Freshii shares plunges after same-store sales fall again - Canadanewsmedia
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Freshii shares plunges after same-store sales fall again

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Freshii

Freshii Inc. (FRII.TO) shares plunged Wednesday morning after the healthy fast-food chain posted another quarter of weak sales, adding to a string of disappointing results that has shattered investor confidence.

Same-store sales at Freshii fell four per cent in the quarter that ended June 30. Meanwhile, system-wide sales totalled US$49.6 million, up from US$46.3 million a year ago, boosted by an increase in the number of stores. And it posted a modest profit of US$433,000, or one cent per share, compared with earnings of $298,000 a year ago.

It wasn’t always a struggle for the company that’s best known for its salads, rice-and-tofu bowls, and smoothies. Freshii hit Bay Street with big growth ambitions when it went public in January 2017. After listing at $11.50, shares peaked at $14.90 on March 1, 2017. Since then, the stock has lost more than 80 per cent of its value.

“I’m sick of salads – I’m not the only one,” Barry Schwartz, chief investment officer and portfolio manager at Baskin Wealth Management, told BNN Bloomberg’s Paige Ellis Wednesday.

“They need to bring fresh management with new ideas, maybe start some type of loyalty program,” Schwartz said. “Food is extremely competitive: something goes hot and fashionable then it comes out.”

The restaurant chain announced Tuesday it was beefing up its management and governance teams, as former Yum! Brands executive Oliver Rodbard was appointed as Freshii’s vice president of operations, and former Coca-Cola official Bill Schultz was added to the company’s board of directors.

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Telus email still down heading to the fifth day

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For the fifth day in a row, customers with Telus.net emails are still facing disruptions as the company works to fix ongoing issues.

“Telus technicians continue to work to restore access. This is a fluid situation, and we are doing everything we can to stabilize all servers to bring our final clients online,” said a spokesperson in a statement. “This is taking longer than we would like as remaining issues are very complex. We are incredibly sorry.”

Customers began noticing an issue with their emails on Aug. 15, and while the majority of users had service restored by the next day, plenty have still been left without the service.

The issues are said to affect customers in the Lower Mainland, Kelowna, Vernon, Edmonton, Calgary and more. The majority of customers that have reported an issue with Downdetector say only their email has been affected, but some say there is also a problem with internet usage.

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Ontario Cannabis Store returns $2.9M in CannTrust products

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CannTrust

VAUGHAN, Ont. – CannTrust Holdings Inc. says the Ontario government‘s cannabis retailer is returning all of the company’s products it has because they do not conform with the terms of its master cannabis supply agreement.

The company says the total value of the products is about $2.9 million.

The move by the provincial retailer comes as CannTrust faces problems with Health Canada.

The federal regulator found problems at the company’s greenhouse in Pelham, Ont., earlier this year and later raised issues regarding a manufacturing facility in Vaughan, Ont.

Health Canada has placed a hold on CannTrust’s inventory including approximately 5,200 kg of dried cannabis and the company has also instituted a voluntary hold of approximately 7,500 kg of dried cannabis equivalent.

CannTrust noted that the Ontario retailer operates independently of Health Canada, which has not ordered a recall on any of the company’s products.

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OPEC downgrad its forecast for global oil

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In its latest report, OPEC only slightly downgraded its forecast for global oil demand, lowering it to 1.10 million barrels per day (mb/d) for 2019, down only a minor 0.04 mb/d from a month earlier. That estimate could end up being too optimistic, and OPEC itself said the forecast is “subject to downside risks stemming from uncertainties with regard to global economic development.”

Notably, OPEC said that global supply could grow by 1.97 mb/d this year, significantly outpacing demand growth. Still, that figure is down by 72,000 bpd from a previous estimate, due to lower-than-expected production growth in the U.S., Brazil, Thailand and Norway.

In another worrying sign of a brewing supply surplus, OPEC said that oil inventories in OECD countries rose by 31.8 million barrels in June from a month earlier, rising to 67 million barrels above the five-year average. In other words, just as OPEC+ was meeting to extend the production cuts for another 9 months, inventories were rising, an indication of an oversupplied market.

On a slightly positive note (for OPEC), the group revised up demand for its crude by 0.1 mb/d for both 2019 and for 2020. Still, it said that demand for its oil, often referred to as the “call on OPEC,” would drop to 29.4 mb/d in 2020, down from 30.7 mb/d this year.

Based on those numbers, OPEC+ is staring down a serious supply glut next year absent further action. The group can either stick with current production levels and risk another market downturn, or it can swallow further production cuts.

What happens next is largely outside of OPEC’s hands. Recent price movements are almost entirely the result of shifting sentiments regarding the global economy. “The yo-yoing on the oil market continues and the oil price remains highly prone to fluctuations. After sliding massively on Wednesday, Brent was hit hard once again [Thursday], shedding over 3% in a matter of hours,” Commerzbank said in a note on Friday. “The oil price currently remains at the mercy of expectations for the global economy, and is thus caught between economic concerns and hopes that the trade dispute might end soon.”

U.S. retail sales eased some concerns on Friday, but the global backdrop remains worrying, and a steady release of data from around the world continues to point in a negative direction. Just in the last week, there was the inverted yield curve for U.S. treasuries, a stock market and currency meltdown in Argentina, volatile oil prices, and widespread fears of a global economic recession.

Even the U.S. is not immune, despite mostly healthy data up until recently. For instance, Wall Street analysts have slashed their outlooks for corporate earnings for the third quarter in recent weeks. “Everyone in April and through the beginning of May thought that the economy was going to get better in the back half of the year, trade war was going to sort of settle, certainly not escalate,” Eastman Chemical Chief Executive Mark Costa said on an earnings call last month, as the WSJ reported. “And now we’re just in a very different world where I don’t think that’s true…There’s not a lot of signs of economic recovery coming in the second half.”

Ultimately, the U.S. will struggle to outrun a global slowdown. The World Trade Organization (WTO)  painted a bleak picture for the third quarter, saying that trade volumes are “likely to remain weak.” The global auto sector has been hit hard this year, with a sharp contraction in China, India and Germany. The U.S. auto industry is starting to show some signs of strain as well.

The problem for oil prices is that the outlook for 2020 is already pretty bearish, with supply growth outpacing demand. That’s the base case right now. But the odds of economic recession continue to grow, which threatens to make the supply overhang that much worse.

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