September 13, 2017

On Wednesday, the S&P 500 was up 0.1% while Toronto was down 0.1%.

Costco rose 1.8% which is relatively large increase for such a large company.

I no longer have Liquor Stores N.A. on the list but I keep an eye on its price. It was up 2.5% today. I took a quick look at its recent conference call transcript and did not see anything good. The company admits that certain family-owned discounts mini chains in Alberta have lower costs. It has tried putting prices up but has had to lower prices due to competition. New management is going to try to reduce costs. I suspect they will close some stores. If I still owned these shares I would Sell. Liquor is always going to sell but the problem is that the various competitors sell basically the same products. Customers can easily go to the cheapest location. The lucrative part of the liquor industry would be the producers of popular branded premium products. Having to compete mostly on price, as retail liquor stores do is not a road to great profits. And having to do that while not having the lowest costs is a very rough road to follow. Some years ago I thought Liquor Stores N.A. had cost advantages due to scale. But the monopoly provincial liquor wholesaler does not give volume discounts and it seems that a number of chains have lower costs than Liquor Stores N.A. Simply, Liquor Stores N.A. financial results for the last few years appear to refute my original idea that they had important scale advantages such as in advertising.

Note the update for Stantec in the post below.