And in other developments on the Northern front
Walmart and Target are being blamed for driving shares of Canadian retailers to their lowest level in six years, according to a Bloomberg report this week. Bloomberg said the ratio between the S&P/Toronto Stock Exchange Retailing Index and its counterpart in the Standard & Poor’s 500 narrowed to 4% on Feb. 11, the smallest in six years. The retailing index has retreated 2.3% this year, while a separate index of companies that sell food and basic necessities has lost 1.1%, the biggest declines among 24 industries in the S&P/TSX.
Any weakness in Canadian retail names is due more to Walmart long-standing existence in the market than the more recently announced arrival of Target. Walmart has exerted a huge impact on the marketplace since its arrival in 1994, opening hundreds of stores and is now well underway with a U.S. style supercenter expansion and conversion program. The company has more than 325 stores in Canada with roughly half of those in the supercenter format. Target recently struck a deal acquire leases on Zellers stores and expect to open 100 to 150 units in 2013 and 2014. That fact has weighed on the future outlook for other retailers and isn’t exactly good news for Walmart Canada either.