Shoppers wear masks at a mall on July 20, 2020 in Laval, Quebec. Of late, the retail sector has been helped on several fronts. With more stores open, Canadians have been able to satiate any pent-up demand from earlier in the pandemic.
Ryan Remiorz/The Canadian Press
Canadian retail sales increased by a modest 0.6 per cent in July, a sign that pent-up demand has been satisfied after blowout gains in the early weeks of reopening.
Higher sales at auto dealers and gasoline stations helped to drive July’s gain. After removing those components, retail sales fell 1.2 per cent as home-improvement and sporting-goods stores – two areas of strength during the COVID-19 pandemic – saw buying sprees fade.
Despite a slower pace of spending, further gains are expected: In a preliminary estimate, Statistics Canada said Friday that retail sales rose 1.1 per cent in August.
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“While the headline gain was a bit shy of expectations, the much bigger and more important picture is that retail and wholesale activity just carved out perfect V-shaped rebounds,” said Douglas Porter, chief economist at Bank of Montreal, in a client note. “And, that rebound was maintained in August,” he added, referencing Statscan’s early estimate.
Canadian retailers have experienced a quick recovery. Retail spending fell 31 per cent between February and April as stores were forced to shutter under pandemic restrictions. What followed was record month-to-month gains in May (19 per cent) and June (24 per cent) as lockdown restrictions were eased, bringing sales above prepandemic levels.
July’s increase was more like a “normal” report, Mr. Porter said.
During the month, scorching gains for many retailers began to dissipate. Sales at building supplies and gardening stores fell 11.6 per cent in July, but were still 4.7-per-cent higher than a year earlier. Sporting goods, hobby and book stores dropped 8.8 per cent, but were 11.4-per-cent higher than the previous July. Grocery sales fell for a fourth consecutive month, but remained stronger than before the outbreak.
“The increase in restaurant activity likely accounted for the noticeable dent in food store sales,” said Royce Mendes, senior economist at CIBC Capital Markets, in a client note.
The auto sector enjoyed a solid month. Vehicle dealers tallied a 3.5-per-cent gain in July, with used-car dealers rising 11.5 per cent. Gas stations were lifted 6.1 per cent because of higher fuel prices and more car trips.
Clothing stores continued their rebound, with sales rising 11.2 per cent to $2.5-billion in July. However, revenue was still weaker than before the pandemic.
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Of late, the retail sector has been helped on several fronts. With more stores open, Canadians have been able to satiate any pent-up demand from earlier in the pandemic. Moreover, household disposable income surged 10.8 per cent in the second quarter because of historic transfers of emergency aid from the federal government. Further, with many service industries still heavily curtailed, Canadians have shifted some spending to goods.
Still, the outlook for consumption is somewhat uncertain.
“The continued federal government income support programs and low interest rates will remain supportive for consumer spending,” said Ksenia Bushmeneva, a Toronto-Dominion Bank economist, in a research note. “However, there are also significant headwinds, such as the still-high level of unemployment, uncertainty with respect to [loan] deferral programs, and rising COVID-19 cases.”
Timelier data from Canadian banks suggest consumer spending has levelled off or even fallen in recent weeks.
By the end of August, spending was slightly lower than at the beginning of the month, according to Royal Bank of Canada data. Transactions were “relatively stable” in early September compared with a year ago, but had dipped since mid-August, the Bank of Nova Scotia found.
“Most provinces show a decline since mid-August and the recent pickup in the number of COVID-19 cases could slow the recovery further,” the Scotiabank report said.
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TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
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