Canadian retail stocks feel consumer-spending pinch

Discount brands are better able to ride out the slump.

Bryan Borzykowski 12 December, 2016 | 6:00PM

On a recent trip to Calgary, John Wilson took a walk in the city's underground mall. It was early December and Wilson, Sprott Asset Management's CEO and co-chief investment officer, had expected the numerous high-end stores, such as Holt Renfrew and Harry Rosen, to be packed with holiday shoppers. Instead, he was one of the only shoppers. "You could have shot a cannon off," he says. "It was like it was a Sunday and all the stores were closed."

To Wilson, this wasn't just a slow day at the mall. Rather, it was another sign of Alberta's struggling economy and yet another indication that consumer spending in the city, and around the country, was slowing. Over the last five years, Canadians have been buying things at a healthy clip -- consumer spending has grown, on average, by 3.2% per year since 2010.

But the numbers are dropping. In the first quarter, retail sales jumped by 5.6% year-over-year, climbed by 3.8% in the second quarter and then rose by just 2% in the third quarter. Benjamin Tal, CIBC World Markets' deputy chief economist, expects retail sales growth to fall below 3% in 2017.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alimentation Couche-Tard Inc46.78 CAD1.37
Dollarama Inc49.36 CAD-1.10
Loblaw Companies Ltd69.78 CAD-0.17

About Author

Bryan Borzykowski

Bryan Borzykowski  Bryan Borzykowski is a Toronto-based business and investments writer. He’s contributed to the New York Times, CNBC, BBC Capital, CNNMoney and several other publications. Bryan’s also written three personal finance books and appears regularly on CTV News.

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