Jan 172015
 

The discount retailer Target Corp. recently announced that it will be closing all its 133 Canadian locations. Target simply can’t compete in the retail space up here. There are less people in all of Canada than in California, so it’s not worth the investment for Target to stay here anymore. Canadian Targets generally offer few products, and at higher prices than in the U.S. Their inventory problems only add to the negative shopping experience. No wonder traffic is slow at Canadian Target stores. It must be frustrating to go buy some soup, but then find out the store is out of stock. 😀

15-01-target-canada-closing

It will cost Target Canada another $600 million to close down for good. 17,600 employees will lose their jobs and will probably have to set up kiosks in the mall to vend for themselves. 😕 At least they will each receive 16 weeks of severance pay.

This is why building up multiple income streams is extremely important. It provides insurance against unemployment. I currently have 4 other sources of income besides my full time job. If I was laid off tomorrow, my other incomes will cover 70% of all my current living expenses. The aim is to get this number up to 100%. I can do this by taking a portion of the money I earn from my full time job, and turn it into an income creating asset such as a private mortgage or dividend paying stocks.

Target Canada Clearance

Target stores will continue to be open during the liquidation process so keep an eye out for reduced prices in the near future. 🙂 I was excited to see Target come into Canada almost 2 years ago. But I suppose it just wasn’t meant to be. As a shareholder I’m glad management has decided to pull out before they lose any more of my money. TGT shares immediately jumped 3% after the announcement was made to leave Canada.

Target’s stock price has performed well since my initial purchase back in 2013. I’m currently up 16% on my TGT investment. At first this might seem like a decent return over a 2 year period. 😀 Many people would be grateful for an 8% annual rate of return. But to be honest it’s actually quite underwhelming. In the world of finance everything is relative. Since I purchased my Target shares, the overall stock market index (S&P500) has climbed 32%. This unfortunately means my investment has underperformed the market. 🙁 Oh well. Win some, lose some. 😕 I believe Target is still a strong company and will recover from its recent mistakes. It still has over 1,800 stores in the U.S. and 366,000 employees worldwide. The dividend yield is 2.8%.

Disclaimer: I’m long TGT. 🙂

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Random Useless Fact:

Google can graph mathematical equations like a graphing calculator. For example, copy and paste the following line into Google.
5 + (- sqrt(1- x^2- (y- abs(x))^2))cos(30((1-x^2-(y-abs(x))^2))), x is from -1 to 1, y is from -1 to 1.5, z is from 1 to 5

 

Jul 152013
 

Earlier today Loblaw Co., Canada’s largest grocery chain announced they will buy Shoppers Drug Mart, Canada’s largest pharmacy chain.

The executive chairman of Loblaw (L:TSE,) Galen Weston, said this would create opportunities for brands from the two chains to appear in each other’s stores, and that the merger would give Loblaw greater buying power for health and wellness products. Not surprisingly Shopper’s (SC:TSE) stock price shot up 24% today which puts the value of the company very close to the $12.4 billion that Loblaw Co. is willing to pay for it. Shoppers own 1242 stores so on average each store is being bought for $10 million. No store closures are planned at this point.

Loblaw shares also went higher today. Normally when mergers are announced the larger company doing the purchasing loses some value in the short term because they are overpaying. But in this case the synergy works so well that both companies are looking to profit from this deal :0) Loblaw says they will save $300 million a year through efficiencies like by introducing their President’s Choice products into Shopper’s stores. Loblaws stock ended the day up $2.58 per share (5.43%) which adds about $725 million to the company’s market cap. The combined premium for both stores value is about $3 billion. So that’s like a 10% annual rate of return :0)

13_07_loblaw_store

I don’t own either company yet, but now I’m thinking about buying some Loblaw because last year the combined revenue of L and SC was $42 billion but with this new merger I think they should be able to make at least 10% more per year. They will also have more buying power to lower their input costs like buying from manufacturers.

Here are some opinions from random people on the internet regarding this merger 🙂

  • “I hope this means Shoppers prices will decrease with the power of a big supplier through Loblaws. I buy medication that is non prescription, and it usually costs more at Shoppers than other drug stores right now.”
  • A few weeks ago Sobeys purchased Safeway. This week Loblaws purchased Shoppers. I am glad Canadian retailers are getting bigger and stronger instead of letting low life retailers like Walmart steam roll our Canadian home grown ventures.”
  • “Oh good, Galen Weston can control the food that makes us sick and the medicine that makes us healthy.” (this one made me lol)

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Random Useless Fact:
If you started with a dollar and double it every day. In 48 days you’ll have enough to buy every financial asset that exists on the planet, about $200 trillion.