LIQUOR STORES NA LTD 4.70 PCT DEBS T.LIQ.DB.B

RE:RE:RE:RE:RE:RE:13 percent dividend ????/ Solo Liquor Store Competition

[Ticker28]

Hi Scarface,

The quick answer is yes it will.  What is harder to determine is how much of an impact it will have and if it will give earnings a boost or a drag.

Obviously a weaker Canadian dollar bodes well for exporters but can hurt importers.  That being said though, this can be alleviated by using option strategies such as covered calls or puts which hedges against currency fluctuations.  My sense is the senior management have experience with cross border operational challenges related to currency risk and have acted to mitigate it.

Now it can bring some great benefits that our competitors lack.  If we export inventory purchased from Canadian producers to the US stores we will be able to expand margins on those products or we could mark those products down to gain market share and then proceed to still collect a more robust margin with added volumes courtesy of US market scale.

Around 30% of total sales is currently coming from the US market.  We might also stand to benefit largely if they convert those dollars, bring them in Canada to complete store renovations as per plan, and then they get an additional 39 cents on the dollar.

I will work at clarifying some more on the actual impact of the forex rather than estimating and it may have some drag on inventory costs but this could be offset by other credits.  Once I get more details I will post.