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Retailer Pier 1 to permanently shut down, close all 540 stores in U.S. and Canada –



After trying to restructure itself and find a buyer for months, U.S. retail chain Pier 1 announced Tuesday that it will wind down operations and close all 540 of its stores in the U.S. and Canada

The chain filed for bankruptcy protection in February and said at the time it hoped to find a buyer for the business, which at the time included 50 stores in Canada and almost 500 in the U.S.

On Tuesday the company announced those efforts had failed to find a buyer, so it will instead  shut down the business entirely.

“This decision follows months of working to identify a buyer who would continue to operate our business going forward,” the chain said in a statement. “Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down.”

Closing the stores in Canada was always part of the plan, but Tuesday’s news means not even the U.S. ones will be spared.

It will start going-out-of-business sales as soon as it can reopen stores that have been temporarily shut due to the coronavirus pandemic.

Texas-based Pier 1 Imports was founded in the 1960s and is known for selling home furnishings and decor. It is unknown exactly when the doors will close for good on this side of the border. (Luke Sharrett/Bloomberg)

Pier 1 traces to a single store in 1962 that sold beanbag chairs and love beads to hippies in San Mateo, Calif. It expanded to offer just about anything for the home, from lounge chairs to curtains, and it later adopted the slogan: “From Hippie to Hip.” At its height, Pier 1 had more than 1,200 stores.

But in recent years, its sales have fallen as it struggled to compete with online retailers Wayfair and Amazon, which sell sofas and coffee tables at a lower price and deliver them quickly.

The company is just the latest retailer to be felled by the pandemic, as in recent weeks U.S. chains Neiman Marcus and J Crew have both gone bankrupt.

In Canada, shoe store Aldo went into restructuring earlier this month, and fashion chain Reitmans did the same also on Tuesday.

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Bombardier to lay off 2,500 workers as demand for business jets drops amid pandemic –



Bombardier will lay off 2,500 workers as the company struggles to keep its operations afloat amid dwindling demand for business jets during the COVID-19 pandemic.

In a release Friday morning, the Quebec-based transportation company said the aerospace industry as a whole is expecting to see a 30 per cent year-over-year loss in business jet sales, forcing it to reduce its workforce.

The company said 1,500 of the permanent job cuts will be in its Quebec facilities and 400 in Ontario, with the rest of the layoffs in its international facilities. The layoffs will begin this month and be carried out throughout the year.

The layoffs come just days after Bombardier made its official exit from the commercial airplane industry, selling off its CRJ regional jet program to Mitsubishi Heavy Industries Ltd. for $550 million US on Monday. 

The company has recently staked its future on business jets, sales of which have dropped during the COVID-19-related recession and the subsequent decline in travel.

“Our sales books are still quite full in the long term, but we still had to adjust to the reality we’re going to be facing from now until the end of the year,” Bombardier spokesperson Mark Masluch said in an interview. 

“That said, in our collective agreement and in the way we work, there is always the opportunity to call back our workforce if there’s a rebound in the market.” 

Masluch insisted that the layoffs were strictly the result of COVID-19. 

Bombardier paused all operations in March in an effort to protect employees from the spread of the novel coronavirus. 

It gradually resumed operations again last month, but had already reported a loss of $200 million US in its first quarter.

Union disappointed by decision

The International Association of Machinists and Aerospace Workers, the union that represents Bombardier workers, said it was disappointed by the company’s decision.

In Montreal, 717 Bombardier employees benefited from the Canada emergency wage subsidy (CEWS) program, but that help was set to expire today. 

Last month, the union asked that Bombardier reapply to the CEWS program but, judging by the layoffs, the union does not believe that request was ever put in. 

“I don’t know exactly what motivated these decisions,” said David Chartrand, co-ordinator for the union’s Quebec branch.

Chartrand said the federal government is also to blame. He said it has been absent in supporting the aerospace industry as a whole. 

“We need help from the government to support these industries, but they’ve been completely inactive,” he said. 

Workers are seen exiting the Bombardier plant on Friday. (Paul Chiasson/The Canadian Press)

Quebec promises help

Quebec Finance Minister Eric Girard said Bombardier remains an important economic driver and the provincial government “will help them to go through this difficult period.”

“If they need help, I am convince that the minister of economy will be there to attach the right conditions to this help just like he did for the Cirque du Soleil,” he said, referring to a loan recently handed out to the struggling Montreal-based entertainment giant.

Prime Minister Justin Trudeau said the federal government will continue to support workers of all industries as they struggle during the pandemic. 

“Obviously, the aerospace industry, airlines, are particularly affected with the ceasing of global travel and with the fact that the demand for purchasing business jets has decreased dramatically,” said Trudeau. 

“We will work with industries and individual companies to try and ensure they have access to all the supports that we’ve put forward.” 

Prime Minister Justin Trudeau spoke with reporters on Friday. 0:39

History of government bailouts

Bombardier, which was in trouble long before the start of the pandemic, has been bailed out before.

In 2015, then-premier Philippe Couillard agreed to provide Bombardier with a $1.32-billion bailout, in hopes of saving jobs in the province. 

In return, the province would gain a 49.5 per cent stake in the company’s C-series program, later referred to as the A220. The government made a 20-year commitment to the project. 

The same year, just as Trudeau was first sworn in as prime minister, Bombardier called on the federal government to match the $1-billion investment. 

Although the Canadian government did not agree to those terms, it did provide the company with $372.5 million in interest-free loans in 2017.  

Despite all that, Bombardier sold its remaining A220 stake to Airbus last February, in an effort to pay off a multibillion-dollar debt.

That same month, the company sold its rail-building unit to French train giant Alstom SA, marking its exit from the rail business. 

In February, Quebec Premier François Legault insisted the province was done injecting money into the 83-year-old company. 

“The government has already invested a lot of money in Bombardier,” he said at the time, calling Couillard’s investment a “mistake.”

As of Friday, Bombardier has 8,200 employees in Quebec and 2,100 in Ontario.

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CMHC tightens mortgage insurance rules starting July 1 –



The government-backed Canada Mortgage and Housing Corp said on Thursday it would tighten rules for offering mortgage insurance from July 1, after forecasting declines of between 9  and 18 per cent in home prices over the next 12 months.

The move would make it harder for riskier borrowers, who offer downpayments of less than 20 per cent to access CMHC’s default mortgage insurance.

CMHC is establishing a minimum credit score of 680 instead of the current 600, the group said in an emailed statement.

It will also limit total gross debt servicing ratios to its standard requirement of 35 per cent of annual income, compared with a threshold as high as 39 per cent currently, and total debt servicing to 42 per cent versus as much as 44 per cent now.

The measures will help curtail “excessive demand and unsustainable house price growth,” CMHC CEO Evan Siddall said in the statement.

He said COVID-19 has exposed longstanding financial-market vulnerabilities, and “we must act now to protect the economic futures of Canadians.”

James Laird, Co-founder of and president of mortgage brokerage CanWise, said the change to the debt service ratio will have the biggest impact of the three changes.

That’s because under the current gross debt service ratio cap of 39 per cent, a family with an annual income of $100,000 and a 10 per cent down payment would have qualified to buy a home valued at up to $524,980, Laird calculates. Under the new rules, that same family can only get approved to buy a home worth $462,860 — a reduction of 12 per cent.

Laird said the most impactful development was the CMHC’s decision to leave minimum down payment sizes where they are. “The biggest news coming out of the announcement from the CMHC is that they did not increase the minimum down payment from 5 percent to 10 per cent,” he said.

Such a move would have required any buyers to have far more saved up before being approved to buy, which would make the pool of potential buyers much shallower.

1 in 3 mortgages in Canada

Some 35 per cent of Canadian banks’ mortgages are insured, their financial statements show. CMHC is the top mortgage insurer, while Genworth MI Canada and other private companies also provide similar products.

Despite evaporating activity in the housing market due to the COVID-19 pandemic, prices have continued to rise as listings have fallen off alongside demand.

Home prices across the country rose 1.3 per cent in April from March, and data from Toronto and Vancouver real estate boards showed increases of 3 per cent and 2.9 per cent in May, respectively, from a year earlier.

The CMHC has taken a more bearish view of the housing market than others. Last week, some of Canada’s biggest banks forecast maximum price declines of about 7 per cent.

Siddall last week responded to critics of its more dire outlook, saying on Twitter they were “whistling past the graveyard and offering no analysis.”

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Canada unexpectedly adds 290,000 jobs on gradual reopening – Financial Post



Canada’s labour market unexpectedly strengthened after two-straight months of record losses as the country gradually reopens from COVID-19 related restrictions.

Employment rose by 289,600 in May, Statistics Canada said Friday in Ottawa, surprising economists who had been anticipating more losses last month. The gains were across most industries and provinces, though largely driven by higher employment in Quebec, the province hardest hit by the pandemic.

The numbers echo recent high-frequency data, which had signalled a recovery is underway, with job postings increasing and more Canadians reporting an increase in work at the end of May. They will be a relief to policy makers who had been scrambling to inject hundreds of billions in cash into the economy to keep it afloat. Still, just under 5 million remain without work or substantially reduced hours with the jobless rate at postwar records.

“The surprisingly positive readings on employment paint a more optimistic picture of the early part of the recovery, but there’s still a long road back,” Royce Mendes, an economist at Canadian Imperial Bank of Commerce, said in a research report. “The increase in May only represents 10 per cent of the COVID-19-related job losses and absences that occurred over the prior two months.”

The pick up in May follows an unprecedented loss of about 3 million jobs in March and April. More than 2 million employed Canadians continue to experience much lower hours worked than pre-crisis.

The unemployment rate ticked up to 13.7 per cent in May, from 13 per cent in April, as people returned to the labour force.

Economists in a Bloomberg survey expected a loss of 500,000 jobs, with the unemployment rate rising to 15 per cent.

Canada’s currency extended gains on the result, appreciating 0.7 per cent to C$1.3406 against its U.S. counterpart at 9:46 a.m. Toronto time. Yields on two-year government bonds rose 2 basis points to 0.35 per cent.

The better-than-expected report suggests the governments programs to cushion the blow to the labour market are working. By mid-May, 179,000 businesses had applied for the government’s 75 per cent wage subsidy program. The pace of applications to Canada’s emergency income benefit program has also decelerated in recent weeks, suggesting the worst of the layoffs and job losses is over.

In addition to the employment pick up, Statistics Canada said the number of people who worked less than half their usual hours dropped by 292,000. That means the number of Canadians who have either lost their job or worked substantially fewer hours has fallen to just under 5 million, from about 5.5 million in April. Hours worked rose 6.3 per cent in May from the prior month but were still 23 per cent below February’s levels.

Cautious Reopening

The surprise jump reflects the cautious reopening of the economy across provinces. By the time the employment survey was taken from May 10 to May 16, some provinces including B.C., Saskatchewan and Quebec allowed some non-essential businesses to reopen.

Quebec accounted for nearly 80 per cent of May’s gains, the statistics agency said. In contrast, Ontario -– where the economy remained largely shut until May 19 –- saw more losses.

In the early days of the reopening, employment rebounded more strongly among goods producers, the data show. The goods-producing sector added 165,000 jobs versus 125,000 in services. Lower-wage jobs also rebounded more, particularly in retail trade, accommodation and food services.

Women Lagging

Demographically, male employment increased more than twice as fast as that for women, consistent with the more rapid increase in the goods-producing industry. Women were among the earliest victims of the COVID-19 related job losses in March and the latest data suggest they are slower to recover as well.

“The kinds of jobs that reopened earlier tend to be more male dominated in employment and also that more women don’t know how to get back to work because they don’t know what to do with their kids because schools aren’t open,” said Armine Yalnizyan, a research fellow at the Atkinson Foundation.

Women with at least one child under age 6 showed a slower return to work than women with older children. Statistics Canada said it will continue to monitor labourmarket outcomes for men and women with children in the months to come.
Youth are still suffering heavily from the COVID-19 economic shutdown. While employment recovered by 30,000 for those aged 15-24, the cumulative job losses for this age cohort are still a whopping 843,000 from February to May.

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