On Tuesday, the S&P 500 was down 0.1% and Toronto was down 0.3%.
Linamar was down 2.2% and will probably continue to be weak until and unless there is some progress on NAFTA.
After the close, AutoCanada announced it did a deal to sell and leaseback two dealerships raising $55 million. In a way this should be a neutral because it will be paying rent to reflect the sale price. But these deals tend to be viewed as positive. And I think it is another reflection of the fact that the new boss Paul Antony is taking speedy and decisive action to improve profitability at AutoCanada.
In other news, Statistics Canada reported July sales at food services and drinking places. They give both the change since June and the change since July of the prior year. I focus on the change since the prior year. They note that the comparison to last July is “unadjusted, (that is not seasonally adjusted)”. I understand the concept of seasonally adjusting July versus June or July versus December. But I don’t know what they would mean when they say July 2018 is not seasonally adjusted versus July 2017. It’s obviously the same season. Possibly it could mean not adjusted for the number of weekdays and weekend days? In any case the numbers are adjusted and they report:
In July, unadjusted sales in the food services and drinking places subsector were up 4.9% year over year. Sales in each of the following industry groups increased: full-service restaurants (+5.6%), limited-service restaurants (+5.2%), special food services (+1.2%) and drinking places (+1.4%). Sales increased in every province, with Ontario (+5.0%), Quebec (+5.9%) and British Columbia (+5.8%) recording the largest gains in dollar terms.
Prices for food purchased from restaurants were up 4.4% in July compared with July 2017
This increase driven mostly by higher prices is exactly what I had expected in 2018 as prices were raised due to the higher minimum wages. This should bode well for Boston Pizza. But this increase has been happening most months since at least January and yet Boston Pizza did not report higher same store sales in Q1 or Q2. The concern therefore is that Boston Pizza is losing market share. I have asked BP about this but they have not responded. In their reports they mostly blame lower sales in the energy patch areas. With 28% of their restaurants in Alberta, it is possible that they have a dis-proportionally high exposure to the energy patch. But I still think they have probably lost some market share.