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Starts cool further in May

14 June 2018
By the Numbers

OTTAWA – Housing starts continued to cool in May as the trend measure used by Canada Mortgage & Housing Corporation (CMHC) dropped to 216,362 units in May from 225,481 units in April. Similar declines were also recorded on both a seasonally adjusted and actual basis.

The trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts. It’s used by CMHC to complement the monthly SAAR and account for considerable swings in the estimates, which are largely driven by the multi-unit segment which can vary significantly from one month to the next.

“In May, the national trend in housing starts declined following several months of stability,” CMHC chief economist Bob Dugan said in a statement. “This reflects a decline in multi-unit urban starts in May that leaves them close to their 10-year average following several months of historically elevated levels.”

Chart courtesy of the Canada Mortgage & Housing Corporation.The standalone monthly SAAR of housing starts for all areas in Canada was 195,613 units in May, down from 216,775 units in April. The SAAR of urban starts decreased by 11.1% to 178,201 units. Multiple urban starts decreased by 16.4% to 119,811 units while single-detached urban starts increased by 2.0% to 58,390 units.

Rural starts were estimated at a seasonally adjusted annual rate of 17,412 units.

On an actual basis, starts of single family homes in urban areas across the country fell 3% last month to a preliminary 5,563 units, from 5,764 units in May 2017. The only bright spot was Quebec, where starts climbed 15%. They were essentially flat in Ontario and declined 18% in Atlantic Canada, 13% in the Prairies and by 8% in British Columbia.

For the five-month period ending 31 May 2018, CMHC said starts of single family homes totalled a preliminary 20,429 units – down 9% from the 22,337 units for the same period last year. They were up 16% in Atlantic Canada and 2% in Quebec but down across the rest of Canada, most notably by 13% in Ontario.

CMHC defines an urban area as one with a population of 10,000 or more.

Meanwhile, multi-unit segment starts were set at a preliminary 10,507 units in May, statistically flat with the 10,521 units for May 2017. Starts in this segment were down across the country, except Quebec where they climbed 16%.

For the year-to-date, multi-unit starts were tagged at 53,790 units – up 6% from 50,922 units for the comparable period. They were up in Quebec, Ontario and B.C. but down on the Prairies and in Atlantic Canada.

Total starts for the first five months were up 1% to 74,219 units. Upticks were recorded for Quebec, Ontario and B.C. but declines were registered in the Prairies and Atlantic Canada.

Michael Dolega of TD Economics is the report was disappointing but surprising in his research note.

“The slowdown is not overly surprising in light of a cool-off across Canada’s largest existing home markets, tighter regulation, and higher borrowing costs,” he said. “To that end, the slowdown in Ontario, experiencing a rebalancing in the existing home segment, accounted for two-thirds of the entire national decline in homebuilding.

“While the slowdown is not surprising to us, its magnitude is more pronounced that we had expected,” he continued, adding the bank now expects the overall economy’s performance in the second quarter will be weaker than previously expected although they still believe it will come in a just under 3% for the entire 2018 year.

“Going forward, given the inherent volatility, some rebound is likely to materialise in the coming months,” Dolega said, noting starts will likely fall below the 200,000 mark for the year, thanks to rising interest rates, affordability issues in both the Greater Toronto and Greater Vancouver area as well as government regulations. “The fragility of the housing market will be one of the factors that is likely to keep the Bank of Canada in the slow lane over the medium term, with just one more hike expected this year.”

Flexiti acquires TD private label credit card portfolio

14 June 2018
By the Numbers, Retail

TORONTO – POS financing and payment provider Flexiti has acquired the Canadian private label credit card portfolio of TD Financial Services (TDFS), a move that will give it more than one million new customers and $250 million in consumer receivables while expanding its retail network by some 900 locations across the country.

“This is a significant transaction in the consumer lending space,” the company said, adding it believes it is now the leading private label credit card issuer in Canada.

Flexiti also announced the acquisition – the details of which were not disclosed – was financed, at least in part by a new equity injection of $50 million from Globalive Capital, a Toronto-based investment firm with investments in several high technology companies. It is now has a controlling interest in Flexiti, which also secured new credit facilities of $350 million, including $300 million from the Cayman Islands branch of Credit Suisse AG, acting as senior lender.

Peter KalenUntil the TDFS deal, Flexiti was primarily a provider of point-of-sale (POS) financing and payment technology, specialising in providing these services to big ticket retailers.

“Since our inception, Flexiti has experienced tremendous growth by following one simple mantra - our retailers are our partners, and we put them at the core of everything we do,” Peter Kalen, Flexiti’s founder and chief executive officer said in a statement. “This acquisition of TDFS’ private label credit card portfolio represents an important milestone for our company, and the consumer lending space in Canada, as it instantly positions us as one of the largest consumer lenders in the country with a cardholder base of over one million Canadians.

“We’re thrilled to welcome our new retail partners to the Flexiti network and look forward to working closely with them to drive sales and customer loyalty through our industry-leading point-of-sale financing platform,” he continued.

At the time of acquisition, the TDFS portfolio included merchants such as EQ3, the contemporary retail division of Palliser Holdings; Lastman’s Bad Boy, the eight unit high-impact promoter based in Toronto; La-Z-Boy Furniture Galleries; Cantrex Nationwide, the Montreal-based buying group; Kent, the home improvement retailer with building centres across Atlantic Canada; and, Castle Building Centres, the Mississauga-based buying group of hardware and lumber merchants.

A company spokesman said there shouldn’t be a large learning curve as Flexiti’s existing POS financing platform provides retailers with the ability to offer their customers a virtual private label credit card.

“Customers can apply for financing and receive approval within minutes – no paperwork, no scanning or mailing,” the spokesman said. “With minimal integration required into existing POS systems, retailers can quickly scale across multiple locations and sales channels, including e-commerce, to offer financing to all of their customers.”

With the acquisition, Flexiti now has a retail network of some 3,500 locations across the country.

Offering a private label credit card also brings a number of advantages to the retailer.

“In Canada, retailers have been faced with among the highest interchange rates in the world – nearly double the average in the U.S. and three times higher than Australia,” the spokesman said. “Issuing private label credit cards and shifting spend onto them is one way retailers can save fees and boost sales with financing options. Compared to our southern counterparts, Canadians spend proportionately more on general purpose credit cards than Americans.

“However, the utilisation of co-brand and private label credit cards are lagging significantly in comparison,” he continued, adding, “The advancement in technology driven credit card and financing platforms, like that which Flexti offers, will be integral to closing this gap in the coming years.”

Related Story: Flexiti launches online financing

LVM furniture display expands

14 June 2018
Events, Furniture, Mattresses

LAS VEGAS – The organisers of the twice yearly furniture trade event have added some 128,000 square feet of new, expanding and renewing home furnishings showrooms to the World Market Center here. All of it is expected to be ready for the Summer 2018 edition of the Las Vegas Market, which will begin its usual five-day run on 29 July.

“Las Vegas Market continues to amplify the quality, quantity and diversity of resources in its furniture category, maintaining a commanding momentum in this already dominant segment,” Julie Messner, senior vice president of furniture and home décor leasing for International Market Centers, the owners of the market, said in a statement. “Las Vegas Market is a proven draw for the most dynamic and distinctive resources in the industry, building upon its track record by delivering an exciting, must-see shopping experience for retailers and designers alike.”

The World Market Center is home to the Las Vegas Market, held in January and July every year.Four new-to-market furniture resources are opening for the summer event: Istikbal, providers of case goods, upholstery and accessories, in 5,900 square feet on B7; Roberto Grassie, designer and wholesaler of unique luxury furniture and accessories, in 3,474 square feet on B6; Furniture Care Protection, suppliers of cleaning, polishing and protection products, in 500 square feet on A10; and, Vintage Furniture, a manufacturer of handmade furniture constructed from reclaimed wood, in 8,200 square feet on A9.

Additionally, two furniture resources are expanding their showrooms: Aeon Furniture, providers of dining room furniture and accessories on B6; and, VIG Furniture, suppliers of European-inspired contemporary, modern and transitional home furnishings, also on B6.

Seven showrooms are extending their commitments including Coaster Fine Furniture, manufacturer of case goods, upholstery and accessories on C16. Other renewals are: Donco Trading Company, an importer of juvenile furniture, bunk beds, loft beds, platform beds and futons on A9; Greenington, a supplier of bamboo case goods, accents and accessories on B7; Handy Living, a provider of easy-to-assemble case goods, upholstery and accessories on A6; Holland House, a manufacturer of bedroom and dining room furniture on C14; Patiologic, a resource for fire pits, outdoor furniture and accessories on C12; and Propac Images, a supplier of wall décor on B7.

The organisers believe LVM is the largest furniture market in the western United States, with more than four million square feet of exhibit space and more than 2,000 furniture lines presented on 32 showroom floors. It also hosts nearly 200 temporary exhibitors showcasing home furnishings on B2 and in The Pavilions at Las Vegas Market.

Approximately 50 Canadian companies regularly exhibit at the Las Vegas Market, including some 30 Canadian furniture resources such as Palliser, Décor-Rest and Sunpan Home.

The key furniture categories presented at LVM are: case goods, dining, upholstery, leather and casual/outdoor as well as mattresses and foundations.

The Summer 2018 edition runs from 29 July to 02 August 2018.

HGO's market wrap-up

4 June 2018

MISSISSAUGA, Ontario - In the first video blog to be posted on Home Goods Online, our publisher and editor, Michael Knell, gives his take on the 2018 Canadian Furniture Show, which ended its three-day run at the International Centre here last week.

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Home Goods and its accompanying newsletter - HGO This Week - covers the furniture, bedding, appliances, consumer electronics, accessories, lamps and lighting and floor coverings product sectors of the big ticket home goods market in Canada. HGO is also a forum for the dissemination of market research and hard-hitting articles on best practices for Canadian retailers.

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