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Target Coming to Canada


Parsad
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Zellers is part of the Hudson Bay Company.

 

Do you know when the Hudson Bay Company was founded?

 

1985?

 

1969?

 

1915?

 

1895?

 

1815?

 

1795? (Partner, what are you smoking?)

 

1715 (...)

 

Drum roll please....

 

...in 1670!!!  :o http://www2.hbc.com/en/index.shtml

 

Not in terms of profitability, but in terms of longevity it would post most of Berkshire subsidiaries into shame! Cheers!

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I worked for HBC for 15 years and all I can say, this is a looooooooooong time coming.  All of our money went into the Bay (actually, Queen St, Bloor Street and Yorkdale Mall locations all in Toronto got the bulk of it) and Zellers was all but forgotten years ago.  Empty shelves, miserable staff and a tired brand makes for a sorry company.

 

As a Canadian who hasn't been to a Target, what can they bring to Canada?  Is it just a red WalMart?

 

FWIW, when Lowes came to Canada 3 years ago, I converted almost immediately.  Fresh, clean, bright stores with happy helpful staff and the shelves always full made me a former Home Depot shopper, both as a home owner and contractor.

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I visited a Target in the US for the first time last month.  I had a hard time finding any difference between it and Wal-Mart. I admit that many of my friends express a preference for Target (some even refuse to shop at Wal-Mart). It may have had a slightly better clothing selection..  I'm not sure.

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I had a hard time finding any difference between it and Wal-Mart. I admit that many of my friends express a preference for Target (some even refuse to shop at Wal-Mart). It may have had a slightly better clothing selection..  I'm not sure.

 

I was turned off of WalMart when I found out about "WalMart quality".  Huggies diapers have 12 less in a pack, toilet paper rolls are smaller etc. and they're the same price as everyone else.  I mean, I understand about cost savings, but WalMart is to the extreme sometimes.  Of course, it also means they don't price match other stores when they're on sale, since they're not the identical products with regards to size.

 

I always assumed a national brand item was identical everywhere, until I saw a blog post about the difference in size of a roll of toilet paper at a WalMart versus a competitor (come to think of it, I think the comp was Target).

Now I read labels more carefully, thanks to WalMart.

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What's most impressive is that HBC was sold earlier this decade at a valuation of about $1.5b and now the Zellers element alone is being hived off for $1.8B.  IMO, there have been no notable improvements in the operations of HBC or its intrinsic value.

 

I guess that pretty much confirms that Jerry Zucker was a pretty bright guy.

 

SJ

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I have 4 "go to retailers"... when I need something in the US.

In order of preference:

1 - Trader Joe's (wow - just wow - their grocery and wine are phenomenal... Two-Buck Chuck anyone?!?)

2 - Costco (good quality and prices on food/consumer goods)

3 - Target (everything)

4 - Sak's off 5th (for work clothes)

 

Target is similar to Walmart; they sell everything.

That's about where the similarities end. It's just far, far cleaner, with much better products (Archer Mills products are a great value proposition).

I grew up (and now live again) in what I like to call Canada's mid-west... spent much of my youth in Minneapolis/St Paul (if there are any members there, please send me a message, would be good to meet for coffee).

 

Target is based in Minneapolis and I feel, as a retailer, the company exemplifies many of the mid-west qualities I admire.

 

On a side note, I was in SoFlorida 2 weeks ago and had a long discussion with an HBC exec's 30yr old son (father was a former CFO as well as some other positions, but didn't want to talk shop, the son did).

I was a shareholder a while back (had a $600mln market cap, $500mln or so in debt... and some really choice assets), so I was familiar with him and the company... told him that it would be a great day when Target finally swooped in and saved them from Zellers - he just looked at me weird.

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I was a shareholder a while back (had a $600mln market cap, $500mln or so in debt... and some really choice assets), so I was familiar with him and the company... told him that it would be a great day when Target finally swooped in and saved them from Zellers - he just looked at me weird.

 

It was the other way around for a long time.  The Zellers stores were very profitable and were the dominant discount store in Canada by far for a long-time.  They had over 50% of the market at one point in the 90's.  The CEO of Zellers from 1989-1996 had done a spectacular job, but after that they started to lose market share and profitability.  By 2005-2006, the tide had turned, the stores had been neglected and they were bleeding cash.

 

Target will do very well in the existing Zellers locations.  All those stores needed was a better supply management system, updating and a retailer that is at the top of their game when it comes to discount retailing and expenditure management.  Many of those Zellers locations are still very busy...at least the ones in BC...so Target will come in and do what should have been done a few years ago.  They will make money and take market share away from other players.  In particular, Loblaws "Real Canadian Superstores" and Jimmy Pattison's "Save-on-Foods" will probably suffer a bit.  Cheers!

 

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What's most impressive is that HBC was sold earlier this decade at a valuation of about $1.5b and now the Zellers element alone is being hived off for $1.8B.  IMO, there have been no notable improvements in the operations of HBC or its intrinsic value.

 

I guess that pretty much confirms that Jerry Zucker was a pretty bright guy.

 

SJ

 

I didn't realize Zucker died in 2008. It looks like he was a good capital allocator through InterTech group. Of course, it's all speculation because it's a private company.

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The fellow who sold it to Target, bought the entire company from Zucker's widow for $1.1B in late 2008/early 2009!  Far less than the Zeller's sale price alone, and HBC is worth at least as much.  Now that's a good investor!  ;D  Cheers!

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For the Yanks here:

Walmart came into Canada in '94. They expanded and concurred like mad during the late '90s...

Zellers tried to compete by... buying K-Mart Canada!

 

Walmart was just far, far better.

 

I take it by the price that Target is really committing to this.

Walmart is going to have a rude awakening in this country when Target gets to a full stride.

 

Even Liquidation World did really well until Walmart, Dollarama and (Loblaws/Weston's) The SuperStore started eating their lunch 5-10yrs ago!

 

The thing about this newer HBC guy is that he doesn't even care about this Zellers "morsel", if you will.

Look at his Lord and Taylor!

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