RE:RE:RE:The Problems: Oil Prices and AlbertaFootballFan1 wrote:
According to their latest Presentation dated Sept 2015, 74% of LIQ sales was in Alberta and B.C......Now, this may gradually change with the new USA stores, but the big concern is still how well the Alberta stores do and whether any increase in earnings in the USA may be offset by declining profitability in Alberta (after the associated costs of getting these stores built or, in the case of the NJ stores, paid for and integrated is done).........Also, I'm wondering how price-competitive LIQ is vs. the competition in Alberta...?....Jack Daniels is the same no matter where you buy it from, and though LIQ store locations look great (at least from pictures I've seen), are their competitors offering the same products at lower prices, do people really want wine and beer tasting, private label offerings, fancy stores etc. going forward in this economic environment...?......As for Suncor, they are an integrated O&G company with high-margin refineries and downstream retail (gas station) operations across Canada, plus operations in the U.K, Norway, etc. The Alberta oil plays are only one aspect of the company - Suncor is the largest integrated O&G player in Canada, has a great balance sheet, lots of cash on hand, and actually increased their dividend last year - no comparison to LIQ in my opinion.....
As to LIQ being competitive or not lets look at an area that we all know has a depressed markets right now, which is Fort McMurray. If I recall I believe LIQ has 6 stores there. If your competitor cuts its price on Jack Daniels should LIQ do the same? It depends on your locations and market share. If the store in questioned who lower this price was 10 miles out of your way, would you drive that far to save a $1? Not likely! But instead of arguing whether they will or will not do this why not just look at there Q3 Report to know for sure. According to that it says that there Gross Margin Percentage, which is where selling liquor at a discount would show up, was 25.7%, which was almost the same as last year, at 27.8% and other years as well. So even though they may have done some discounting in Fort McMurray, overall they did not do a lot. But lets look at Fort McMurray again. If LIQ Stores are suffering there, does it not stand to reason that other Liquor Stores there are also suffering? So who really is in a better position to cut prices or weather this storm? A Competitor who may own 2 Liquor Stores in Fort McMurray, and is up to his eyeballs in debt, or LIQ who owns 250 stores and many outside of Fort McMurray and has credit available, and has shown a good profit last quarter?