did in India and China.
The bravado of HBC explorers like Samuel Hearne, the first white man to reach the Arctic Ocean, is legendary; they eventually laid claim to three million square miles, or one-quarter of North America's land mass, spanning the Far North to San Francisco. Their presence discouraged American settlement of present-day Western Canada; and three HBC trading posts — Fort Garry (Winnipeg), Fort Edmonton, and Fort Victoria — became provincial capitals.
But HBC, like the CPR and Canada's early banks, recruited heavily from Scotland, which in the view of the definitive HBC biographer Peter C. Newman explains the primacy of prudence over commercial zeal that ultimately led to HBC's current vulnerability.
"The original implanting of that special [Scottish] mentality within the Canadian psyche, a combination of creative deference and cautious progressive pragmatism, is the Hudson's Bay Co.'s most pervasive legacy," Newman wrote in Company of Adventurers (1985), the first installment of his three-volume history of HBC.
"This orderly attitude, rooted in collective survival rather than individual excellence, still colours what most Canadians do and, especially, don't do."
By the time HBC sold its massive northern and western Canadian territories to the three-year-old Canada in 1870, the company was fast losing its relevance. A more entrepreneurially minded group of absentee owners at HBC headquarters in London might have better exploited the firm's considerable remaining oil and gas, real estate and liquor distribution assets. But they chose instead to sell majority interests in most of their operations — trading posts and urban stores excepted — to savvy outsiders, and retain only a passive minority stake.
Yet even as the great firm was rapidly shrinking, a complacent, debilitating arrogance dating from HBC's glorious past lingered.
"The Hudson's Bay people used to tell me how proud they were to be the oldest company in the Western hemisphere," Newman quotes L.F. McCollum, the American oilman whose Continental Oil bought a majority stake in and took control of Hudson's Bay Oil and Gas Ltd. "And I'd tell them, `So what? What have you done? Continental Oil [now ConocoPhillips] is only 25 years old and our assets are worth 10 times as much as yours, so please don't brag to me." (HBC has assets today of $4 billion Canadian; ConocoPhillips has assets of $93 billion U.S.)
HBC still clings to the status of Canada's largest chain of department stores. And, particularly in Western Canada, where its retail roots are deepest, commands a degree of patriotic loyalty.
But in recent decades, HBC has been reduced to a motley collection of some 500 stores under about half a dozen banners, none a leader in its retail segment, and all fighting a losing battle for market share against interlopers like Wal-Mart, Gap, Williams-Sonoma, Winners and Talbots, and homegrown rivals Reitmans, Roots, Sleep Country and Mountain Equipment Co-op.
It is HBC's misfortune that traditional department stores have been losing favour for years. The demise of Gimbels, Marshall Field, Filene's, B. Altman and Bonwit Teller is some indication of what HBC's mid-market Bay stores are up against.
Remarkably, HBC's fortunes have continued to slide despite the demise of rival Eaton's and the intensive-care status of Sears Canada, in addition to HBC's own contribution to the thinning of the ranks with its acquisitions of Morgans, Simpsons, Zellers, Towers and Woodwards, among others.
That Wal-Mart Canada Corp., starting from scratch in Canada only a decade ago, now has revenues 76 per cent higher than HBC's $7.1 billion in sales, speaks to the failure of HBC to adapt to retail trends.
As recently as last June's HBC annual meeting, CEO George Heller seemed to dismiss Wal-Mart as, if not a passing fad, then a phenomenon that HBC would handily survive just as HBCers endured the rigours of the Franklin expedition (by resorting to cannibalism, among other things).
Heller's six-year tenure has been marked by incrementalism — gentle stabs at cost-cutting, better inventory control, the launch of niche banners like Home Outfitters and Designer Depot, and the occasional coup as when it wrested the Olympic-apparel franchise from Roots.
Meanwhile, though, HBC's true revenue engines, Zellers and the Bay, have languished. The respected Dayton-Hudson Co. of Minneapolis saw the light long ago, dumping all its banners save its youngest, discounter Target, around which it rebuilt the entire company to the point of taking that division's name for its own.
Like Target, Zellers could possibly hold its own against Wal-Mart in Canada were it to adopt Target's cheap-chic formula. Instead, even the modest remodeling campaign underway at Zellers, bearing no resemblance to the total reformulation that's actually needed, is only half-completed years after it began. Such is the effect of Heller's divided attention among his many banners.
Jerry Zucker, 55, is not a merchant but a conglomerateur with interests ranging from factories that make diapers for Procter & Gamble Co. to a 25 per cent interest in the minor-league South Carolina Stingrays hockey club. A math major and scientist by training, Zucker holds 280 patents, but not in the retail field.
The most likely outcome for HBC, assuming Zucker follows through with his offer to acquire HBC and is not trying once again to merely trigger a bidding war, is the installation of a Heller replacement who, to succeed, would have to reduce the firm to its essential parts — namely, Zellers — and remake it into a thriving retail concept like Target, Winners or H&M.
Failing that, Zucker will have to bust up the company and sell its lucrative credit-card operations, its land and leases.
That would be no tragedy. It would free up millions of square feet of selling space for merchant entrepreneurs more innovative and less risk-averse than successive generations of HBC managers.
John Wanamaker of Philadelphia, greatest U.S. drygoods merchant of his era in the early decades of the 20th century, foresaw endless possibilities within easy reach of any persistent striver. "The universe is sensitive to the merest touch and therefore it is possible to set wheels in motion that shall outrun the world," he said.
That was the bug that infected Sam Walton when he first pitted himself against the giant Sears, Roebuck, J.C. Penney and Kmart Corp. in 1962, leaving those rivals in his dust by the time of his death in 1990.
From the rubble of HBC when Zucker, or some other future buyer is done with it, will rise men and women with ambitious schemes who will face doubters, as Timothy Eaton once did.
Whether they succeed or fail, though, in occupying retail space once claimed by HBC, they will fare better than an HBC behemoth that has spent so much of its history watching the world pass it by.

[SSLL]

Laura Secord Indulges in a Dramatic Makeover
Canada's largest chocolatier announces a new look and 20 enticing new flavours.


Canadians love chocolate and are consuming more of it each year. Now Canadian Godiva, Laura Secord, is undergoing a major renewal that will include new products and packaging and remodeled stores.

Just in time for the holidays, chocolate lovers can enjoy more than
20 new chocolates including Raspberry Marilla, Fresh Lemon, 72% Cocoa Dark Chocolate and Pistachio Marzipan. All these sweet treats are included in Laura Secord's signature "Miniatures" and classic "Assorted" chocolate collections.

Laura Secord's new packaging features a tone-on-tone ivory design which
is contemporary and elegant. Inside the box, each chocolate has been carefully selected to tantalize the taste buds and delight the eyes. The

Laura Secord's stores also underwent a facelift, with rich wood design elements, colourful mosaic tiles and the enticing aroma of waffle cones baked on the premises.

"Laura Secord is a beloved Canadian icon with a rich heritage as a
chocolatier," said Jamie Ardrey, chief executive officer, Laura Secord.
"We are indulging more often," confirms vice president of marketing, Andrea Graham.

[SSLL]

Other bidders expected to circle HBC
By ANDY HOFFMAN
Sunday, October 30, 2005 Posted at 10:13 PM EST
From Monday's Globe and Mail

Jerry Zucker hasn't even filed a formal bid for Hudson's Bay Co., and analysts and investors are already talking up the likelihood of another offer for North America's oldest retailer.

With HBC now in play, a long list of potential buyers will once again take a look at the company that owns the Bay, Zellers and Home Outfitters. Some analysts believe the company could be worth up to $30 a share and the roster of possible bidders includes U.S. department store operators, Canadian pension funds and private equity firms. The question for many will be whether HBC is worth more intact or in pieces.

Last week, Mr. Zucker, a South Carolina businessman, announced plans to offer $1.1-billion for HBC and said through a spokesman that he had no plans to chop up and sell off HBC's various assets.

Mr. Zucker, who already owns about 19 per cent of the company's shares, said he would bid $14.75 a share for HBC through his company Maple Leaf Heritage Investments Acquisition Corp. On Friday, HBC shares closed at $15.35.

Robert Johnston, a vice-president at Mr. Zucker's U.S.-based InterTech Group Inc., has said Mr. Zucker would consider raising the hostile offer if he is given a look at the company's books and finds it is worth more.

In a letter sent Friday to HBC chief executive officer George Heller, Mr. Zucker himself held out the prospect of a sweeter bid.

Wendy Evans, president of Evans & Co. Consultants Inc., said other possible bidders could include Federated Department Stores Inc., which recently took over rival May Department Stores Co. in a $11.9-billion (U.S.) merger.

“They have such wonderful real estate,” Ms. Evans said of HBC, adding the property assets make HBC attractive to a wide range of suitors.

John Chamberlain, an analyst with Dominion Bond Rating Service, said HBC's real estate assets have a book value of $250-million (Canadian), but conceded the market value is much higher.

A recent CIBC World Markets report pegged the value of the HBC-owned real estate at up to $770-million, and consequently, there is concern Mr. Zucker plans to gut the retailer of those lucrative assets.

“At this point, we're not entirely convinced that Mr. Zucker and his Maple [Leaf] Heritage Investments has a long-term strategy to run the business,” Mr. Chamberlain said. “The danger for bondholders at this point is that there is no protection if any potential acquirer should strip out assets, including the credit card operations, the real estate or any of the other hidden assets within HBC.”

Some retail consultants say financial players, many of whom have already taken a long hard look at HBC, could be poised to swoop.

“I would not expect ... that it would be done on a single offer,” said retail consultant Maureen Atkinson, senior partner at J.C. Williams Group Ltd.

“Canadian pension funds may take a look at it. [They] probably would do it in partnership with a venture capitalist,” Ms. Atkinson said. “KKR [Kohlberg Kravis Roberts & Co.] has done very well with their investment in Shoppers Drug Mart and maybe are looking at that.”

There has even been talk of combining HBC with the assets of Sears Canada Inc.

Earlier this month, HBC said it would sell its credit card division, which analysts have said is worth up to $700-million. The move accelerated Mr. Zucker's plans to bid for HBC.

On Friday, HBC said it would assess Mr. Zucker's offer and make a recommendation to its shareholders but offered no timelines.

However, in an internal letter to staff, Mr. Heller suggested that while management and the board were not pursuing a sale, a “change of ownership is not necessarily a negative development and does not automatically mean a change in our current strategic direction.”
______________________________
Oct. 31, 2005. 06:08 AM
Trouble in the aisle
The Hudson's Bay Company isn't alone among retailers struggling as they attempt to meet the challenges of an ever-changing business environment
DANA FLAVELLE AND NAOMI CARNIOL
BUSINESS REPORTER

Here's the problem for the Bay.
Even people who feel strongly about its heritage — who identify the Hudson's Bay Company with the fur trade and the founding of Canada — don't shop at its namesake department store chain.
So, they have very mixed feelings about last week's announcement that an American financier has made a $1 billion bid to buy the Canadian retail icon, a move that could spell dramatic changes at the troubled company that operates the Bay, Zellers, Home Outfitter and Designer Depot.
"I think it's a big part of Canadian history, so I don't know if it's right to sell it," says 14-year-old Noëlle Nurse, standing outside the flagship downtown Toronto Bay store on Queen St. W. with a group of friends. "But I don't shop there."
"They need to change," Nurse says, adding the store needs to do more to attract young people with louder, hipper music and edgier décor. "They could make it better."
"It's pretty historic," 22-year-old Beth Evans says of the Hudson's Bay Company. But she rarely shops at the Bay stores, except occasionally for makeup. She views the stores as appealing to older consumers. "My mother will be devastated."
But HBC's problems aren't confined to its 98 Bay stores. Its discount department store chain, Zellers, is also struggling for many of the same reasons that department stores across North America are languishing.
In an era dominated by big box retailers, like Home Depot, and the world's biggest discounter, Wal-Mart, the traditional department store has lost its relevance to consumers, says John Williams, a consultant with J.C. Williams Group Ltd.
Since 1995, an onslaught of new format U.S. retailers has gradually chipped away at the traditional department stores' turf, leaving them with little more than clothing and some housewares to sell. Consumer electronics was the first to go, followed by home furnishings.
The trend isn't confined to Canada or to HBC — one of the last two department store operators still in business north of the 49th parallel, the other being U.S. controlled Sears Canada Inc. The list of chains that has disappeared over the last four decades includes Eaton's, Simpsons, Kmart, Woodwards and Towers.
Consider the experience over the weekend of Scarborough shopper Gina Dacanay, a mother of three who had been all over town looking for Halloween costumes that didn't break the budget.
She went first to Wal-Mart, where nothing was left in the right size, and then to costume specialty retailer Party Packagers, where the prices were too high.
"Thirty five to forty dollars? That's too much for one night. And I have three kids to buy for," says Dacanay.
Finally, she went to a Zellers store — "Truly Canadian," as the sign outside proudly proclaims — because the costumes are on sale at 40 per cent off.
Does it matter to her whether it's Canadian owned or not? "Not really," she conceded, somewhat embarrassed. "As long as I still have a lot of choice."
But there was little left to choose from in the Zeller's customer department yesterday. "Maybe it's too late," says Dacanay.
The same could be said for Hudson's Bay, which is now in play after a $800 million bid by Jerry Zucker.
The company missed expectations in each of the last three quarters, losing $8.3 million as sales fell 1.5 per cent to $1.6 billion in its latest three months. Meanwhile, Wal-mart has grown to be Canada's largest general merchandiser, with an estimated $11 billion a year in sales, and just over 50 per cent of the market.
It didn't help that department store retailers completely missed the new trend in shopping mall development that saw open air power centres replace enclosed regional malls in the fast growing suburbs.
Hudson's Bay finally entered the power centre segment in 1999 with a specialty bed and bath concept called Home Outfitters, the only profitable and growing chain in the company. More recently it began adding a second concept called Designer Depot, specializing in off-price fashion, much like Winners.
But it hasn't solved the problems at the Bay or Zellers.
Geography is only one of the ways shopping patterns have evolved. Consumers are no longer loyal to a single store or brand. Instead they shop according to what they value, studies by the market research group NPD shows.
That can mean mixing a cheap T-shirt from Wal-Mart with Prada shoes and designer jeans. What has been lost is the mass middle market, the one department stores have traditionally occupied.
As part of a five-year turnaround plan HBC articulated two years ago, the company began carrying more private-label merchandise and exclusive brands to take the focus off price, where it can't compete with Wal-Mart's image as the low-price leader.
Zellers is gradually moving upmarket with furniture by Alfred Sung and fashionable clothing from Tres You, in a bid to emulate Target Corp., the one U.S. discounter that has managed to compete with Wal-mart.
At the Bay, the company has added exclusive furniture lines along with more off-price designer merchandise that appeals to consumers' desire for a good deal.
But much of it seems to be lost on Canadian consumers, increasingly distracted by new European retailers, like H&M, who use celebrities to flog their "cheap chic" gear.
"I definitely care if (an) American buys too much of Canada," says 30-year-old Ian Gardner, standing at the bus stop outside the Bay's Queen St. store yesterday. "It's a cultural thing."
At the same time, all he buys at the Bay is basics like underwear.
Similarly, Ralston Bennett, 58, says, "I wouldn't want it to close. It's a landmark." But, like the others, he only shops at the Bay two or three times a year.
But Robert Banks, 50, says that if the business isn't thriving, it's because the company has done a poor job of adapting to changing times.

[canucklehead2]

Its funny that Sears is being touted as a new owner for The Bay stores afterwards, but its doing just as poorly. I guess the only reason is because it has deep pockets and is the only competition left for The Bay.

[CMD UW]

"They need to change," Nurse says, adding the store needs to do more to attract young people with louder, hipper music and edgier décor. "They could make it better."

This statement speaks volumes about the Bay.

If they changed their image, carried more trendy and hip lines, they would attract many. A Macy's-esk look and feel would really do wonders.

[SSLL]

^^And also because no one seems to want to enter the market from elsewhere. The US chains aren't faring much better. Les Ailes de la Mode, a five store chain of Québec department stores was bought by a Canadian retailing company, which is good news for the Bay, that there are some people who want to buy department store (other than Sears).

^Anyone remember when Eaton's post-bankruptcy (the first time) tried to woo the younger crowd, with its in-store Diversity departments? It was pretty cool, but still a dud. Too little too late.

[canucklehead2]

Yeah. Not gonna work. They need to take on a classicly Canadian iconish feel. Like when you are shopping at The Bay you are shopping in one of the most important stores in the world like Harrods or one of the biggies in New York, instead of just another bland surburban retail chain.

[SSLL]

Holt Renfew already takes the "top department store" label in Canada.
_______________
Nov. 5, 2005. 01:00 AM
More jobs cuts likely at HBC, analysts say
Galloway to head special committee

Retail icon fights hostile takeover

Hudson's Bay Co. will likely make future job cuts in its merchandising group, industry watchers speculated yesterday, a day after the retailer announced it was eliminating 825 management positions.
That conjecture came as the Toronto-based retailer announced that David Galloway, a former CEO of Torstar Corp., is chairing a special committee struck to assess a hostile takeover offer from a wealthy American industrialist who is the Canadian retailer's largest shareholder.
"I think there probably will be more (cuts)," said Richard Talbot, president of Talbot Consultants International Inc. in Unionville, Ont. "It is an incredibly bureaucratic organization and somebody with a very sharp knife needs to get in there."
Canada's biggest department store operator, and the country's oldest company, announced a streamlining of its management ranks Thursday, saying it was seeking annualized savings of $40 million to $45 million.
The company, target of a $1 billion takeover bid by U.S. investor Jerry Zucker, will assume a pre-tax restructuring charge of approximately $28 million in its fiscal third quarter to reflect severance.
HBC Merchandising Group, which does the buying for HBC's Bay and Zellers banners, was reorganized last February and underwent a ``handful of changes" as a result of Thursday's announcement, the company said.
Nevertheless, Talbot predicted more cuts to back office staff and outsourcing would be used to trim expenses, possibly to entice rival bids.

[SSLL]

Can it be? A Winners in Toronto's poshest stretch of retail?
__________________________________________
Nov. 6, 2005. 01:00 AM

MINK MILE on the MARKDOWN
There's just one weekend to go until Winners opens its doors on that luxe stretch of Bloor between Yonge and Avenue. Right on time for the holiday rush, the wildly successful discount retailer gears up for battle with its haute new neighbours. By Dana Flavelle

Canada's most exclusive shopping district is just one weekend away from an extraordinary event: the official opening of a no-frills, no-holds-barred discount fashion retailer.
Winners is "crashing" the elite fashion enclave on Bloor St.
"It's a bit like having a hot dog vendor next to a nice restaurant," says Nicole Sibonney, a long-time Bloor St. aficionado.
The sprawling suburban "wannabe," with its fluorescent lighting and jam-packed racks is setting up shop next to European luxury goods retailer Gucci, a study in granite, glass and understated elegance.
"It's a signature high-end retail destination and Winners ain't — at least that's the perception," says Councillor Kyle Rae, whose ward encompases homeless shelters as well as Rosedale mansions.
But it's not just the clash of ambience and architecture that has raised eyebrows among Toronto's moneyed elite. For established retailers like Holt Renfrew, there's the prospect of having to compete with a neighbour that carries much of the same designer merchandise at 20 to 60 per cent off.
Is it the end of the "Mink Mile" or just the inevitable next step in the "democratization" of luxury goods retailing?
Winners' arrival on Bloor speaks volumes about the way people shop, particularly in the two fastest-growing segments of the market, women under 34 and over 45, according to market research firm NPD Canada.
Their wallets dictate value but their hearts yearn for luxury so they're splitting their purchases between the two extremes, says NPD's director of fashion Kaileen Millard.
There's a parallel trend: It's no longer embarrassing or a badge of class to shop at a thrift store. Getting something cheap has become chic.
"Remember 40 or 50 years ago when people sent their maids to Honest Ed's?" says Millard, referring to the discount emporium at Bloor and Bathurst. "Now it's: `Isn't this too cool and can you believe I got it at Wal-Mart?'"
The two fastest-growing categories of jeans are those priced under $29 and over $69. "Everything else in between is decreasing. The same thing is happening in bras. You've got polarization of price points," Millard adds.
John Williams, a principal in the retail-consulting firm J.C. Williams Group Inc., calls it the "democratization" of Bloor St.
Toronto is treading a path already forged on Manhattan's Fifth Ave. and Los Angeles' Rodeo Drive, the most exclusive shopping district in North America, he says.
Bloor is already home to Zara and H&M. Both specialize in runway knockoffs at cut-rate prices.
Even well-heeled Bloor St. shoppers who will pay $2,000 to $3,000 for suits at Harry Rosen privately admit to picking up khakis at the Gap for $69.95.
But will they shop at Winners?
"Disgusting," said Sandra Sherman, while browsing Bloor St. yesterday afternoon with her husband Ronald Sherman, who works in finance. "It's disgusting that Toronto can't support two blocks of high-end retail stores," she said.
"I don't think it's the right thing," adds George Corbo, owner of Corbo Boutique, across the street from the new Winners. "We've worked hard to develop Bloor St. as a high-end shopping area and this detracts from the whole thing."
Take a walk on Mink Mile, starting at Yonge St. and work your way west to Avenue Rd. There's Holt Renfrew, the luxury goods retailer owned by Galen and Hilary Weston. The 137-year-old company was once the official furrier to Queen Victoria.
Just ahead, Adrienne Clarkson, former governor-general of Canada, wrestles with an unruly umbrella outside the Chanel boutique, where the less-is-more aesthetic flashes from the single handbag ($2,175) on display in the window.
Security guards prowl the entrances.
On the left is Royal de Versailles, purveyors of fine jewellery.
Maple Leaf hockey star Tie Domi peeled off crisp $1,000 bills at least once here to buy baubles for his wife, or at least so the MFP leasing inquiry at City Hall heard earlier this year.
The store's owners, Irit and Michael Shay, are as much part of the social scene as their customers. Irit co-chaired one of the city's most fabulous fundraisers, the Brazilian Ball, earlier this year. Proceeds go to Toronto General Hospital.
The Shays have seen a lot of changes on Bloor since they opened their shop 30 years ago. Most of it has been for the better, says Irit, citing the arrival of Louis Vuitton and Prada.
"It's the best street in Canada. It's a destination for people who are after the high end," she says.
Winners is opening directly across the street. What does she think?
"The way we handle our business, we don't look right, we don't look left, we just look at what is right for us. Whatever happens on the street? I don't know," she says.
David Margolis opened the first Winners in 1982 on Spadina Ave. near Front St., in the heart of what used to be a thriving "rag trade" before cheap imports from China decimated Canada's apparel manufacturing sector.
The brash newcomer pioneered the concept in Canada of selling wholesalers' excess inventory at steep discounts in warehouse-style stores, a sort of permanent garage sale where the merchandise changed weekly and customers could find Calvin Klein jeans alongside Roots bags and the occasional Chanel sweater.
Twenty-three years later, Winners has 170 stores across Canada and is part of the $14.9 billion a year TJX Cos. Ltd. empire, the United States' leading off-price retailer, with buying clout that extends to Europe and Asia.
Margolis has retired but the business continues to thrive.
The Bloor St. location, which opens Nov. 17 in a space once occupied by a Chapters bookstore, will sport a distinct look from the franchise, one that is more in line with its haute new neighbours. The discounter is also sparing its fellow retailers the insult of living next to a no-frills window display. Access to the store is gained only through an interior hallway between a new La Senza lingerie store and a Nike sportswear outlet.
Winners has unveiled a sleek new sign intended to signal to shoppers that the store is more high-end than people might think, said Nigel Smith of HahnSmith Designs, the Toronto company hired to redesign the logo. Slender silver lettering on a black background replaces the fat blue lettering on stark white.
"We think it's a natural extension of our business," says Sherry Lang, vice president of communications for TJX, of Winner's Bloor St. location. "We think it's a perfect fit."
That's not what they're saying behind closed doors at the Bloor-Yorkville Business Improvement Area.
"It's come up," says Eric Abugov, vice-chair of the 2,500-member business association, says of Winners' move to Bloor St.
He's also a vice-president at ICI Construction Ltd., a company that has built such Bloor St. retail landmarks as Christian Dior, Tiffany's and Harry Rosen.
The problem for some BIA members wasn't just that Winners was coming to Bloor St. but that it was locating in the "luxury block" at the Avenue Rd. end of the district, Abugov explains.
Didn't Winners realize there was a pecking order on the street? The lower-end stores are supposed to locate closer to Yonge St., where the younger people shop.
An ardent free-market capitalist, Abugov figures consumers will decide who succeeds. "And if it doesn't work, it doesn't work."
In any case, no one else wanted the peculiar space at 110 Bloor St.
The trouble with the space is it's inverted, Abugov explains. All the square footage is on the second floor with a very small window at ground level. Most retailers want lots of street frontage to showcase their wares, while second floor space usually goes to offices, fitness clubs and other services. But it's ideal for a fashion discounter, looking to cut its window dressing costs and rental rates.
Caryn Lerner is the 48-year-old American retail whiz at the helm of Holt Renfrew, Canada's best-known luxury goods retailer
Coming into the job 13 months ago, Lerner inherited a small nine-store chain that she says has enjoyed several years of "double digit" sales growth. (The privately held firm doesn't disclose actual numbers.)
Her challenge, she says in a telephone interview just off the plane from New York, is to build on that success. With Lerner, who has worked at Barney's, Jones New York and ran Escada USA, came the depth of experience that owner Weston hoped would help Holt Renfrew become "an emerging international brand," he said at the time of her appointment.
She has already brought back children's wear, a category the retailer exited 20 years ago, because she noticed the top two trends in retailing were luxury goods and infant wear. Why not combine them, she thought?
Next, she's planning to overhaul the shoe department. And in the ready-to-wear category, she wants to add even more prestigious international brands, such as Gucci, Chanel and Dior, a move that will put her in direct competition with other boutique owners on the street.
Lerner believes there is room for everyone on the street, a philosophy underscored by an event the retailer launched last Thursday when Holt Renfrew held its first annual holiday window unveiling.
The festivities featured an outdoor ice rink, performances by Olympic skaters Jamie Sale and David Pelletier, and a flurry of artificial snow to herald the season.
Lerner defines Holt Renfrew's core customer as a sophisticated person who travels widely, is fashion savvy and appreciates fine quality. She's not worried about them defecting to places like Winners, or anywhere else for that matter.
"There's something to be said for walking into a nicely lit store and being waited on in a nice way, as opposed to shoving a shopping cart up to a steel rod and diving into the merchandise while another woman is driving her shopping cart into the back of your knees," Millard says. "I don't see Holt Renfrew panicking by any means."
Sibonney agrees. She and her husband owned a store at Bloor and Avenue Rd. before moving to funkier Queen St. W., where she co-owns The Beadery.
She's a supplier to Holt Renfrew and still loves to shop Bloor St.
Her favourite haunts include luxury goods retailers Corbo and Prada as well as Holts.
She doesn't see herself switching to Winners, where a prized Gucci bag may be hidden beneath heaps of more pedestrian Nine West or Liz Claiborne satchels.
"I'm a speedy shopper. I don't have the time or patience to go through racks of stuff," says Sibonney. She also believes that at better stores she's paying for higher quality. "I buy expensive items because of the way they're made."
Still, Sibonney thinks there is room for everyone on Bloor St. Winners could help attract more younger shoppers to the area.
"Maybe it will create a balance in the somewhat stuffy atmosphere. Things may change for the better."

[esquire]

Can it be? A Winners in Toronto's poshest stretch of retail?

Emerging crisis in Rosedale! Alert the matrons at once!

esq.

[SSLL]

Winners is everywhere, and I think it stinks that Bloor Street will now have such a common (though full of bargains) superstore next to the likes of Holt Renfrew, Gucci, and the only Canadian Tiffany & Co.

[Kilgore Trout]

it's not like this is the homogenization of bloor street. upscale stores like gucci and chanel can be found throughout the world and they're inevitably the same.

but rich people will now have to shop alongside mere commoners! oh, the horror!

[Rendar]

You know, I know quite a few well to do people who LOVE Winners...

[miketoronto]

There is nothing wrong with Winners. Its just that its very cluttered, no service, bargin style does not fit in with Bloor Street.

The only issue I have with Winners really, is that they have their main store just down a couple blocks on Yonge Street. Do they really need one on Bloor also? Would be nice to leave the space for more unique retail that would be a draw to Bloor Street.

Here are some pics from the other night when I was at Holt Renfrew on Bloor, for the opening of the Christmas windows. It is just so nice to be in a store like Holts sometimes, where care is given to displays, and good customer service, etc. It leaves a special touch to a shopping trip to Bloor.
And the question is if Winners can fit in.

http://img.villagephotos.com/p/2005-11/1101021/holt1.jpg

http://img.villagephotos.com/p/2005-11/1101021/holt12.jpg

http://img.villagephotos.com/p/2005-11/1101021/holt14.jpg

http://img.villagephotos.com/p/2005-11/1101021/holt16.jpg

http://img.villagephotos.com/p/2005-11/1101021/holt20.jpg

http://img.villagephotos.com/p/2005-11/1101021/holt21.jpg

http://img.villagephotos.com/p/2005-11/1101021/holt22.jpg

[Rendar]

just so nice to be in a store like Holts sometimes, where care is given to displays, and good customer service, etc. It leaves a special touch to a shopping trip to Bloor.
And the question is if Winners can fit in.


Depends on the store and dept. There are some real hags in the Edmonton store ladies section. If you're not already dressed in Gucci, you better bugger off.

[SSLL]

^Wow, great pics! Good to see such a production being undertaken. I do like the new logo too... This Winners shows how small the luxury market is in Toronto. Chapters is everywhere, but it was an emporium of literature. Winners is an emporium of last season's don'ts and strange sizes. I'm curious how they could fill all those levels though. Is the Starbucks still around?

[SSLL]

Zucker calls for Zellers closings
By MARINA STRAUSS
Friday, November 11, 2005 Posted at 4:57 AM EST
From Friday's Globe and Mail

Jerry Zucker wants to close some money-losing Zellers stores, sell off the downtown Toronto head office of Hudson's Bay Co. and invest $375-million to polish store operations.

As part of his formal, $1.1-billion offer for HBC, the wealthy U.S. financier outlined his blueprint for Canada's oldest company.

The documents, filed with regulatory authorities yesterday, reveal that Mr. Zucker, with almost 20 per cent of HBC shares, was flatly turned down by the HBC board of directors when he asked last May for two seats on an expanded, 14-member board.

"We would have had the best interests of shareholders at heart," Robert Johnston, vice-president at Mr. Zucker's South Carolina InterTech Group Inc., said in an interview. Most of the current board members own relatively few, if any, HBC shares compared with the would-be owner.

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The offer paints a picture of a U.S. businessman who sees potential in HBC, which runs the Bay, Zellers and Home Outfitters.

But the offer also shows Mr. Zucker to having been rebuffed every step of the way as he has tried to take more control of the decision making at HBC.

He says that he would pursue much the same strategy as HBC has now, but try to improve store presentation and behind-the-scenes technology. And he would rent out space to popular retailers within some of the HBC stores to draw more customers.

Nevertheless, his plans for HBC, which has more than 500 stores, may change if more information becomes available, the documents add. Observers believe he ultimately would break up the company and unload its parts. His offer expires on Dec. 29.

Mr. Zucker, who first started buying HBC shares in mid-2003, offered in August of 2004 to buy the company for $15.50 a share -- higher than the current $14.75-a-share bid, the documents disclose. He made the proposal in a letter to the board of directors.

Three weeks later, on Sept. 7, chief executive officer George Heller replied by letter, saying the company was "not for sale," the latest offer says. "The board of directors had concluded that 'it would be inappropriate and unwarranted to give anyone access to confidential data regarding [HBC] under the circumstances.' "

HBC spokesman Rob Moore said in an interview that the board will formally respond by Nov. 25, as required. But "there are items in there we would consider to be inaccurate."

He didn't explain why Mr. Heller, rather than the chairman of the board, had responded to the 2004 offer on behalf of the board.

HBC's chairman, or "governor," is Yves Fortier, an influential Montreal lawyer and former ambassador to the United Nations.

In August, 2004, Mr. Zucker wanted to run HBC with the key management personnel in place, the offer says. Asked yesterday whether Mr. Zucker would still keep the executive team, Mr. Johnston did not reply directly. He said Mr. Zucker would have to meet with management and see if its "goals and interests" were in line with those of the new owner.

Mr. Johnston added that, at the time, Mr. Zucker had high praise for management and its strategy. But since then, he has become increasingly disappointed with the financial performance of HBC, and "the inaction of management and the board of directors of HBC to take effective steps to maximize shareholder value," the offer says.

Last week -- six days after Mr. Zucker made his intentions known -- HBC cut 825 employees from its 70,000-strong staff and reshuffled the top executives, a move aimed at saving up to $45-million in annual costs. The company has struggled to make financial improvements over the past several years.

Mr. Zucker would pour $125-million a year in each of the next three years into improving HBC's operations, Mr. Johnston said yesterday.

Mr. Zucker generally backs HBC's strategy of store modernization, expanded sales of big-ticket items, such as furniture, and the development of new businesses to capture the emerging "off-price" market, the offer says. Off-price retailing is led by the Winners chain in Canada and entails selling popular brands at a discount.

But Mr. Zucker "believes that there are a variety of other strategies that need to be implemented in order to build value and position HBC to compete in today's changing retail environment," it says.

Divesting the Toronto head office could fetch more than $100-million, some analysts have said.

Late last week, the HBC board set up a special committee, headed by board member David Galloway, to weigh its options. Mr. Galloway, a former Torstar Corp. executive, is chairman of Bank of Montreal, which is the parent of BMO Nesbitt Burns, the offer noted. It is advising HBC in both Mr. Zucker's bid as well as the sale of its credit card division.

HBC's decision last month to put the lucrative credit card business up for sale was the final straw that prompted Mr. Zucker to make his bid, Mr. Johnston has said.

On the Toronto Stock Exchange yesterday, HBC shares slipped 6 cents to close at $15.25.

[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.

[SSLL]

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.

[SSLL]

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.

[SSLL]

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 :D

[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...
_____________________________
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.

[SSLL]

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.
_______________________________-
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."

[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. " 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. [b]"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]

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]

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.

[SSLL]

Grocer in no fear of Wal-Mart plans
Jan. 25, 2006. 01:00 AM
ALLAN SWIFT
CANADIAN PRESS

MONTREAL— Metro Inc., the third-largest Canadian supermarket chain, is expressing confidence in the face of coming Wal-Mart superstores that will carry a full range of grocery products.
Chief executive Pierre Lessard said after Metro's annual meeting yesterday that the grocer's network of 573 stores in Quebec and Ontario already has discount outlets that can meet the competition, noting that regular Wal-Mart stores already carry dry groceries such as cereals.
He said Metro's Food Basics and Super C banners "are competitive with any type of discounter."
Wal-Mart Canada Corp. said late last year it will build two or three superstores in the next year or so that will combine general merchandise with a full range of groceries, including fresh food.
Wal-Mart Supercentres have made a big impact in the United States, but analysts say Canadian grocers are in a better position because they already run discount divisions.
Eric Richer La Fleche, Metro's chief operating officer, added that many of its stores are in urban settings, which don't have room for massive Wal-Marts.
"We don't take it (Wal-Mart) lightly; we just think we are competitive in Ontario and Quebec."
Lessard said Metro has no intention to add more non-food products.
Metro reported yesterday that earnings were $32 million in its first quarter ended Dec. 17, down from a year-ago $38.6 million as it booked $18.3 million in costs on the integration of A&P Canada stores.
The Montreal-based company, which bought the Canadian A&P stores from Great Atlantic & Pacific Tea Co. last July for $1.2 billion in cash and $500 million worth of Metro shares, said earnings amounted to 28 cents per share versus 40 cents per share the year before.
Excluding integration and rationalization costs and an additional tax expense of $5.3 million, net earnings were $49.6 million, or 43 cents per share. Analysts had called for 41 cents.

[canucklehead2]

Either way it looks like a dark day for Canadian owned retailers.

[malek]

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.

Nothing exists outside of the center of the universe.;)

[neilson]

HELL YEA!

TARGET WILL BE IN CANADA WITHIN 2 YEARS BECAUSE OF THIS, MARK MY WORDS!

Bay agrees to U.S. takeover
Jan. 26, 2006. 02:07 PM
CANADIAN PRESS


Hudson’s Bay Co.,(TSX: HBC), Canada’s oldest company whose fur-trading roots culminated in the birth of the country, has struck a friendly takeover deal that will see the iconic retailer fall into American hands after more than 335 years in business.
American businessman Jerry Zucker’s revised offer, which values the storied retailer at about $1.5 billion, including debt, comes just days before his original offer was set to expire and is now “unanimously endorsed” by HBC’s board of directors.

The friendly deal also comes in the wake of speculation that conglomerate Onex Corp. (TSX: OCX.SV) and mall developer First Pro Shopping Centres had launched an informal counter offer with an eye to helping discount giant Wal-Mart set up its highly-anticipated supercentres in this country.

“On behalf of the management of HBC, we are pleased with the outcome of the auction process and fully support Mr. Zucker’s enhanced offer,” said president and CEO George Heller.

“We are anxious to get to work with Mr. Zucker on realizing the value that we know is inherent in this great company.”

Zucker’s Maple Leaf Heritage Investments Acquisition Corp. has boosted the U.S.-based firm’s previous all-cash takeover offer to $15.25 a share, or more than $1.06 billion, plus assumed debt.

Hudson’s Bay shares (TSX: HBC ) were up $1.10, about eight per cent, in afternoon trading on the Toronto Stock Exchange.

The new deal raises Zucker’s previous offer by about $35 million and HBC said it is satisfied that the amended offer “constitutes full and fair value for the company.”

Hudson’s Bay had previously rejected as inadequate Zucker’s initial offer of $14.75 per share plus debt, after the American businessman put the historic retailer in play last October.

Established in 1670, Hudson’s Bay has more than retail 500 outlets, led by The Bay and Zellers chains. Now in its fourth century, the retailer is considered a cultural icon by Canadians because of its early wilderness exploration and colonization that predates Confederation.

But industry watchers say Canadians’ nostalgia for the historic retailer has waned in recent years and the company has struggled with poor financial results as bargain-hungry shoppers eagerly flock to U.S.-based retailers seeking more bang for their buck.

That has prompted newspaper columnists and industry watchers to complain bitterly that while Canadians publicly fret about the demise of Canadian-owned department stores, like Eaton’s, they don’t hesitate to shop American if the price is right.

Robert Johnston, Zucker’s spokesman and vice-president of strategy at South Carolina-based Maple Leaf Heritage, said Canadians’ concerns over HBC’s pending American ownership are “poorly placed.”

“This company has been a Canadian icon into its fourth century now. By having a foreign owner of this company will no way change or diminish that,” he said. “You have to recognize that this company was owned by foreigners up until three decades ago. It was, in fact, headquartered in the United Kingdom.”

Zucker, who already owns almost 19 per cent of HBC’s stock, has also made an all-cash offer for all of the outstanding 7.5 per cent convertible unsecured subordinated debentures due Dec. 1, 2008.

He’s offering $1,010 for each $1,000 principal amount of debentures, plus accrued and unpaid interest to the date that the debentures are taken up under the offer.

The new deal also comes with fewer conditions, HBC said. Zucker’s previous offer required the deal to be endorsed by about 90 per cent of HBC shares but that threshold has now been lowered to 66 2/3 per cent.

Maple Leaf will mail the amended offer by Feb. 10, and HBC’s board will issue an amended directors’ circular recommending that shareholders accept the new offer, which expires Feb. 24.

“We are pleased to have reached this agreement with HBC today and to be associated with a company with such a long and proud history. As the company’s largest shareholder for more than two years, we are aware of the tremendous opportunities available to HBC,” said Zucker.

“We are committed to enhancing our customers’ shopping experience through a substantially greater focus on service and revitalizing the spirit of the organization.”

[harls]

hooray.

[MikeTTG]

And yet strangely no mikescarbourough "the-sky-is-falling" post.

[MikeTTG]

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.

Yep, there was one in Toronto too. On two floors of the Exchange Tower, were the Starbucks and the food court are. That was back in the day when Abercrombie & Fitch was still the store where Teddy Roosevelt had bought his gear for the Spanish American War. It was the land of the $400.00 croquet set.

That A&F didn't survive the early '90s recession. The name was bought by (the Limited?) and turned into what you see today before it was spun off into a separate company. The original Abercrombie store in New York was across Madison from where Brooks Brothers flagship was and still is. Their Toronto location was empty well into the mid nineties, possibly until the time when the TSE closed its trading floor and that part of the building was gutted and rebuilt as it is now.

[SSLL]

And what a beautiful Starbucks it is now!

With the sale of HBC, I wonder if Zucker will stick to his word in standing by the brands that partly buit Canada (more Hudson's Bay Co. than Zellers, mind you).

[MTL-514]

Yep, there was one in Toronto too. On two floors of the Exchange Tower, were the Starbucks and the food court are. That was back in the day when Abercrombie & Fitch was still the store where Teddy Roosevelt had bought his gear for the Spanish American War. It was the land of the $400.00 croquet set.

That A&F didn't survive the early '90s recession. The name was bought by (the Limited?) and turned into what you see today before it was spun off into a separate company. The original Abercrombie store in New York was across Madison from where Brooks Brothers flagship was and still is. Their Toronto location was empty well into the mid nineties, possibly until the time when the TSE closed its trading floor and that part of the building was gutted and rebuilt as it is now.

interesting, thanks MikeTTG

[MikeTTG]

And what a beautiful Starbucks it is now!

With the sale of HBC, I wonder if Zucker will stick to his word in standing by the brands that partly buit Canada (more Hudson's Bay Co. than Zellers, mind you).

And it's always packed, at least when I take that route to the office and am jonesing for a venti caramel macciatto fix!

[Rusty van Reddick]

Neilson, why in the hell does this matter to you?

[neilson]

because i've been waiting for years and years to see Target come to Canada. It's a beautiful thing, just like the election earlier this week!

[MTL-514]

because i've been waiting for years and years to see Target come to Canada. It's a beautiful thing, just like the election earlier this week!

come to Canada?

aren't you from the deep south?

[canucklehead2]

Thats what I keep wondering. Someone who posts about Alberta alot yet is listed as being from Alabama. Either its a joke we don't get, or he is just obsessed with Canada. Either way I find it interesting..

[Rusty van Reddick]

He's some sort of wannabe but even that can't explain being thrilled about Target coming to Canada...

I'd be thrilled to see Target here tho.

[big W]

And yet strangely no mikescarbourough "the-sky-is-falling" post.

Thats becasuse the sky fell on Monday for him.

[big W]

Thats what I keep wondering. Someone who posts about Alberta alot yet is listed as being from Alabama. Either its a joke we don't get, or he is just obsessed with Canada. Either way I find it interesting..

I thought he was from the GTA and moved to the US south? I don't get the Alberta connection except that if he is a Canadian then he is a promoter of parts of Canada that are doing well.

Neilson fill us in please or are you going to enjoy your time as the Man of Mystry.

[neilson]

He's some sort of wannabe but even that can't explain being thrilled about Target coming to Canada...

I'd be thrilled to see Target here tho.
I lived in the Malvern section of Scarborough in Toronto for a summer; and so I know a good bit about your nation and it's largest city.

I also take pride in being a rare breed of Americans that actually follows along and pays attention to Canada. There aren't enough of us out there, and I only hope my knowledge and following of your country shows that yes, there ARE Americans that took the time to learn about your nation and keep up with it.

[habsfan]

It's good to know that some americans actually pay attention to what's going on north of the border.

I can honestly say that Neilson does seem to know quite a bit about Canada.

[SSLL]

Does the columnist even know what Home Outfitters is? He compared it to American Eagle Outfitters!!!
___________________________
What's in store for Hudson's Bay?
Odds are against a Phoenix-like revival
Jan. 27, 2006. 05:32 AM
DAVID OLIVE
BUSINESS COLUMNIST

"We had to pass where no human being should venture."
— Simon Fraser, early 19th-century Hudson's Bay Co. explorer
For good or ill, yesterday marked a turning point in the fortunes of Canada's oldest company.
Jerry Zucker, the secretive South Carolina investor whose $1.5 billion takeover offer for Hudson's Bay Co. was accepted yesterday by the HBC board after a 17-month standoff, will either make good on his pledge to revive the 335-year-old retailing icon. Or, failing where three previous management teams have done, the career bargain-hunter eventually will make good on his investment by selling off chunks of HBC's commercial heritage.
As he has done consistently since first acquiring a sizeable stake in HBC in 2003, Zucker yesterday promised a retail renaissance at the HBC stable of the Bay, Zellers, Home Outfitters and Designer Depot stores — a compulsory reassurance to suppliers and creditors.
"We are committed to enhancing our customers' shopping experience through a substantially greater focus on service and revitalizing the spirit of the organization," said a statement issued by Zucker.
The Zucker strategy is to pump an annual $325 million over the next three years into modernizing HBC's operations — a decidedly modest sum for Canada's second-largest retailer after Wal-Mart Canada Corp.; upgrade store appearance; emphasize sales of furniture, appliances and other big-ticket items; step up HBC's recent emulation of rival Winners' "off-price" formula; close money-losing stores in the 294-unit Zellers chain; and dispose of HBC's Toronto head office, likely fetching more than $100 million.
Zucker also has plans for jazzing up merchandise display, a chronic weakness at Zellers in particular; introduce state-of-the-art inventory control systems and other behind-the-scenes technology to keep popular items in stock; and boost traffic and sales-per-square-metre by inviting third-party merchants to set up boutiques in the Bay's oversized emporia.
While usually diplomatic over the years in his stated satisfactory regard of CEO George Heller, Zucker would likely install a new management team — a set of fresh eyes at a firm that has a department-store mindset dating from an era when traditional department stores were still relevant — with a more innovative group perhaps headed by Winners founder David Margolis or Sears Canada Inc. turnaround CEO Paul Walters, who was ousted in a power struggle with the incoming CEO of Sears, Roebuck & Co.
Heller and his board forced Zucker's hand. Like Kirk Kerkorian and his so-far unhappy investment in General Motors Corp., Zucker finds himself with a wasting asset. In 2003, he seemed content to wait on the bountiful profits to flow from Heller's recently unveiled five-year plan to arrest market-share losses to nimble competitors.
By October of last year, Zucker had changed his tune, launching a takeover bid for the entire firm, but Heller had not changed his. Announcing calamitous financial results in November, Heller continued to insist that staying the course was preferable to a takeover. "The best way to maximize shareholder value is to execute the strategic plan."
Zucker would agree. But HBC has not followed through on that plan. Blaming everything from soaring gasoline prices that crimped mall traffic to a bulky new inventory system that has depressed big-ticket sales, HBC reported a sextupling of losses in its latest quarter in November, to $50.3 million. More important, same-store sales — revenue at stores open a year or more — continued to slide at the Bay (down 6 per cent) and Zellers (down 2 per cent).
"Two years into their five-year plan and they have failed completely to improve profitability, sales levels or margins," Zucker's Canadian-born spokesman Robert Johnston complained in November.
The odds are against a Phoenix-like revival of HBC, long a commercial anachronism in a field now dominated by highly focused merchants. Which is not to say nothing good will come of a Zucker-led regime.
On their own, freed of the weight of HBC's debt, overhead and sclerotic decision-making, the Bay, Zellers and Home Outfitters could yet thrive as northern versions of Nordstrom Inc., Target Corp. and American Eagle Outfitters Inc., respectively.
As experience shows, all-purpose general merchandising — with the singular exception of Wal-Mart — is an obsolete concept. And that HBC in its current form is a business that no entrepreneur would venture to create in this day and age.

[neilson]

^Would you want Linens 'N Things or Bed, Bath, and Beyond to buy Home Outfitters?

[MikeTTG]

^^Yes, please, HURRY!

[MTL-514]

^ funny!

[SSLL]

A NEW OWNER FOR HUDSON'S BAY: STRATEGY
Note to Zucker: Five things you should know
Life at HBC is more crazed than when our grandfathers shopped there, GORDON PITTS writes
By GORDON PITTS
Friday, January 27, 2006 Page B5

If Jerry Zucker takes ownership of Hudson Bay Co., he will venture into the tumultuous world of retailing, where today's triumphant business model becomes next year's road kill.

That's reflected in the staggering mortality rate of once-successful store brands-- names like Eaton's, Woodward's, Woolworth, Kresge--and the abject vulnerability of formerly dominant concepts, such as the mid-range department store exemplified by the Bay.

Even Loblaw Cos. Ltd., considered Canada's most savvy retailer, has stumbled as it frantically refits its supply lines for a looming Wal-Mart Stores Inc. threat in food retailing.

"It's a topsy-turvy world," says John Williams, a Toronto retail consultant, who points his finger at the mercurial consumer as primary agent of this change.

Michael Silverstein, a Chicago-based retail consultant and senior vice-president with Boston Consulting Group, says retailing is the most Darwinian of all businesses, propelled by an ever-changing cast of entrepreneurs with energy and drive.

There is one major shift that totally re-orders the retail industry in every decade of modern history, he points out. The main premise to understand is that the leading concepts today will surely stumble tomorrow, Mr. Silverstein said in an e-mail message.

With that in mind, Mr. Zucker must become familiar with several facts of life:

The mid-market is still collapsing

"There is no reason to shop in the middle," says Mr. Williams, who heads J..C Williams Group. Consumers who find a product to their liking at a mid-range store can always go to Zellers Inc., Costco Wholesale Corp. or Wal-Mart to buy the same item at a reduced price.

Of course, some consumers find the relatively tacky environment and pedestrian service of the discounter retailers is an affront to their sense of taste and self-image. In that case, they can always move up to the creature comforts of luxury retailing with its intense customer service --as long as they are willing to meet the price. All of which leaves the mid-market vendor with an eroding group of consumers.

This is not your grandfather's store

The department store is not dead, but it is being reshaped. In some cases, "it is becoming a collection of specialty stores with the same staffing model as a specialty store," says Mr. Silverstein, who views Bloomingdales of New York and Harvey Nichols of London as models for many reshaped players.

"The ones that will die are chasing cost reduction and inventory turn," says Mr. Silverstein, who sees no relaxation by Wal-Mart as a force in the discount end of the sector.

Toronto-area retail consultant Richard Talbot points out that once stumbling department store operators, such as Nordstrom Inc., based in the U.S. Northwest, and Selfridge's of London, have revived through new concepts and the exercise of "real entrepreneurial flair." He says the Bay had that opportunity with the demise of Eaton's but chose a more down-market approach.

The rise of instant product delivery

Mr. Silverstein likes the way a new wave of branded manufacturers have been able to use their own retail networks as detection systems for consumer trends and vehicles for instant product delivery.

"When Apple launched the Nano [iPod], it was able to announce it on Monday and have it on sale in over 300 stores with dramatic merchandising on Tuesday," he says. "It was a blockbuster success."

He notes that the U.S. manufacturer of Coach leather goods also constitutes one of the most profitable retailing successes. Similarly, Zara, the Spanish fashion retailer, supports its stores with a tightly connected manufacturing and supply chain capability.

The Internet as great influencer

On-line sales are rising, Mr. Williams says, but they still only account for a tiny percentage of retail shopping in Canada. But the Internet is making a huge impact in specific areas, such as books and travel, and is influencing 20 per cent of all retail sales.

People use it to research and compare product specifications, prices and quality ratings. Then they go to the retailer of choice to kick the tires and clinch the deal, Mr. Williams says. It does not show up as an Internet retail transaction, but all the preparation is done on-line.

It's also contributing to the collapse of the middle and the pressure on price. "Consumers can really learn about goods and pick exactly what they want," Mr. Silverstein says. "They can then 'force' the retailers to compete on price."

Buzz is big

Increasingly mobile, media-saturated consumers are alert to all the latest global trends, and that is shaping their shopping patterns.

Mr. Talbot, who heads Talbot Consultants International Inc., says Hudson Bay's discount brand, Zellers, has probably run its course. But if it were converted to Target, the popular U.S. discounter with the style cachet, sales would soar overnight because Canadian consumers are already well informed about the Target model. Similarly, Canadians were primed for Wal-Mart's price-slashing formula when it moved into Canada 12 years ago.

All this transborder buzz accelerates the pace of change, as retail formats shift and store banners fall in and out of favour. As brands become more transient, the stores' real estate emerges as the deal maker for retail companies. But, no doubt, Mr. Zucker already knows that.

[SSLL]

Retailers welcome renovation
Station's stores pine for customers

Sprucing up `shabby' terminus may help
Feb. 3, 2006. 01:00 AM
HAROLD LEVY
STAFF REPORTER

Plans to redevelop Union Station were met with mixed feelings by the owners of some of the station's smaller stores.
Ching Mei, owner of The General Store on the departures level, welcomed the massive renovations but feels much more downtown development is required.
"It is not enough to improve Union Station," Ching, who at 18 years believes she is the longest-standing merchant at Union Station. "The whole area around it has to be made more conducive for retail stores and there has to be adequate parking."
But Ching hopes the renovation will bring more business to the stores in Union Station which are often stagnant between the morning and evening rush hours.
"It could use a boost," she said.
Nancy, owner of a small bakery franchise in the GO Corridor area of Union Station, described her feelings about the renovation as "fifty-fifty."
"It's good for regular people and for Toronto because Toronto is open to the world and that is good," said Nancy, who has a 1 1/2-year lease. "But for us, for the business ... we're nervous.
"Change may not be good for the business."
It was good news to Jane Kang who works in a small cosmetics store in the concourse.
"This place is shabby," she said. "It definitely needs to be cleaned up.
"Look at the marble," she said, pointing toward the corridor. "I'm pretty sure it was white when they put it in. Now, it is brown."
Kang pointed out major problems for everyday users of the station, such as elevators that are so inaccessible that people take the ramps instead, poor access to the building and a confusing layout.
"I get people coming in all the time to ask me where to go," she said.
Mayor David Miller also welcomes the proposed overhaul.
"My hopes are that, first of all, the retail areas that are there are significantly improved. It will actually be a destination," he told reporters yesterday.
It was also good news to Qin Bin who operates a newsstand in the concourse area and has dreams of the station being transformed into an "enchanting" retail and transportation centre.
"I hope it can be made like a station fit for a modern city," said Qin, who recently signed a four-year lease.
"This could be huge and I will benefit."
with files from catherine porter

[SSLL]

Roots reaches out to grow
The Canadian outfitter of the U.S. Olympic team has a new beret and other gear, plus a sales deal with Target

By Mary Ellen Podmolik
Special to the Tribune
Published February 4, 2006

Four years ago, Roots Canada Ltd. struck gold at the Winter Olympics with a navy and red beret.

The $19.95 hat worn by the U.S. team became the must-have item from the Salt Lake City games. Fans lined up outside Utah stores for hours in hopes of nabbing one. Others, who saw the berets on television being worn by Olympians, bought them through Web sites or plunked down up to $50 to nab one via eBay. Altogether, the Toronto-based Roots sold more than 1 million Team U.S.A. berets during and after the games.

It was an extraordinary break. No retailer could ever have hoped to achieve that kind of recognition through traditional marketing.

Four years later, Roots executives are wondering if lightning can strike twice.

Heading into the 2006 Olympics in Torino, Italy, which kick off Friday, Roots again will outfit the U.S. team during the opening and closing ceremonies. The beret is back, too, albeit with a different color scheme, style and a suggested price tag of $24.99.

This time Roots is being slightly more aggressive. Athletes and consumers will get a choice of wearing solid-color berets that are either red, white or blue. There also are shirts, pants, sweaters and color-blocked vests, all featuring a look that Roots co-founder Michael Budman calls "retro futurism." They will be sold in Italy and through Roots and the Internet, but they also will be available in Target stores.

Success isn't necessarily a sure thing.

"When opening day comes, when judgment day comes, hopefully the 70 or 85 million Americans that are watching will support the team," Budman said. "What happened in '02, something like that happens once in a lifetime. The mood in the country was much different than it is today. America was more unified."

Factors that helped propel sales four years ago--the then-recent events of Sept. 11, 2001, and the staging of the Olympics in the U.S.--no longer apply. Also, the firm is sharing the spotlight as an official U.S. team outfitter with Nike Inc., which for the first time will dress athletes for the medals stands.

So Roots, which has only five U.S. stores but would eventually like to have 40, is looking for maximum exposure. It signed speed-skating gold medalist Apolo Ohno for its ads. It inked deals with Internet retailers to sell key items like the berets. And efforts to find a U.S. distributor for the berets led to an agreement that is now sending most, but not all, of the 12-piece Olympic collection to Target's 1,400 stores in time for the opening ceremonies.

"It's very trendy," Target spokeswoman Aimee Sands said. "That athletic look has been popular and we expect it to do well."

Consumers who favor either Nike's or Roots' duds are buying into a trend that is helping fuel one of the biggest areas of growth in retailing right now: the sale of active sportswear to be worn on the street, not just in the gym.

Last year, sales of women's activewear rose 7.9 percent over 2004's level, compared to a 2.7 percent gain for all of women's apparel, according to the NPD Group. Sales of men's active sportswear grew by 7.7 percent during the same time period, compared with a 5 percent increase for all of men's clothing.

Jane Hali, a retail consultant at New York-based Coleman Research Group, thinks the beret's popularity was cemented after athletes wore it while carrying a tattered U.S. flag from the World Trade Center during opening ceremonies.

This time around, she predicts a different best seller. "The cap will sell more," she said. "It's Americana."

Despite increased visibility of its brand four years ago, Roots did not open additional stores in the U.S. The privately held company points to the large financial commitment required and its continued quest for the right partner to share expenses.

So while Roots operates more than 125 locations in Canada, it has not expanded across the border. "That's the natural inclination, to focus on your own backyard," Roots spokesman Robert Sarner said. "It's not a casual endeavor to open stores in major cities in the United States."

U.S. retailers like Home Depot, Sears, Costco and Gap have crossed the Canadian border, but Roots may put more stock in the history of another Toronto-based company, Dylex Ltd., once one of Canada's largest retailers with more than 600 stores in its home country. Dylex's entry in the U.S. market, made through the purchase of existing chains Foxmoor Casuals and Brooks Fashions, faltered; divisions were sold and Dylex was put into receivership in 2001.

"Canada is a very teeny country," said Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consultancy and investment banking firm.

"The United States is like a different world to negotiate leases in. We've got lifestyle centers, urban centers, malls. If you come to the U.S. and you're a Canadian company, you've got to get quite a bit of expertise or you get destroyed."

[malek]

Puma Acquires Montreal-Base Licensee ATAadvertisementRelated information

All Associated Press News

FRANKFURT, Germany (AP) - German apparel maker Puma AG said Tuesday it acquired ATA Inc., a Canadian company that licenses and distributes its footwear, clothing and accessories.

Terms of the detail were not disclosed, but Herzogenaurach-based Puma said it would help it expand its products in Canada.

"As a licensee and distributor, ATA Inc. has exceeded our expectations and has grown to be a valued and respected partner," said Puma Chairman and CEO Jochen Zeitz. "This business venture builds upon the success demonstrated by Puma North America and will lead to new and exciting opportunities in Canada."

Shares of Puma were up a quarter of a percent to euro266.69 (US$319.52) in Frankfurt trading.

[MTL-514]

Trendy to the core
Banana Republic, H&M said to be close to finding downtown locations
EVA FRIEDE, The Gazette
Published: Tuesday, February 07, 2006

Downtown appears headed for a retail rush: after H&M opens at least three suburban stores this spring, it will most likely set up shop on Ste. Catherine St. W.

One possibility for a location is the Bank of Nova Scotia branch on Ste. Catherine just west of Peel St. The branch is closing April 7.

Sources say both H&M and Banana Republic are closing in on downtown locations.

H&M, the Swedish fast fashion retailer, has revealed plans to open in March or April in Rockland Centre, Galeries d'Anjou and Fairview-Pointe Claire. But recruiters are already hiring for a Carrefour Laval store, although company spokesperson Christian Bagnoud said plans for that store are not final.

Bagnoud said he is not aware of leasing details in the downtown core, but sources say the mega-giant company - with more than 1,100 stores worldwide - is days away from signing a deal.

H&M, established in 1947, is known for its cheap, trendy fashion and for signing on guest designers Karl Lagerfeld and Stella McCartney for one-time collections.

The downtown store would probably be more than 10,000 square feet in size, Bagnoud said. The Fairview store, the first slated to open, will be 16,000 square feet.

Banana, a division of Gap, made its entry into Montreal last August with four suburban stores more than a decade after opening in Toronto. A representative of Gap in Canada would not confirm details of Banana's hunt for a downtown location.

Another entry to the retail scene will be Aritzia, an upscale Vancouver-based retailer with about 20 shops across Canada.

Aritzia carries trendy denim brands like Fidelity, Habitual and Seven for all Mankind, as well as Juicy Couture, Ella Moss and its own brands.

Marketing manager Sally Parrott said Aritzia was looking at a fall opening, on Ste. Catherine St. or possibly in a mall.

© The Gazette (Montreal) 2006

[malek]

I just read (sorry its in French) that Oakley will open its second Canadian O-Store in downtown Montréal on st-catherine st. between Drummond and Montagne. It'll be the largest Canadian store with 3200 sqft, almost twice the size of its Toronto location (1700 sqft).

[MTL-514]

wow - lots of new stuff coming to St Catherine Street West

[malek]

I was getting worried after seeing some stores being closed... I guess it was their landlords that kicked them out for better (i.e. fatter) tennants.

[SSLL]

Great news. Strange it took so long for Banana Republic to come to Québec after being in Ontario to BC for so long...

[MTL-514]

it's often the case, with many stores and restaurants

[malek]

they need to adapt their marketing and services to a different market... but 10 years is a bit too long for that ...

[miketoronto]

I was busy showing my aussie friend around so now I have time to comment on this thread as someone mentioned I did not comment yet.

All I have to say is it is disgusting how our oldest retailer and company is now controlled by American's, along with a bunch of other companies in one week.

In one week Canada has lost Hudson's Bay Company, Fairmont Hotels, and Dofasco Steel to foreign ownership.

This is very risky business for Canada to be letting everything in our country be foreign owned. As they say in my dad's town in Italy, "you don't have a country anymore if nothing is owned or made in your country".

Anyway we will have to see what happens, but I think it is a sad day in this country that so many companies in one weeks time have just been taken over.

HBC is a worrying one, as ou can bet American's are going to do something nasty with the downtown stores to make them lost profit and close them down. And if not that, then they will either turn them into such high end places us normal residents won't be able to shop there, or downsize them.

I already noticed THE BAY sign is dark on the top of the Hudson's Bay Centre in downtown Toronto.

Anyway sad sad sad week for Canada. Our legendary department store is now owned by city hating Americans. Our legendary railway hotels which had to give up the CP NAME, are now owned by a prince who rules a country that hates everything western. And now our own steel companies are not even Canadian.

Not good for Canada, and maybe we need drastic takeovers like this to show how Canada is in such bad shape when it comes to protecting our country and our own companies and products.

I say its time to shut down free trade and bring back the rules of foreign ownership not being allowed at such high levels.

Anyway let these companies keep buying us out. I will just spend less money at them. I was in Montreal last week, and I bought a whole new set of clothing from SIMONS, a nice Canadian owned company.

We should be ashamed as Canadian's that there is almost no stores in our malls owned by Canadians or Canadian icons anymore.

And the same goes for companies. We should be ashmed CP HOTELS is no longer, MOLSONS is no longer, DOFASCO is no longer.
These are companies with proud histories and links to Canadians. Now they are nothing but foreign owned by people who could not give a crap about Canada.

Then we wonder why people are not visiting Canada in record numbers anymore. Could it be because when people cross the border all they see is the same stores, restaurants, and companies they have in their own country? Whats the point of going somewhere different when its all the same.

Even my mom who is American born thinks its a sad day for Canada and is very upset HBC was sold to American's.

Canada was much better off in the 80's. I remember a Canada back then with more idenity then now.

But it seems Canada does not care anymore. Lets just keep selling off our country. Maybe the next step will be the selling off of Ontario to a prince in some other land.

[SSLL]

Apple Stores for downtown Toronto and Carrefour Laval:
http://thinksecret.com/news/0602briefly.html

[SSLL]

Canada firm to buy Sleep America

Erica Sagon
The Arizona Republic
Feb. 16, 2006 12:00 AM
Valley mattress retailer Sleep America is getting into bed with Sleep Country Canada.

The Toronto company said it intends to buy Sleep America's chain of 32 stores in the Phoenix area and Tucson for an undisclosed price. The deal is expected to be final in March.

Sleep America co-founders Debbie and Len Gaby will keep their posts as president and chief executive officer, respectively, and no immediate changes are planned for the Sleep America brand.

Len Gaby said he is looking to expand Sleep America outside Arizona in "a couple of years, at least." For now, the Valley's population growth is keeping the firm busy, he said. Six or seven Sleep America stores are set to open in Arizona.

"I wouldn't say we're maxed out here yet," he said. "We're looking at locations that literally weren't on the map a few years ago."

He added that Sleep Country Canada's growth plans were consistent with his own and that the takeover was a natural fit.

The Gabys opened Sleep America in 1997 and made the name well-known in the Valley through ads touting the company's customer-satisfaction guarantee.

Sleep Country Canada Income Fund, the parent company of Sleep Country Canada, has 116 stores and 800 employees under Sleep Country Canada and Dormez-Vouz brands. Sleep Country Canada executives were not available for comment.

[SSLL]

Giant Tiger store has me purring
Feb. 18, 2006. 01:00 AM
MARION KANE

My daughter Ruthie was a mere pup — about 6 years old, as I recall — when her dad returned from a shopping spree in search of a party dress with this burning question: "Where did she learn how to shop?"
Apparently, he was astounded to watch my offspring walk into the first store, immediately approach a rack of clothes and begin effortlessly flicking the hangers with one hand — a well-known selection technique — as if this were second nature.
"Guilty on all counts," was my reply, knowing full well that Ruthie had learned the art and wondrous pleasures of shopping under the tutelage of a skilled expert — yours truly.
Many of my well-honed purchasing pointers were gleaned from my mother. Among them: always eat lunch, not dinner, in a posh restaurant; visit high-end stores (the likes of Holt Renfrew and, in her case, Liberty of London) only during sale season and always thoroughly scour the reduced rack for expensive lingerie.
This canny plan has given me a magpie eye (I can spot a designer vintage coat at a Goodwill store from across the room) and a passion for bargain-hunting.
All of which leads to today's topic: the wondrously eclectic retail emporium that's a famous landmark in my new home of Stratford: Giant Tiger.
I'd been here only a couple of weeks when news of its many attractions reached my ears — and my mouth.
At a jolly wine and dessert gathering in late summer, a guest brought a delicious lattice-crowned cherry pie made at the well-known eatery Anna Mae's in nearby Millbank. The pie's source, she freely confessed, was Giant Tiger, where they get daily deliveries of Dutch apple, lemon meringue, raspberry custard and other tasty versions priced at less than $7 a pop.
Soon, I became a regular at this clean, brightly lit store, spurred on by friends' tales of $5 terry cloth bathrobes from a defunct cruise line, brand-name bathing suits for $15 and delectably creamy fudge made in Quebec by Ste. Julie and priced at under $3 for 240 grams.
Seated on a swivel chair in Giant Tiger's second-floor office, where we have a bird's eye view of the entire store, I chat with owners Jack and Pauline Book.
With many years in the retail biz, they bought this outlet as a franchise in 1996 and quickly doubled the space to comprise its current 20,000 square feet.
Giant Tiger is a family-owned Canadian chain with 159 stores located mostly in Ontario and Quebec but expanding rapidly into other provinces. It began with its three-storey landmark outlet in downtown Ottawa 40 years ago and quickly spread, mainly to rural areas. This spring, the GTA will get outlets in Mississauga and Brampton with plans for more.
"We try to have Canadian products," Jack explains, "but not everything we sell is Canadian." Main attractions are fashion and food. "We constantly have new arrivals," he continues, noting there are customers who come daily. "People are on the hunt for treasures," adds Pauline. "You may come in and find we've got a popular item at a very good price."
Yes, I have the spectacular velvet skirt, black beaded top, small leopard suitcase, frozen shrimp and chicken breasts, microfibre cleaning cloths, Mortimer's tourtiere, pear-flavoured white tea, Melitta coffee and crunchy Vlasic dill pickles to prove she's right.
"We cater to a large German and Dutch population," Jack explains as we cruise an aisle rife with Spekulaas cookies, Dr. Oetker pudding mixes and Zwieback rusks. Cadbury's chocolate fingers made in the U.K. and terrific Waterbridge jams from Denmark are other top-notch imports.
Seeking a sugar fix, I recently picked up a package of King Dons made by Hostess. Surprisingly, they are yummy: small dark chocolate mini-cakes covered in dark chocolate with white "cream" oozing from the middle.
Here are two recipes made with items from Giant Tiger, my favourite new shopping venue.
Tuna Bean Salad
Inspired by a Tuscan salad of tuna, cannellini beans, tomatoes and onion, this makes a nutritious, tasty sandwich filling for pita pockets. Use President's Choice Organic Bean Medley but red or white kidney, black-eyed peas, cannellini beans or chick-peas are fine, too. Omit olives, dried tomatoes, if desired.
170g can chunk or solid white tuna, drained
19-oz (540-mL) can beans, drained, rinsed
1-1/2 cups halved cherry or whole grape tomatoes
1/4 cup pitted black olives, quartered
1/4 cup sundried tomatoes packed in oil, drained, sliced
1/2 red onion, peeled, quartered, thinly sliced
1/3 cup extra-virgin olive oil
2 tbsp red wine vinegar
1/2 tsp dijon mustard
Salt + freshly ground black pepper to taste
1/4 cup chopped fresh parsley
In serving bowl, break up tuna with fork. Add beans, tomatoes, olives, tomatoes and onion. Stir gently to combine.
In small bowl, whisk together oil, vinegar and mustard. Add to salad; stir gently to combine. Taste; add salt and/or pepper if necessary. Garnish with parsley.
Makes about 4 to 6 servings.
Caramelized Pineapple
Inspired by a dessert prepared by students at Northwestern Secondary School right here in Stratford and their clever chef/teacher Paul Finkelstein. They used fresh pineapple served with panna cotta and coconut ice cream. Add a little coconut milk to sauce, if desired.
19-oz (540 mL) can sliced pineapple
1 tbsp butter
3 tbsp granulated sugar
1 tbsp lemon juice
1/4 cup golden or dark rum
2 tbsp reserved pineapple juice
1 tsp vanilla extract
Lemon juice to taste, optional
Drain pineapple well, reserving 2 tablespoons for sauce and remainder for fruit salad, smoothies, etc. Pat pineapple dry with paper towel.
Preheat oven broiler.
In large heavy skillet, melt butter and sugar over medium heat; stir in lemon juice and cook 2 to 3 minutes or until golden brown and beginning to caramelize. Add pineapple in single layer; cook about 3 to 4 minutes per side, turning once with tongs. Transfer to wire broiler rack in single layer.
Meanwhile, reduce heat under skillet to medium low; add rum, reserved pineapple juice and vanilla. Cook, stirring and scraping browned bits from skillet, until slightly thickened, about 2 minutes. If too sweet, add a little lemon juice.
Place pineapple under broiler; cook until browned and caramelized, about 5 minutes.
Serve warm drizzled with a little of its sauce with ice cream, crème fraîche or whipped cream.
Makes about 4 to 6 servings.
_________________________
Giant Tiger coming to GTA soon
Feb. 18, 2006. 01:00 AM

Giant Tiger plans to open stores in Mississauga and Brampton this spring.
In Mississauga, a 26,000-square-foot store is set to open March 18 at 3200 Erin Mills Parkway in a former Food Basics location. In Brampton, a 38,000-square-foot store is to open April 1 in the Kingspoint Plaza at 370 Main St. N. (Highway 10) in a former A&P grocery store.
Jeff York, the president of Ottawa-based Giant Tiger Stores Ltd., says the company has had good response to its new stores in Ajax, Newmarket, Bradford, Bolton and Acton. "We have had numerous requests from customers to open more stores in the area," he says.
Giant Tiger, a privately held Canadian company, was established in 1961 in Ottawa's Byward Market and now has 159 locations throughout Ontario, Quebec, Manitoba, Saskatchewan, Alberta and New Brunswick. There are 99 stores in Ontario.

[SSLL]

From: http://www.theglobeandmail.com/servlet/story/RTGAM.20060220.wxrloblaw20/BNStory/Business/home
___________________________________
Couture by Loblaw
MARINA STRAUSS
RETAILING REPORTER
Grocer Loblaw Cos. Ltd. is poised to launch a low-priced private-label apparel line next month as it races to shore up its product selections and compete against powerful discounter Wal-Mart Canada Corp.

The line is being referred to as Joe Fresh -- Joe after fashion guru Joseph Mimran, who developed the men's and women's wear for Loblaw, and Fresh, referring to styles that are refreshed often and therefore never become outdated. Mr. Mimran is also the architect of the retailer's private-label general merchandise offerings under its familiar President's Choice label.

The apparel rollout is important for the country's largest supermarket chain as it grapples with disappointing financial results and snags in introducing non-grocery items. At the same time, Loblaw is feeling the heat from Mississauga-based Wal-Mart Canada, which is preparing to introduce more food and apparel at larger supercentres in Canada late this year or early next year.

It is a timely strategy for Toronto-based Loblaw, said retail consultant David Howell, president of Associate Marketing International. "It's important that Loblaw do it now. . . . It's a fast race between Wal-Mart and Loblaw."

Loblaw has been racing to build more superstores, expand product selections and cut costs in a bid to take on Wal-Mart. But the grocer's transformation has been bumpy, and Loblaw doesn't expect a turnaround until later this year.

The problems were particularly acute in the non-grocery aisles, as new home products were added to the mix but couldn't make it to store shelves on time because of distribution breakdowns, resulting in missed sales and lower profits.

Now Loblaw is gearing up for its next major launch -- apparel -- as it attempts to emulate popular U.S. discounter Target Corp., industry observers said. Minneapolis-based Target has become a destination retailer for cheap fashions, and is one of the few merchants successful in competing with Wal-Mart.

Wal-Mart, for its part, has beefed up its clothing offerings, partly by adding trendier fashions under the George label. It is aimed at capturing a higher-income, style-conscious shopper, the same one that Loblaw is chasing.

Loblaw is putting finishing touches to its private-label apparel line, which some industry insiders say is being named Joe after its designer, Mr. Mimran, just as George was named after George Davies.

Mr. Mimran does private-label work for Loblaw and Toronto-based Holt Renfrew & Co. Ltd., both headed by billionaire Galen Weston. Mr. Mimran, who declined to comment, is founder of the hip fashion chain Club Monaco.

Loblaw is redesigning some of its superstores to accommodate an expanded apparel section, with fitting rooms and separate cashiers.

Loblaw spokesman Geoffrey Wilson wouldn't comment on the apparel plans, but suggested March 13 should be set aside, and an invitation would be forthcoming. "There are many new and exciting things coming down the pipe."

Wal-Mart spokesman Andrew Pelletier said its George line is performing well in Canada, and will be expanded. "We'll be raising the bar when it comes to apparel because that's what the customer expects."

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From: http://www.theglobeandmail.com/servlet/story/RTGAM.20060219.whbcc0219/BNStory/Business/home
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HBC shakeup imminent
MARINA STRAUSS
From Monday's Globe and Mail
If all goes as scheduled, Jerry Zucker will pick up the keys to Hudson's Bay Co. on Friday. He's expected to take a little while to look around the old place, and then get right to work.

There's a lot on his “To Do” list as he takes over the oldest company in Canada. Its core retailing division makes little, if any, money, and has been losing business to nimbler rivals. Its discounter Zellers struggles to compete with the powerful Wal-Mart Canada Corp., while the Bay races to keep up with specialty chains.

HBC is desperately in need of a sharpened image and leaner, more efficient operations.

“Zellers has to do more to be different,” says retailing consultant Walter Loeb in New York, a former member of HBC's board of directors. “In order to make it, you have to take a position against Wal-Mart ... Zellers is key to the future success.”

Mr. Zucker has said he will follow HBC's strategy of closing unprofitable Zellers stores, expanding others and improving customer service and inventory management to ensure in-demand goods are on store shelves. Asset sales are also on the drawing board.

“We think there is tremendous potential to really reinvigorate this company and put it back on its growth trajectory and re-establish itself as the dominant department-store retailer in Canada.” Says Robert Johnston, a vice-president at Mr. Zucker's South Carolina business.

Mr. Loeb says some Bay stores should be converted to Zellers, and that the Target-ization of Zellers — styling them more in the image of the successful U.S. discounter Target — needs to be hammered home even more.

The downtown Bay stores, meanwhile, need to become a fashion destination at mid-to-higher prices, Mr. Loeb adds.

A wealthy industrialist with no retailing experience, Mr. Zucker may take a page from U.S. billionaire hedge fund manager Eddie Lampert. He's another non-retailer who orchestrated the acquisition of Sears Holdings Corp. after scooping up the bankrupt Kmart. Now he's set to fix both.

Like Mr. Lampert, Mr. Zucker will likely cut costs and replace top management with his own picks, says Joe Manget, vice-president at Boston Consulting Group who does work for Sears.

(That won't come cheap: golden parachutes for HBC CEO George Heller and four of his senior executives could reach almost $10-million, according to information in public filings.)

Like Mr. Lampert, Mr. Zucker will likely call the shots on strategy. And like Mr. Lampert, Mr. Zucker will be extremely focused on boosting the bottom line. During discussions with senior HBC executives, Mr. Zucker wanted to talk numbers more than anything else, a source said.

But Mr. Zucker should not be too quick to slash advertising because it draws customers to stores, Mr. Manget says. Mr. Lampert went too far at Sears by ditching ads, prompting sales to dwindle, Mr. Manget says. “It's the easiest way to cut costs but it's very hard to regain the customers once they stop shopping you.”

Indeed, Mr. Manget warns that Mr. Lampert's financially-driven recipe of slashing costs, inventory and promotions could yield short-term profit gains but long-term disaster for HBC.

Mr. Zucker would do better by making smart investments in HBC in a bid to shorten inventory purchasing cycles to help ensure that stores carry relevant and timely merchandise, Mr. Manget says. Otherwise products can become dated and have to be cleared out at marked-down prices, which pinches profit.

HBC stores also need to make sure they don't run out of basic items such as white shirts and black pants, he adds. If shoppers can feel confident that they'll be able to find the staples in their desired size, they will likely return to a store and, at the same time, snap up other products while there.

What is more, Mr. Zucker needs to invest in other basics that make shopping more convenient such as comfortable change rooms and helpful people to staff them, he says.

But it's not just the inside of the stores that needs to be transformed, Mr. Manget says. In updating Zellers outlets to emulate Target, Mr. Zucker should refashion the outside as well, he says.

He points to the successful makeover of Canadian Tire and Shoppers Drug Mart newest outlets. With more windows and an airier look, the exterior re-designs flag significant changes inside, too. “Zellers has made some progress here but has a long way to go.”

Shifting more resources to burgeoning product categories, such as pet care, could also pay off for HBC, he says.

For all the potential fixes, there are some retailing experts who say Mr. Zucker would fare better by just selling off the real estate and its leases to rival retailers.

“He could lose all the gains he's made by trying to run this thing,” says retailing consultant Don Watt of DW + Partners, who advises Wal-Mart Canada's U.S. parent. “This turnaround could take years.”