- The North West Company (TSX:NWC) will sell 34 of its current 46 Giant Tiger store locations
- Of the remaining 12, five will continue to operate, one will be converted to a Valu-Lots centre and six will close down
- As part of the transaction, North West and Giant Tiger Stores Limited (GTSL) will enter reciprocal supply and distribution agreements
- North West also announced a 3.9 per cent increase in fourth quarter sales to C$553.1 million
- The North West Company (NWC) was down 7.01 per cent, with shares currently trading at $21.89
The North West Company (TSX:NWC) has announced that it will sell 34 of its current 46 Giant Tiger store locations.
Privately-owned Giant Tiger Stores Limited (GTSL) will acquire the stores for a cash consideration of C$45 million.
Of the remaining 12 stores, North West will retain and operate five in northern market locations. A sixth store will be converted to a Valu-Lots clearance centre, while the rest will close down in the second and third quarters of this year.
Under the terms of the transaction, North West and GTSL will sign reciprocal product supply and distribution agreements.
The deals relate to the supply of food products by North West to the acquired stores. GTSL will also supply general merchandise to North West’s remaining northern stores.
North West’s President and CEO, Edward Kennedy, believes that the buying and distribution efficiencies will benefit both parties.
“Our 20-year relationship with GTSL has been a very important one and this new agreement creates the conditions for mutual success going forward.
“We recognize that GTSL’s proven capability as a leading Canadian-owned discount retailer, including their ability to successfully franchise stores, will enable these locations to reach their full performance potential,” he said.
The transaction is expected to close in the second quarter of this year.
As part of today’s announcement, North West reported its financials for the fourth quarter of 2019.
Sales increased by 3.9 per cent to $553.1 million, primarily driven by new store hype and the re-opening of its Cost-U-Less outlet in St. Thomas, US Virgin Islands.
Net earnings also increased 23.6 per cent to C$17.3 million.
“Our core remote retail businesses were very stable in the quarter and delivered a solid bottom line improvement for the year.
“We were also very active with five new store openings that increased our expense rate in the quarter but that give us growth upside in 2020,” Kennedy said.
The North West Company (NWC) was down 7.01 per cent, with shares trading for $21.89 at 1:06pm EST.
