Tuesday, July 16, 2013

Shoppers – a mercy killing?

This is a clip from the Globe and Mail published Monday, Jul. 15 2013, 10:02 PM EDT “Canada’s biggest grocery chain and the country’s largest pharmacy will become one company, creating a homegrown juggernaut in the face of stiffer competition from the consolidation of existing players and the entry of a major U.S. retailer.”

A homegrown juggernaut? Get real - Loblaw Cos. Ltd has been a poor investment for years with a 10-yr return of about zero. Shoppers is a high overhead retailer of cosmetics and groceries. They employ that corny old retail strategy of fanning customers through the high margin cosmetics before they can get to the low margin dairy at the rear of the store. Retail is a tough business and will get tougher with more U.S. competition on the way. The Shoppers shareholders have an opportunity to bail – consider this to be a mercy killing.

No comments: