Winnipeg Free Press - PRINT EDITION

Early indications show disappointing Canadian holiday sales

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TORONTO -- Early signs from retailers suggest Canadian holiday sales were nothing to celebrate in 2013 as more shoppers hunted for discounts and retailers slashed prices to move inventory.

Both Sears and Target said lower sales in Canada pressured results in the fourth quarter, a sobering outlook that could be echoed in financial reports from other retailers in the coming weeks.

The holiday shopping season, which includes Black Friday and Christmas, was "very difficult," said Daniel Baer, a retail analyst at Ernst & Young.

Bad weather in Central Canada kept many people from malls during the peak shopping period. A massive ice storm hit southern Ontario in the days leading up to Christmas, while the eastern provinces suffered their own unseasonably bad weather and power outages.

"Between what we've been hearing from (Sears and Target) and other private companies, it has certainly been a tough two months -- December in particular," Baer said.

However, it wasn't just the bad weather, he suggested.

The increasing popularity of Black Friday sales actually worked against Canadian retailers, Baer said.

While more companies promoted deep discounts to coincide with the U.S. Thanksgiving holiday, it meant shoppers became conditioned to expect sales throughout the rest of the holiday shopping season.

On Friday, Target Corp. said poor sales at its Canadian stores will have a bigger impact on fourth-quarter results than it originally expected. The discount retailer said it had to slash prices to clear out unsold merchandise and that hurt gross margins.

Meanwhile, Target says personal information -- including phone numbers and email and mailing addresses -- was stolen from as many as 70 million customers in its pre-Christmas data breach. That was substantially more customers than Target had previously said were affected.

The chain also indicated its sales have been hurt by the breach, cutting its forecast for fourth-quarter earnings and a key sales barometer.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition January 12, 2014 B9

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