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Couche-Tard CEO would love second shot at Carrefour deal – theglobeandmail.com

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A customer pushes her shopping trolley in front of a Carrefour Hypermarket store in Saint-Herblain near Nantes, France on Jan. 15, 2021.

STEPHANE MAHE/Reuters

Alimentation Couche-Tard (ATD-B-T) (ATD-A-T) would revive its $20 billion bid for France’s Carrefour (CRRFY) if the Canadian convenience store operator saw a change in the French government’s stance on the proposed deal, its chief executive said on Monday.

Couche-Tard dropped its surprise bid for the European retailer over the weekend after the plan ran into opposition from the French government. Some French politicians said the issue was a matter of national food safety.

“We’d love to do the transaction …. if we got signals that the environment could change or would change from the French government or other key stakeholders,” Brian Hannasch told an analyst call.

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News of the approach from Couche-Tard, which operates convenience outlets and fuel stations, broke only last week but unravelled swiftly in the face of opposition from French politicians including finance minister Bruno Le Maire.

With a deal effectively blocked, the companies said they had decided instead to examine opportunities for sharing practices on fuel purchases, partnering on private labels and distribution in overlapping networks.

Shares in Carrefour slumped more than 6% in Paris to 15.55 euros on Monday afternoon as the prospect of the 20 euro per share offer evaporated, for now at least. Couche-Tard shares rose 3.4%.

“In terms of politics, I think we went into this with eyes wide open knowing that this was a risk, and I certainly do believe that the pandemic has heightened the food security issue, particularly in France,” Hannasch said.

“And so whether that changes over time, it’s hard to say.”

‘TRUE BARRIER’

In a note to clients on Monday, Bryan, Garnier & Co retail analyst Clément Genelot blamed France’s 2022 presidential elections as the “true barrier to the deal,” amid fears that the sale of the country’s leading private employer could strengthen far-right opposition to incumbent Emmanuel Macron.

Carrefour employs 105,000 people in France and runs around 8,000 convenience stores as well as its traditional hypermarkets and supermarkets.

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One top ten Couche-Tard shareholder, already skeptical about the merits of a tie-up with a grocer, said the company would face questions for moving away from its core business.

“I think in the interim there will continue to be some form of overhang or discount I think applied to the equity just because there will be that concern that the management team has started to get outside what’s considered their area of competence,” he said on condition of anonymity.

Analysts at investment bank Citi said there was still a chance Carrefour and Couche-Tard could revive talks at a later date, while the possibility remained for Carrefour and domestic rival Casino to examine a merger deal.

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Transat AT reports $39.9M Q3 loss compared with $57.3M profit a year earlier

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MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.

The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.

The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.

Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.

On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.

Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:TRZ)

The Canadian Press. All rights reserved.

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Dollarama keeping an eye on competitors as Loblaw launches new ultra-discount chain

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Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.

“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.

“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”

Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.

However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.

The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.

Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.

“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.

Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.

“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.

The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.

The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.

The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”

“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.

Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.

Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.

She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”

Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.

To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.

“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”

The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.

“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.

“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”

This report by The Canadian Press was first published Sept. 11, 2024.

Companies in this story: (TSX:DOL)

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U.S. regulator fines TD Bank US$28M for faulty consumer reports

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TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.

The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.

It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.

CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.

TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.

The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.

This report by The Canadian Press was first published Sept. 11, 2024.

Companies in this story: (TSX:TD)

The Canadian Press. All rights reserved.

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