Archives for April 26, 2019

Canada’s main stock index fell in late-morning trading as Bombardier Inc. shares weighed on the key industrials sector.

The S&P/TSX composite index was down 11.80 points at 16,574.72 as shares of Bombardier fell following a move by the company to cut its financial guidance for the year.

In New York, the Dow Jones industrial average was down 205.5 points at 26,391.55. The S&P 500 index was down 5.23 points at 2,922.02, while the Nasdaq composite was down 0.55 points at 8,101.46.

The Canadian dollar traded for 74.10 cents US compared with an average of 74.21 cents US on Wednesday.

The June crude contract was down 11 cents at US$65.78 per barrel and the June natural gas contract was down 3.6 cents at US$2.54 per mmBTU.

The June gold contract was up US$2.70 at US$1,282.10 an ounce and the May copper contract was down 3.75 cents at US$2.87 a pound.

Precision Drilling Corp. says it earned a profit in its latest quarter compared with a loss a year ago as its revenue improved eight per cent.

The company says it earned $25 million or eight cents per diluted share for the quarter ended March 31.

That compared with a loss of $18.1 million or six cents per diluted share in the same quarter a year ago.

Revenue for the three-month period grew to $434 million, compared with $401 million.

Excluding sale of drilling assets in Mexico and restructuring charges, Precision Drilling says it earned $1 million or zero cents per diluted share in the quarter.

Analysts on average had expected a loss of five cents per share and revenue of $408.6 million for the quarter, according to Thomson Reuters Eikon.

Sobeys opened its first discount grocery store in Western Canada on Thursday as it works to catch up to competitors in the chase for frugal shoppers.

The FreshCo store in Mission, B.C., is the first of a dozen shops under that banner promised by Sobeys Inc. by the end of this year in an effort to grow market share in the west following a years-long fallout from its troubled acquisition of the Safeway chain.

“Sobeys is far behind our competitors in terms of having a presence in discount,” said Mike Venton, general manager of the discount format at Sobeys, a subsidiary of Empire Co. Ltd.

Sobeys operates more than 1,500 retail shops under a number of banners. Eighty-seven per cent of these are full-service stores, like Sobeys, Farm Boy or IGA locations, said Venton — only 95 shops fall under the FreshCo or other discount banner names and they’re all located in Ontario.

By comparison, Canada’s largest grocer, Loblaw Companies Ltd. operated about 488 discount food stores at the end of its 2018 financial year and more than 390 locations under a number of other banners in its market division, according to its most recent annual report.

Metro Inc., which operates primarily in Ontario and Quebec, operated 228 discount food stores out of a total 947 food locations at the end of its 2018 financial year, according to financial filings.

“If you look at Western Canada, we have zero presence,” Venton said.

The company said growing that figure would be one of its strategic priorities for its 2019 financial year. Sobeys first announced plans to convert up to one quarter of its existing Safeway and Sobeys stores in the Western provinces to the FreshCo banner in 2017.

Mission is the first of a dozen announced locations in B.C. and Manitoba. Two Winnipeg locations will open in early May, with two Richmond, B.C., ones to follow later that month.

Those 12 stores will start to shift the company’s ratio of full-service to discount stores, though “it will be a long time before we move that number significantly,” Venton said.

The company believes changing that ratio is strategically sound.

“The key to us is to make a big splash when we go in and then compete and grow market share,” said Empire CEO Michael Medline during the company’s most recent quarterly call with analysts.

Shoppers increasingly look for value, making Sobeys discount division the part of the national business that’s growing, Venton said.

“I would expect this won’t change for quite some time either,” he said.

Sobeys aims to avoid cannibalizing its business by choosing spots that had two or more full-service locations in a small region and converting one of those locations to the lower-priced FreshCo brand.

Meanwhile, it believes it can lure shoppers away from its competitors’ through price guarantees and its ability to tailor its stores to individual communities, Venton said.

“We feel real good about our ability to attract customers and delight them with what we’re going to put in those stores.”

The plan to gain market share through discount offerings in Western Canada comes just as the company is starting to regain its footing after a period of losing ground to competitors following its acquisition of Safeway in 2013 for $5.8 billion.

Empire upset Safeway shoppers after it cancelled a popular loyalty program, failed to keep certain items in stock and made other significant missteps. Same-store sales plunged as customers turned to other chains.

Empire launched Project Sunrise, a three-year transformation plan, to help turn the company around and Medline said recently that it has gone from losing a lot of market share to stabilizing to starting to gain some back.

The company seems confident it won’t slip again as it brings this new brand to the west.

“We have a tried and tested model that we’re very successful within Ontario,” Venton said.

West Fraser Timber Co. Ltd. says earnings dropped significantly in the last quarter as the company felt the impact of lower production and demand.

The company says it lost $5 million or seven cents per share in the quarter ending March 31, compared with earnings of $197 million or $2.53 per share for the same period last year.

Adjusted earnings were $22 million or 32 cents per share for the quarter, compared with $229 million or $2.96 a share for the first quarter last year.

Analysts had expected adjusted earnings $36.3 million or 56 cents per share according to Thomson Reuters Eikon.

The company says earnings were hit by lower demand in the key spruce-pine-fir sector as U.S. housing starts lagged because of wet weather across major construction markets.

B.C. producers including West Fraser have announced several rounds of production curtailments as they grapple with limited wood fibre supply in the province and depressed demand.