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More changes needed to Canadian Entrepreneurs’ Incentive program: CFIB

Photo by Jopwell

Some recent changes by the federal government on the Canadian Entrepreneurs’ Incentive (CEI) – measure that was proposed in the budget to offset some of the negative impact of the increase in the capital gains inclusion rate – is a step in the right direction but more change is needed, according to the Canadian Federation of Independent Business. 

The national organization said CEI will reduce the amount of capital gains paid by some business owners when they sell the shares of their business. 

While these changes do not fully offset the negative impact of the hike in the inclusion rate, CFIB said it is pleased that the government moved forward on three of CFIB’s top four proposed amendments:

1.    Farmers and fishers selling property will now have access to the program (only those selling shares were included before). Personal services businesses will also now have access to the incentive.

2.    The founder rule has been dropped, allowing those who invest later to benefit.

3.    The incentive will be phased in over five years, rather than 10.

Dan Kelly

“These are all good moves, but the government did not move on one of the most critical changes – the need to expand the CEI to all entrepreneurs. It appears hundreds of thousands of small businesses will continue to be specifically excluded, including owners of restaurants, hotels as well as those in finance, insurance, real estate, arts, entertainment, recreation, and professionals like doctors, lawyers, accountants. It makes no sense to have a different tax treatment between a retail shop and a local restaurant,” said Dan Kelly, President and CEO of the CFIB.

“The CEI itself is a positive measure. While the new amendments will help many, they will not benefit the many business owners who sell their assets rather than shares (other than farms/fishers) or those who have capital gains within their corporations. For them, the increase in the inclusion rate will hit hard. CFIB will continue to push Ottawa to reverse the hike in the inclusion rate and expand the CEI to all SMEs.”

Benjamin Bergen

Council of Canadian Innovators President Benjamin Bergen said:

“Since the federal budget’s release, Canadian business leaders have urged the government to reverse its proposed tax changes to capital gains and instead support strategies that build lasting wealth and prosperity.

“The tweaks to the CEI announced today fall short of addressing the harm caused by the government’s tax plans on Canada’s innovation economy. CCI continues to call for a full reversal of the government’s plan because taxing our way to prosperity isn’t a viable path.

“In CCI’s recent pulse check survey, 90 per cent of Canadian innovators expressed concern that the tax hike will harm the economy, with reduced access to skilled talent and growth capital cited as the primary risks. Furthermore, the Parliamentary Budget Office estimates that the government’s projections from this tax hike won’t deliver the expected windfall. There is neither a political or economic case for these changes any more.

“Half-measures, piecemeal incentives, and misguided strategies will not drive the growth Canada needs. Canadians deserve bold, forward-thinking economic policies that actually foster growth and give companies the talent and capital they need to scale. It’s time for the government to stop taxing ambition and start working with innovators to tackle Canada’s productivity and prosperity challenges. The current path is not just misguided—it’s a dead end.

“CCI has always taken pride in working constructively and substantively with Canadian governments, co-developing policies and strategies to ensure that our economy is on the best possible footing for the 21st century innovation economy. We will continue to do this work as we participate in the upcoming consultations.”

Recently, the federal Department of Finance new enhancements to the Canadian Entrepreneurs’ Incentive, to ensure innovators and small business owners, including farmers, “are rewarded for their hard work.”

  • Eliminating the Founder Requirement and Reducing Ownership Requirements: Budget 2024 announced a requirement that business owners must be a founder who, at all times since founding the company, held 10 per cent or more of all common shares. Following feedback that this ownership requirement may not meet the needs of entrepreneurs, particularly in the tech and farming sectors, the government is now proposing to:
    • Reduce minimum ownership levels to 5 per cent; and,
    • Reduce minimum ownership time to any continuous 24-month period, at any time since the business’ founding, thereby eliminating the requirement to be a founder.
  • Reducing the Level of Engagement Requirement: Budget 2024 announced that business owners must be actively engaged on a regular, continuous, and substantial basis for the five years immediately preceding the sale to benefit from the incentive. The government heard that many entrepreneurs may reduce their day-to-day involvement in a company prior to selling and that many business owners choose to sell before five years have elapsed. Recognizing the importance of innovation, the government is now proposing to:
    • Reduce the period of active engagement on a regular, continuous, and substantial basis to any combined three-year period at any time since the founding of the business.
  • Expanding Eligibility to More Small Businesses: Budget 2024 announced that small business corporation shares would be eligible property for the incentive, making eligible entrepreneurs better off when selling business shares worth up to $6.25 million. To expand the incentive to more small business owners, including the next generation of business owners, the government is now proposing to expand eligibility to:
    • All qualified farming and fishing property; and,
    • Additional small businesses.
  • Accelerating the Rollout: Budget 2024 announced the incentive would increase by $200,000 annually over ten years, to reach $2 million by 2034. In response to entrepreneurs’ desire for the full incentive to be delivered sooner, the government is now proposing to:
    • Double the annual phase-in increases to $400,000, to reach $2 million by 2029.

Royalmount Announces Lineup of Luxury Jewellers Ahead of September Opening 

Photo credit: Royalmount/Carbonleo

The Royalmount development in Montreal has announced new jewellery tenants ahead of its opening next month. Included will be several first-to-market brands as well as one of the world’s largest Rolex stores. 

The Rolex store, to be managed by Raffi Jewellers Flagship Boutique of Cambridge, ON, will span a whopping 7,295 square feet, making it one of the largest in the world for the brand when it opens. Raffi will also operate a standalone Tudor boutique at Royalmount, which will be the first in Montreal and the third in Canada. 

Luxury watch brands IWC and Omega will also open their first storefronts in Quebec at Royalmount, both in partnership with local retailer Maison Monaco. Additionally, Maison Monaco will open its own storefront at Royalmount housing shop-in-stores for brands including Zenith, Longines, Frederique Constant and Roberto Coin.

Royalmount (Rendering: Carbonleo)

Luxury brand Montblanc will open at Royalmount, in partnership with a local licensee who also operates Montblanc stores in downtown Montreal as well as at CF Carrefour Laval — the Laval store will close with Royalmount set to replace it, according to a reliable source. Jewellers Pandora and Swarovski are also confirmed to be opening, with Swarovski featuring its newest ‘blue’ store design that recently opened on Bloor Street in Toronto. 

TimeVallée Facade Rendering, Royalmount in Montreal. Image provided by Maison Birks
Rendering of the new Birks store, set to open September 5, 2024, next to TimeVallée. Image provided by Birks

As reported last week, Maison Birks will bring Swiss watch concept TimeVallée to Royalmount, with a 2,800 square foot storefront that will be adjacent to a new concept Birks store. TimeVallée will house shop-in-stores for seven watch brands including Cartier, Panerai, Baume & Mercier, Jaeger Lecoultre, Chopard, Grand Seiko and Piaget. 

The brands join previously announced luxury jewellers opening at Royalmount including a flagship Tiffany & Co. store, David Yurman and TAG Heuer. The TAG Heuer shop will be run by Maison Monaco. 

Royalmount rendering – Chun Hua Catherine Dong “Wishing Bear” (CNW Group/Royalmount)

“Securing top-tier watch makers and jewelry retailers for Royalmount solidifies our commitment to offering visitors a diverse and high-quality shopping experience,” said Andrew Lutfy, CEO of Carbonleo and lead investor, in a statement. “Jewelry often holds sentimental value for its owners. It tends to invoke a special moment or memory. And this fits beautifully with the Royalmount experience, of which creating human connections is a huge part.” 

“The increase in the cultural relevance of luxury jewelry and watches over the past few years has led to unprecedented demand and growth in both categories,” added Michael Stroll, Senior Vice President, Leasing & Partner at Carbonleo in a statement. “Royalmount securing so many of the top brands in the world, including Rolex’s largest Canadian boutique, reflects the world-class nature of the project, and will be wonderful for the city of Montreal and its retail and tourism ecosystems.”

The newly announced brands will join a wide selection of luxury fashion and lifestyle giants that have already committed to being a part of Royalmount. 

Louis Vuitton and other retailers at Royalmount. Image: Carbonleo (screen shot from a video)

Luxury brands will cluster along a central corridor on the main floor of the shopping centre component of Royalmount, with art work located in central areas that will be visible from some of the big-brand stores. In November of 2022, Royalmount announced a roster of luxury brands secured for the retail centre that include Louis Vuitton, Tiffany & Co., and Gucci, as well as French contemporary brands Sandro and Maje. In June of 2023, Royalmount announced further luxury brands including Saint Laurent, Versace, Jimmy Choo, David Yurman and TAG Heuer — all of which will be the first standalone locations for the Montreal market.

In June of 2023, several Montreal-based brands were announced to be opening stores at Royalmount. They include Acuité Visuelle, Aldo, Arc’teryx, Bikini Village, Browns Shoes, Dynamite, Garage, Influenceu, Judith & Charles, La Canadienne, La Vie en Rose, Mackage, Moose Knuckles and Rudsak.

In April, newly announced retailers at Royalmount included Moncler, Longchamp, Veronica Beard, Anine Bing, Roche Bobois and Canada Goose, Zara, Nike, Mango, H&M, Alo Yoga, and Sephora. 

Rennaï at Royalmount (Rendering: Rennaï)

Previous larger-format retailer announcements include home furnishings retailer RH (occupying about 46,000 square feet) and Rennaï, a beauty hall concept spanning about 36,000 square feet housing a retail presence for various leading brands.

The massive project will include food and beverage options, including a food hall. Royalmount’s new food hall, Le Fou Fou will span about 35,000 square feet and be run by MTB Collective. The European-style food hall will have 12 distinct culinary offerings including catering plus four bars with indoor/outdoor dining that seats over 900 guests. It’s described as being Montreal’s first food hall to combine top-tier talent, hi-touch technology and programming all year round.

The $7 billion Royalmount development, set to open September 5, 2024, will be the largest such project of its kind in Canadian history according to Carbonleo. The project has been under construction since before the pandemic and in the spring of 2019 Retail Insider attended the ground-breaking of Royalmount which at the time was a former industrial site with construction equipment ready to dig.

Royalmount’s first phase will include an 824,000 square foot two-level retail and lifestyle complex. Royalmount will be the first 100% carbon-neutral mixed-use development in the Americas and the largest LEED Gold retail project in Canada. Previously announced components include an aquarium and Cineplex, which will bring premium cinemas and The Rec Room entertainment concept to Royalmount.

The privately-funded Royalmount project will become a state-of-the-art lifestyle hub for the region, with L Catterton, an investment arm of LVMH, being a key investor. The development will include a mix of experiences and will also be home to a three-kilometre linear park called Le Champ Libre, along with an outdoor public plaza.

Carbonleo is a privately owned, Quebec-based real estate development and management company. Founded in 2012, the company has more than 170 employees and counts several major projects to its credit, including Quartier DIX30 and the Four Seasons Montreal Hotel and Private Residences. 

Related:

Birks to Open TimeVallée Luxury Multi-Brand Watch Concept Stores in Canada

Royalmount in Montreal Announces Major Retail Tenants and Food Hall Ahead of August 2024 Grand Opening [Interview]

Royalmount in Montreal Announces Major Art Initiative Ahead of August Opening

Royalmount in Montreal Announces more Retail Tenants Ahead of Summer 2024 Opening: Interview with Carbonleo CEO Andrew Lutfy [Exclusive]

Royalmount in Montreal Announces Major Retail Tenants for the 100% Carbon-Neutral Development [Feature]

Canadian Retail News From Around The Web For August 15, 2024

Canadian Retail News From Around The Web

News at a Glance

Retail Insider is streamlining its Canadian retail news from around the web to include a handful of top news stories that can be viewed quickly during the day. Here are the top stories from the past 48 hours.

Metro Inc. reports Q3 profit dip amid sales growth (Retail Insider)

Metro CEO: Discount Grocers Outpace Conventional Stores (Retail Insider)

Silk products returning to grocery stores following deadly Listeria outbreak (CP24)

Lightspeed Launches Retail Insights To Help Retailers Drive Increased Sales and Lower Inventory Risks (Retail Insider)

Costco Canada Tests New Membership Verification System in Selected Locations (Retail Insider)

Hot downtown deals still not enough to lure retailers wary of government whims (CBC Ottawa)

How the ByWard Market has become ‘a market only in name and history’ (Ottawa Business Journal)

Montreal-area bookstore loses hundreds of books due to flooding after massive rainfall (CTV)

Hasty Market to take a phased approach to beverage alcohol (CCentral)

Banff Residents Vote Against Summer Pedestrian Zone (Retail Insider)

More than 50% of Ontario convenience stores licensed to sell beer and wine (Retail Insider)

New puzzle store in Merrickville, Ont. embracing Canadian heritage (CTV)

7-Eleven looking to close 10 stores in Winnipeg due to crime (Retail Insider)

Calgary thrifting bus takes shoppers to 4 second-hand stores (CTV)

Lightspeed Launches Retail Insights To Help Retailers Drive Increased Sales and Lower Inventory Risks

Image: Lightspeed

Leading provider of cloud-based point-of-sale and e-commerce solutions Lightspeed Commerce Inc. has introduced a new product aimed at revolutionizing the retail industry. The company’s latest offering, Retail Insights, promises to equip Canadian retailers with powerful data-driven tools to optimize their inventory management and capitalize on sales opportunities.

With its new Retail Insights platform, Lightspeed is taking a significant step forward in addressing the evolving needs of modern retailers. The comprehensive suite of analytical tools leverages historical and real-time data to forecast demand, predict stock-outs, and streamline the purchase order process.

Dax Dasilva, CEO and Founder of Lightspeed, emphasized the importance of advanced insights in today’s rapidly changing retail landscape. “Retailers need cutting-edge tools to keep pace with the demands of their customers, suppliers, and staff,” Dasilva stated. “Retail Insights provides our clients with a clear view of product performance, sales trends, and inventory levels, enabling them to make informed decisions and plan for increased sales opportunities.”

The platform’s features are designed to adapt to the diverse needs of retailers, regardless of catalog size, supplier network, or number of locations. One of the key functionalities is the ability to estimate missed sales due to out-of-stock periods, allowing merchants to make more accurate ordering decisions. This feature alone has the potential to significantly reduce lost revenue opportunities for retailers.

Another notable aspect of Retail Insights is its forecasting capability for non-seasonal replenishment. By analyzing past sales volumes and stockouts, the system can suggest order quantities, eliminating the need for time-consuming manual estimations. This feature is particularly valuable for retailers dealing with a wide range of products and fluctuating demand patterns.

The platform also streamlines the purchase order process by allowing merchants to create draft orders directly from inventory reports. This integration saves time and reduces the risk of errors that can occur when switching between different systems or screens.

For retailers seeking a deeper understanding of their business performance, Retail Insights offers detailed visual reporting on various metrics. Users can track daily, weekly, or monthly trends at a glance, while also diving into granular data on product performance and costs. The ability to customize and save reports according to specific requirements further enhances the platform’s utility for strategic decision-making.

Lightspeed says its commitment to innovation is evident in its impressive client roster, which includes renowned brands such as Birkenstock in Australia, Evenko and Air Canada in Canada, and L’Occitane in New Zealand. The company’s solutions are currently available in several countries, including Canada, the United States, the United Kingdom, and Australia.

7-Eleven looking to close 10 stores in Winnipeg due to crime

Photo: 7-Eleven

7-Eleven is facing potential store closures in Winnipeg, long hailed as the Slurpee capital of the world.

According to two Winnipeg city councillors, 7-Eleven executives have disclosed that 10 stores within the city limits are at risk of shutting down due to ongoing challenges with crime and shoplifting. The company is reportedly seeking assistance to prevent these closures, which could significantly affect local neighbourhoods and consumers.

This is not the first time 7-Eleven locations in Winnipeg have faced closure threats. In late 2019, the William Avenue store was shuttered due to criminal activity, leaving a noticeable gap in the community.

Councillors met with 7-Eleven officials, including the CEO and a local store manager, to discuss the dire situation. The company representatives explained that several locations are incurring significant losses due to rampant shoplifting and criminal activities, making their operations unsustainable.

The potential closures pose a particular concern for inner-city and North End residents who rely on 7-Eleven stores for accessible food options.

In response to the crisis, 7-Eleven has called upon city officials to help develop solutions to curb criminal activity at their stores. Discussions have included proposals for increased police patrols and the possibility of implementing security measures similar to those used in Liquor Mart locations.

The province of Manitoba is currently funding a police overtime program targeting businesses affected by retail theft.

Cactus Club Cafe Expands with 3rd Toronto Location [Photos]

Cactus Club Cafe, Yonge Sheppard Centre in Toronto. Photo supplied

Canadian restaurant chain Cactus Club Cafe is set to open its third Toronto location at the Yonge Sheppard Centre in North York on August 20.

The new establishment, spanning over 14,000 square feet, will accommodate more than 350 diners, offering a diverse menu that caters to lunch, happy hour, dinner, and late-night crowds. This expansion marks Cactus Club Cafe’s continued growth in Ontario and its commitment to serving the Greater Toronto Area.

Corina Phu, Regional Manager for Cactus Club Cafe, expressed enthusiasm about the new location: “We’re proud to unveil this eagerly awaited restaurant and bring our fresh menu and unique Cactus vibe to North York. This opening represents our continued expansion in Ontario, with plans for more locations on the horizon.”

Cactus Club Cafe, Yonge Sheppard Centre in Toronto. Photo supplied
Patio at the new Cactus Club Cafe, Yonge Sheppard Centre in Toronto. Photo supplied

The Yonge Sheppard Centre location will feature three distinct dining areas: a lounge designed to become a North York hotspot, a warm and inviting dining room ideal for various group sizes, and an enclosed all-season patio. Each space has been thoughtfully designed to provide a unique atmosphere while maintaining the signature Cactus Club Cafe experience.

Culinary offerings at the new location will be overseen by Regional Chef Paul Woodham and Red Seal Chef Jared Cachero, ensuring the high standards of quality and consistency that Cactus Club Cafe is known for. The menu will include new items such as Thai Red Curry, Green Goddess Salad, and London Fog Crème Brûlée, alongside an extensive selection of beverages, including custom cocktails and a sommelier-selected wine list.

In line with the company’s commitment to sustainability and local sourcing, the Yonge Sheppard kitchen will partner with organizations like the Canadian Roundtable for Sustainable Beef and Ocean Wise™ to promote improvements across the food supply chain and support Canadian farmers.

The restaurant’s interior will feature standout art pieces, including a two-level mural by Toronto artist Daniel Mazzone, Andy Warhol prints, and neon-lit works by Miami artist Rubem Robierb, adding to the vibrant and stylish ambiance.

As part of its community engagement efforts, Cactus Club Cafe will be raising donations during its training dry runs, with all proceeds going to North York Community House, an organization that assists newcomers to Toronto in settling and integrating into their community.

The new Cactus Club Cafe at Yonge Sheppard Centre will be open seven days a week, offering daily Happy Hour specials and half-priced bottles of wine every Tuesday. Its location provides easy access via public transit and secure underground parking for those driving.

Cactus Club Cafe, founded in 1988 in North Vancouver has evolved from a single restaurant to a prominent chain of premium casual dining establishments across Canada. The brainchild of former Earls waiters Richard Jaffray and Scott Morison, Cactus Club Cafe emerged from humble beginnings, with the founders selling their first venture, “Café Cucamongas,” to fund their new concept.

The company’s journey has been marked by strategic expansion and culinary innovation. By 1998, just a decade after its inception, Cactus Club Cafe had already established 10 locations across British Columbia and Alberta, demonstrating its appeal and success in Western Canada. The chain’s growth continued steadily, reaching 19 locations by 2008.

Today, Cactus Club Cafe boasts over 30 locations across Canada, with a presence in British Columbia, Alberta, Saskatchewan, and Ontario. The company’s expansion into Eastern Canada, including its growing footprint in Toronto, represents a new chapter in its national growth strategy.

In February 2022, a significant change in ownership occurred when the Fuller family acquired full control of Cactus Club Cafe from Richard Jaffray.

Metro CEO: Discount Grocers Outpace Conventional Stores

Image: Food Basics/Metro

Canadian food and pharmacy retailer Metro Inc. says it is witnessing a significant shift in consumer shopping habits as discount grocery stores continue to outperform their conventional counterparts. This trend, which has been gaining momentum in recent years, is putting increased pressure on traditional store models and forcing retailers to adapt.

Eric La Flèche, CEO of Metro Inc., addressed this challenge during the company’s third quarter earnings call on Wednesday, August 14. He emphasized the need for conventional stores to differentiate themselves and enhance the customer experience. “The experience for the customer has to be elevated,” La Flèche stated, highlighting the company’s strategy for its Metro banner stores.

To combat the growing popularity of discount grocers, Metro says it is investing heavily in its conventional stores and loyalty programs. The company aims to provide a unique offering that sets it apart from discount competitors. This approach is being implemented on a market-by-market and store-by-store basis, tailoring the shopping experience to local consumer preferences.

Metro Inc. operates a diverse portfolio of retail brands across Ontario and Quebec. In addition to its namesake Metro stores, the company owns the Jean Coutu pharmacy chain. On the discount side, Metro operates Super C in Quebec and Food Basics in Ontario. The multi-banner strategy allows the company to cater to various consumer segments and price points.

La Flèche noted that in markets where no conversions between formats have occurred, discount stores are experiencing faster growth than conventional stores. This trend underscores the importance of maintaining a presence in both market segments. “That’s why we like to have both banners, and we go to market with both banners,” he explained.

The company reported higher food same-store sales for its third quarter, primarily driven by its discount banners. However, La Flèche expressed satisfaction with the performance of conventional stores on a relative basis, despite acknowledging the pressure they face in both Quebec and Ontario markets. When combining discount and conventional sales, Metro is seeing gains in market share and sales volume.

Expansion plans are underway for Metro Inc., with six Super C stores already opened this year. The fourth quarter will see the addition of a Food Basics store in Ottawa, a Super C in Montreal, and a Metro location in Ottawa. These openings reflect the company’s commitment to growing its presence in key markets.

La Flèche observed that the discount market is growing more rapidly in Quebec compared to Ontario, partly due to square footage additions and massive conversions by a competitor. He said that he anticipates that once this conversion wave ends, the Metro banner will be well-positioned to resume growth, while the Super C banner will continue to capture growth in the discount sector.

Banff Residents Vote Against Summer Pedestrian Zone

Photo: Town of Banff

The town of Banff has decided against keeping its summer pedestrian zone on Banff Avenue. The decision comes after a recent vote that has sparked considerable debate among residents and visitors alike.

The Town of Banff, renowned for its stunning natural beauty and bustling tourism industry, held a referendum this week to determine the fate of the pedestrian zone. The initiative, which began in 2020 as a response to the COVID-19 pandemic, had become a popular feature during the summer months. However, the voting results reveal a divided community, with a narrow majority opposing the continuation of the car-free area.

Out of 2,523 votes cast, 1,328 residents voted against maintaining the pedestrian zone, while 1,194 supported its continuation. This close margin highlights the complexity of balancing tourism, local business interests, and community preferences in a town that relies heavily on visitor traffic.

The pedestrian zone, which operated annually from the May long weekend to the Thanksgiving long weekend, had transformed Banff Avenue into a vibrant, walkable space. It featured additional public seating, bicycle parking, and flower planters, creating an inviting atmosphere for both tourists and locals. Many restaurants had expanded their patios onto the street, while retailers took advantage of the increased foot traffic with outdoor displays.

As a result of the vote, the Banff Town Council is now required to pass a bylaw rescinding the original decision to maintain the annual summer pedestrian zone. The dismantling process will begin promptly after the bylaw is passed, with the removal of public amenities, followed by the deconstruction of restaurant patios and retail displays.

The town will also need to make several logistical changes to accommodate the return of vehicle traffic. This includes adjusting traffic light signal timing at key intersections such as Wolf Street and Buffalo Street, and coordinating with lights on Spray Avenue. The gates that allowed Roam Transit to enter the pedestrian zone will be removed, along with the large planter barricades at each end of the zone and on Caribou Street.

The decision to create a pedestrian zone on Banff Avenue was initially implemented in 2020 as part of the town’s response to the COVID-19 pandemic. It continued through subsequent summers and was maintained as a pilot project in 2022 and 2023. Earlier this year, in January 2024, the Banff Town Council had voted to make the annual pedestrian zone a permanent summer feature.

However, the decision faced opposition from a group of residents concerned about the impacts of traffic being detoured off Banff Avenue. In March, these residents submitted a petition to overturn the council’s decision, leading to the recent vote.

It comes at a time when other cities are pedestrianizing streets, with mixed success. Business owners in Vancouver’s Gastown area complain that business is down after Water Street had cars removed for the summer, and Montreal has also been pedestrianizing streets with what appears to be greater success.

Metro Inc. reports Q3 profit dip amid sales growth

Photo: Metro

Canadian grocery and pharmacy retailer Metro Inc. reported a decrease in third-quarter profit despite a notable increase in sales. 

The Montreal-based retailer announced a profit of $296.2 million for the quarter ended July 6, down from $346.7 million in the same period last year. This translates to earnings of $1.31 per diluted share, compared to $1.49 per diluted share in the previous year. Despite the profit decline, Metro’s sales showed a positive trend, rising 3.5% to reach $6.65 billion, up from $6.43 billion in the corresponding quarter of the previous year.

Metro’s food segment demonstrated resilience, with same-store sales increasing by 2.4%. The pharmacy division performed even stronger, posting a 5.2% gain in same-store sales. This growth was driven by a 6.3% increase in prescription drug sales and a 3.0% rise in front-store sales, highlighting the diverse strengths within Metro’s retail portfolio.

Eric La Fleche, Metro’s Chief Executive Officer stated, “We recorded solid comparable sales growth in the third quarter, on top of a very strong quarter last year, reflecting effective merchandising and good execution in our food and pharmacy banners.” This growth is particularly noteworthy given the challenging comparison to the previous year’s robust results.

However, Metro faces significant operational changes that may impact its financial outlook. The company had previously warned investors about potential headwinds in its 2024 fiscal year related to the transition to new distribution centres. These facilities, located in Terrebonne, Quebec, and Toronto, Ontario, represent a major investment in Metro’s supply chain infrastructure.

Providing an update on this transition, La Fleche noted, “Our new automated fresh and frozen facility in Terrebonne is now fully operational with productivity levels ramping up in line with our plans, and the transfer to the last phase of our automated fresh facility in Toronto has begun.” The progress suggests that Metro is navigating the complexities of modernizing its distribution network while maintaining its market position.

The company’s adjusted earnings per diluted share remained steady at $1.35, matching the figure from the same quarter last year. 

Has Starbucks lost its coffee alchemy?

Photo by Dom J

Coffee giant Starbucks has been struggling of late and this week, after reporting declining worldwide sales, the company announced a change of leadership at its top level.

It’s an indication that all is not well for the corporation these days.

George Minakakis

George Minakakis, Founder and CEO of Inception Retail Group, said Starbucks has lost its coffee alchemy.

“Once the gold standard of coffee culture, it now faces a stark reality: it’s struggling to maintain its allure in a rapidly evolving market. Let’s start with the simple argument that economically, a cup of coffee at this brand is a luxury for many, and that’s why sales are dropping. That’s just the tip of the iceberg. 

“Many issues are challenging Starbucks. Let me be blunt: you don’t part with a CEO because sales decline in a slower economy. There is something more under the brand that isn’t working, and the board of directors acted. Given (the recent) announcement, a search has been underway for a while.   

He said COVID changed the work culture in society and as a result, fewer people meet in person for coffee because we can stream meetings.

In China, Starbucks is being beaten by LuckIn, a Chinese brand that offers affordable coffee and has twice as many stores. 

“Over the last few years, the brand has been at odds with its own employees, who turned to unions for job security. This was an Artisan Coffee Maker with a cult following of caffeine drinkers looking for innovative brewed mixes. Baristas were the talk of every retailer, who highlighted their service skills as a model to follow. That was the past. Then came the drive-thru, which moved consumers from sitting in the store to sitting in their cars, never allowing them to experience the brand’s culture. 

“When you change consumer models so drastically, something will break in the brand. I am sure that they have lost sales in second cups of coffee and food.  What’s missing is greater product innovation, and the in-store experience has to be brought back to life, inviting guests back in to have a seat, listen to music, talk to people, and do their work!  Starbucks needs to revive its alchemy if it wants to differentiate itself from all the other fast-food giants that have drive-thrus and sell coffee. Right now, they are beginning to look like everyone else in the food service industry. The new CEO has to figure out how to reassemble this whole thing.”

Doug Stephens

Doug Stephens, Founder of Retail Prophet, said Starbucks is a textbook example of a company that reshaped and created a category unto itself. 

“Then the rest of the coffee world began catching up. But instead of doubling down on its core strengths – things like community, customer experience and craft – Starbucks instead began commoditizing its own brand by doing away with many of the cultural and experiential elements that made them so special and important in people’s lives, replacing them with label printers, a watered down loyalty programme and drive-thrus,” he said.  

“In my opinion the brand has never been the same since Howard Shultz left and later returned as CEO in 2008 to salvage the brand. At the time Shultz said that “growth had become the strategy.” And that, he maintained had killed the soul of the company. Shultz righted the ship but I’m not sure he ever regained the soul.”  

Bruce Winder

Bruce Winder, retail analyst, advisor and speaker, said Starbucks finds itself in an unfavorable position on many fronts and has thus taken the drastic step of replacing its CEO after a short tenure.

“Numerous issues circle the company including poor value perception after raising prices too high and too often, slow execution times in store that have frustrated guests and delivery drivers, slow sales, issues surrounding employee unionization and boycotts as a result of the war in the Middle East,” he said. 

“Exacerbating this situation is the current flight to value by the global consumer who has changed how they see premium brands and premium consumption. People are scrutinizing every purchase as interest rates remain elevated (but are decreasing) and inflation, although lower than previous years, leave consumers with elevated prices to contend with.

“Starbucks was once the poster child for social consciousness and has strayed from this positioning of late. Hopefully new leadership will help the troubled brand reclaim their once enviable position.”

Michael Kehoe

Michael Kehoe, Broker of Record at Fairfield Commercial Real Estate Inc., said the coffeehouse business in Canada is extremely competitive and the world’s largest coffee chain, the multinational Starbucks is facing challenges globally that include headwinds at its Canadian store operations.

“This is a big company with complex problems experiencing recent slumping same-store sales and store traffic numbers. Starbucks is a premium brand in the coffeehouse category and with Canadian consumers under increasing financial pressures the firm’s value proposition with its Canadian customer is rather fuzzy,” he said.

“The Canadian Starbucks customer experience is nothing special and the firm’s food offerings for the most part are weak and unappealing. I can’t think of a menu innovation, marketing program or a memorable customer experience at a Canadian store in recent memory and I am a frequent customer. To recapture lost sales and customer footfall there needs to be a focus on efficient coffeehouse operations. This will include a focus on the speed of service, new food offerings and the overall customer experience to differentiate the chain from its numerous competitors. 

“The repositioning of many stores to add drive-thru capability and the closure of underperforming stores are all positive moves for the Starbucks Canadian store network. Price conscious Canadian consumers vote with their feet and their wallets, and I am confident that the big ‘green mermaid’ brand with new leadership at the top will win Canadian customers back to regain their sales and traffic momentum.” 

Carl Gagnon

Carl Gagnon, Président of IMAGO, said Starbucks appears to have lost sight of its WHY – its original strategic focus.

“For years, the brand was a pioneer, offering a distinct value proposition centred on a premium coffee experience, featuring high-quality, ethically sourced beans, and establishing itself as a welcoming “third place” for consumers. Starbucks set itself apart through personalization, consistency, and by cultivating a global coffee culture that turned coffee consumption into a lifestyle. However, this clear, singular purpose has faded over time,” he said.

“As competitors adopted similar concepts, Starbucks’ once-unique proposition began to blur in the eyes of consumers. This shift prompted customers to scrutinize quality, pricing, experience and brand values more critically, often finding greater value elsewhere. Despite intensifying competition, evolving consumer preferences, rising operational costs, and broader economic pressures, Starbucks must realign with its core audience and reconnect with it on a more personal level. Indeed, Canadians increasingly favour brands that resonate with their values and communities.

“To regain its edge, Starbucks could look to McDonald’s successful global-local strategy, tailoring its offerings to better reflect Canadian tastes and preferences, introducing locally-inspired menu items, and collaborating with local brands and influencers to reestablish an authentic connection. Ultimately, by speaking directly to Canadians and Québécois in their own tonality, lifestyle, and cultural codes, Starbucks would touch Canadians at the heart, revitalizing its relevance and fostering deeper emotional connections with its customers.”

Recently, Starbucks announced that Brian Niccol has been appointed chairman and chief executive officer. Niccol will start in his new role on September 9, 2024. Starbucks chief financial officer, Rachel Ruggeri, will serve as interim CEO until that time. Mellody Hobson, Starbucks board chair, will become lead independent director.

Niccol currently serves as Chairman and CEO of Chipotle. 

Laxman Narasimhan is stepping down from his role as CEO and as a member of the Starbucks board with immediate effect. 

Starbucks recently announced its financial results for its 13-week fiscal third quarter ended June 30, 2024, which showed that global comparable store sales declined three per cent, driven by a five per cent decline in comparable transactions, partially offset by a two per cent increase in average ticket.

The company opened 526 net new stores in Q3, ending the period with 39,477 stores: 52 per cent company-operated and 48 per cent licensed.

Consolidated net revenues declined one per cent to $9.1 billion.