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Canada Post is selling pieces of itself to save money — the experts say that won’t be enough

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8 months ago

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Canada Post is selling off its IT and logistics departments, a move business experts say is an essential first step in saving a Crown corporation that lost more than half a billion dollars in 2022.

“Canada Post is disappearing before our eyes,” said Ian Lee, a business professor at Carleton University in Ottawa who has researched the decline of Canada Post.

“They’re starting to restructure because they’re starting to finally face that reality.”

Last week, Canada Post announced it will sell its in-house IT business, Innovapost, to Deloitte Canada. As part of the outsourcing deal, Canada Post will maintain an IT leadership team while most of Innovapost’s 750 person workforce is absorbed by Deloitte.

“It was determined the current shared-service model was not providing the speed and agility needed to compete today and in the future,” said a statement from Canada Post.

That announcement came a week after Canada Post said it would be selling its 3,000 person logistics company.

Canada Post declined CBC’s multiple requests for an interview and instead provided a written statement.

“For the last two years, Canada Post has been executing a comprehensive transformation plan focused on serving the changing needs of Canadians and Canadian businesses,” Canada Post spokesperson Janick Cormier wrote.

“The plan positions the company for growth in Canada’s e-commerce market while delivering on its core mandate of providing reliable delivery of mail, packages and parcels to every Canadian address.”

The lucrative ‘last mile’

Lee said selling off or outsourcing parts of Canada Post’s operations won’t be enough to save it. In the third quarter of 2023, the company lost a whopping $290 million.

“The future of Canada Post is not in pretending that they can deliver letter mail when it’s collapsing by 6 to 8 per cent per year by number of pieces,” Lee said.

Canada Post must move aggressively and quickly into e-commerce, Lee said. Sales of products purchased online and delivered to people’s homes are soaring.

“This future is in reinventing themselves as a partner of e-commerce companies and trying to get back that business that they gave up, and lost competitively, to the Amazons of the world,” he said.

Lee said Canada Post could follow the U.S. Postal Service’s example and work with major logistics companies to cover “the last mile” — the final part of a package’s journey, which accounts for more than half of delivery costs.

 

Canada Post losses a big problem for small communities

 

The post office is a community hub for many small towns, but financial losses at Canada Post have forced many rural outlets to close.

“The U.S. Postal Service is partnering with some of these big logistics companies who bring in millions of parcels. They basically sort them down to the local postal code of the local post office,” he said.

“The one area where Canada Post has a competitive advantage is the last mile. It goes to 16 million addresses. That is the last mile.”

But Canada Post would need to bring its costs down to make a plan like that work, Lee added.

“They’re going to have to work with [the union] because their cost structure is not even closely competitive with the independent gig delivery or even … FedEx,” he said.

Expand services to survive, union says

The Canadian Union of Postal Workers (CUPW), which represents 60,000 Canada Post workers, would not provide CBC News with an interview. (CUPW does not represent any of the employees working at the businesses being sold off.)

In a previous statement, CUPW said it wants to see Canada Post offer more services.

“CUPW has been advocating for a comprehensive plan which would work to ensure the future financial sustainability of Canada Post by expanding services,” spokesperson Siân Griffiths wrote in an email.

Postal worker seen from the back as he puts mail into a mailbox at a suburban house entrance.
The postal workers union says the key to Canada Post’s future is in expanding its services. (Justin Tang/The Canadian Press)

The union suggests Canada Post could provide more postal banking, or start performing check-in services for seniors.

“This would not only generate new streams of revenue but maintain and create jobs while meeting the growing needs of people across this country,” Griffiths wrote.

E-commerce ambitions might come too late

But Nita Chhinzer, a human resources expert in downsizing and a professor at the University of Guelph, said Canada Post needs to focus on its core services.

Attempts to explore logistics and IT didn’t boost the corporation’s bottom line, she said.

“While it increased revenue, it also increased cost in ways that didn’t increase profitability,” she said.

Canada Post has been trying to be too many things at once, she said.

“You can’t be the unionized company that treats its employees well, that’s got a large geographic scope, that has a social responsibility as a Crown corporation to ensure accessibility to everybody, plus the company that is going to offer the lowest price,” she said.

Chhinzer said she also questions Canada Post’s chances of successfully breaking into the crowded field of e-commerce. In September, the corporation opened a new processing facility in the Greater Toronto Area that it says will be able to process one million packages per day.

“Canada Post … was the last to truly enter the parcel market. They launched their initiatives well after their competitors had cemented themselves,” Chhinzer said.

While the e-commerce sector saw 3.5 per cent growth last year, Canada Post saw no growth in that area.

“There are significant critical flaws right now with how Canada Post is operating,” Chhinzer said.

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Roots sees room for expansion in activewear, reports $5.2M Q2 loss and sales drop

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2 days ago

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September 13, 2024

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TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.

The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.

“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.

The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.

But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.

Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.

“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.

“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”

Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.

The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.

In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.

Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.

The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.

The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.

Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.

Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.

It will also re-evaluate its design ranks.

Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.

Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:ROOT)

The Canadian Press. All rights reserved.

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Talks on today over HandyDART strike affecting vulnerable people in Metro Vancouver

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3 days ago

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September 12, 2024

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VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.

No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.

About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.

Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.

Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.

A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”

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

The Canadian Press. All rights reserved.

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

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3 days ago

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September 12, 2024

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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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