Canadian Retailers Best Buy, Sears Slash 1,500 Jobs, More Layoffs to Come for the Industry
By Esther Tanquintic-Misa | January 31, 2014 12:19 PM EST
Canadian retailers Best Buy and Sears have announced it will collectively slash more than 1,500 jobs this year, in what could be an omen of things to come for the Canadian retail market at the onset of the Chinese New Year 2014 Year of the Horse.
On Thursday, electronics retailer Best Buy Canada announced it will slash 950 full-time jobs. Sears Canada earlier this week said it will cut 624 staff at its midtier level. The latter's latest move effectively increased the number of layoffs it has made this month alone to more than 2,200.
Both Canadian retailers were forced to institute the jobs slash as they work to keep afloat amidst the weaker Canadian dollar and lacklustre sales over the holiday season.
"If your topline isn't growing, there's only one way to continue to increase profits," Daniel Baer, a retail analyst at Ernst and Young, was quoted by The Telegram. And people and the industry could most always expect that labour costs would always be the first sacrificial lamb, he said.
"A lot of these retailers have certain sales expectations and they have a cost base that lines up with those sales," Brian Yarbrough, research analyst at Edward Jones in St. Louis, said. "If those sales don't start materializing - and it happens quarter in and quarter out - at some point they feel like there's an opportunity to become more efficient."
Experts believe the ongoing job slash scenario in the Canadian retail market has just started and will continue to persist in 2014.
Economists predict the Canadian dollar to plummet to as low as 85 cents or 87 cents against the US dollar.
And if that happens, "either pricing will have to go up, or cost-cutting measures will have to continue to make up for the lower Canadian dollar," Mr Baer said.
"I don't think we'll see a buoyant retail market in the next little while at least," he added.
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