Stock markets around the world sold off on Monday as surging coronavirus infections prompted a new wave of fear and uncertainty, barely a week before a U.S. election that could reshape global geopolitics.
The Dow Jones Industrial Average finished the day at 27,685, down 689 points or 2.3 per cent. At the lowest point, the benchmark group of 30 large U.S. companies was off by more than 900 points.
The broader S&P 500 and technology-focused Nasdaq fared slightly better, but both closed down by almost two per cent.
The reason for the selling was a new wave of fear washing over markets as COVID-19 infections are rising to record levels in many places.
Numerous Latin American nations also set their own daily case records over the weekend.
After two record days of more than 80,000 new cases over the weekend, the seven-day average of new cases in the U.S. is now at 68,767, according to data compiled by Johns Hopkins University.
“And nobody is quite sure about what the response is going to be,” said Colin Ciezinsky, chief market strategist with SIA Wealth Management. “Are we going to see widespread lockdowns or more targeted rollbacks? Markets are like a deer caught in headlights.”
TSX down, too
Canadian stocks got swept up in the gloom, although on the whole they held up comparatively better.
The TSX’s main index lost 257 points, down 1.6 per cent on the day.
Travel-related companies were hit hardest, with shares in Air Canada losing more than $1 to close at $15.91. Those same shares were valued at more than $50 apiece in January, but that was before COVID-19 wiped out demand for air travel.
Energy companies were battered too, as the price of oil lost more than three per cent with a barrel of the North American benchmark known as WTI closing at $38.52 US.
Oil’s sell off was mainly due to COVID-19, said Judith Dwarkin, chief economist at Enverus. “COVID’s second wave or third wave has enveloped Europe and prompted a new raft of travel restrictions,” she said. “It’s not surprising there’s heightened volatility in the market.”
Renewed coronavirus fears were the main thing roiling markets, but the U.S. election was also a contributing factor, Ciezinsky said.
“People are starting to take money off the table,” he said. “They aren’t sure what the result might be or if it is disputed [so] this is about fear and uncertainty. People don’t know what’s going to happen.”
Hopes are also fading that Democrats and Republicans will come together on another stimulus package, but Esty Dwek, head of global market strategy at Natixis Investment Managers, said some sort of deal is likely once the uncertainty of the election can be settled.
“It’s going to be a little bit volatile in the next week depending on the results, but we’re not expecting weeks of uncertainty,” she said.
You might think that Nissan, the first car-maker to achieve widespread success with a zero-emissions electric vehicle, cares deeply about the environment. But Clayton Brander isn’t so sure.
Three years ago, the Powell River, B.C., resident chose to buy a used 2013 Nissan Leaf, motivated by a keen interest in sustainability.
“I love the car,” he said. “Honestly, in three years and 40,000 kilometres, I’ve replaced a set of tires and windshield wiper fluid. Nothing breaks down. It’s a fantastic little vehicle. I think electric vehicles are the way to go.”
But nowadays, instead of being able to drive the 120 km that 2013 Leafs could initially go on a full charge, Brander can’t get much more than 80 km. He has even become hesitant about turning on the heat or window defroster, since using those features require battery power and will reduce his driving range even further.
Brander always knew that batteries lose capacity over time, and he figured it wouldn’t be a problem getting a new one.
“The dealership where I bought the car said that in a few years, you can replace the battery for about $5,000,” said Brander.
But now, he can’t find one. He’s tried two nearby Nissan dealerships, three local repair shops and contacted Nissan Canada.
“Nissan hasn’t been helpful. I’ve sent probably six emails to them,” said Brander. “They keep telling me to go to the dealership. I called my local dealership and they sent emails to Nissan Canada. Six weeks later, neither of us has gotten a response.”
Both dealerships told him that a new battery — if he can find one — could cost him at least $15,000, which would be more than he paid for the vehicle in the first place.
WATCH | Brander’s struggle to replace his car’s battery:
Clayton Brander of Powell River, B.C., assumed that buying a reliable electric vehicle was an environmentally sustainable decision. Three years later, he’s faced with the choice of buying an expensive replacement battery, if he can find one, or a new car. 2:10
His local dealership has encouraged him to solve the issue by simply purchasing a brand-new Nissan Leaf. The basic 2020 model costs $42,000 and can travel about 240 km on a full charge. That suggestion doesn’t seem very sustainable to Brander.
“It seems like these things are going to end up in the landfill,” he said. “It makes more sense for them financially, I imagine, to sell new cars than to service the old cars.”
U.S. class-action lawsuit
The Nissan Leaf has long been the world’s best-selling electric vehicle, surpassed for the first time in 2020 by Tesla’s Model S, according to Nissan and Tesla’s own figures.
Olivier Trescases, a professor at the University of Toronto’s Electric Vehicle Research Centre, said Nissan deserves credit for being a pioneer.
“They were one of the first to release a compelling electric vehicle with a reasonable range and most importantly, a low price point,” he said.
But he added that one of the design “compromises” Nissan initially made in order to keep production costs down was to not install an advanced cooling system for its batteries. “They were using a chemistry that was particularly temperature-sensitive, and they did not use expensive liquid cooling.”
That means the battery’s capacity is reduced more quickly. In 2012, Leaf owners in California and Arizona launched a class-action lawsuit claiming the car’s driving range was lower than advertised.
The company settled the suit and extended the battery capacity warranty to five years on models made from 2013 onward. Later, Nissan extended the warranty to eight years on models made after 2016.
As well, a battery replacement program for first-generation Leafs was launched in the U.S. A new one cost $5,499 US, plus labour, but the program was discontinued in early 2018.
Where’s the loyalty?
After an inquiry about Clayton Brander’s situation from CBC’s Go Public team, Nissan declined an interview but released a statement via email. It said Nissan Canada will conduct an inspection of Brander’s vehicle and is “hopeful to find a resolution.”
Contacted by phone, the head of corporate communications for Nissan Canada wouldn’t clarify if that means that they would find him a new battery, or at what price.
The statement also pointed out the environmental impact of the Leaf, saying owners around the world have driven 4.8 billion kilometres and helped to prevent “more than 2.4 billion kilograms of CO2 emissions.”
Trescases believes Nissan should show more loyalty to its first customers. “Some of these early adopters helped them to get the car out on the market, get some acceptance and go from there.”
Nissan Canada says more than 3,300 Canadians have purchased Leafs built prior to 2015.
Trescases said the challenge of replacing batteries in older electric cars shouldn’t discourage buyers of newer models, explaining the latest EV batteries are incredibly efficient.
“Today, companies are talking about million-mile batteries,” he said. “That’s a big buzzword, but let’s say they even get close to that — that means that the battery will actually outlive the car by a long stretch.”
At just seven years old, Brander’s Leaf is newer than most cars on the road in Canada, where the average vehicle is 10 years old. (In B.C., the average is 11.)
He remains determined to hang on to the vehicle, ideally with a new battery. He’s happy that Nissan Canada finally got in touch with him after the inquiry from CBC News, but he’s puzzled why the company says the vehicle needs to be tested. He said he already paid $130 for a battery test at a local dealership.
“The fact that I don’t get enough driving range out of this one is all that’s needed to determine that I need a new battery,” he said.
He’d like to see Nissan show some loyalty to its most faithful fans, by helping keep the cars on the road for as long as possible.
“They got all the kudos for introducing the electric vehicles to the masses, so that looks really good,” he said.
“But they’re losing them now by not supporting these older models and just pushing new vehicle sales, instead of saying, ‘Look, we can still keep these out of the landfill.'”
As the hotel industry continues to face staggering losses due to COVID-19, a handful of properties in Vancouver are pivoting the business — and joining others around the world by offering day-use rooms for people who find working from home too distracting.
No longer catering to volumes of tourists, some hotels are shifting focus toward a new demographic: people who are itching to get out of the house and into a quiet, private space to work.
“They are adapting to what the world looks like right now,” according to travel expert Barry Choi, who says the hotel-as-office trend is gaining traction.
One of the biggest draws — discounted rates. Guests aren’t staying between the typical 4 p.m. check-in and 11 a.m. check out, so rates can be up to half off regular overnight stays.
The Georgian Court Hotel in downtown Vancouver — which launched the service on Wednesday — offers stays from 9 a.m. to 5 p.m. for $99, a 34 per cent savings from an overnight stay.
The idea is proving so popular that the Pacific Gateway Hotel in Richmond, B.C., sold out of its day-use rooms on Friday and Sunday.
Yannis Moati is the CEO of HotelsByDay.com, a third-party website with 1,500 hotels worldwide that offer day-use stays.
“We’ve increased our number of hotels by 400 per cent just in the last three months of this pandemic,” Moati said.
Bookings in Canada are growing faster than in the U.S., he said, with Calgary, Winnipeg, Edmonton and Ottawa among the top 10 cities in North America booking day-use rooms.
Daytime guests want what they can’t get at home: a proper desk and chair, dedicated work space, room service, hotel pool — and a room they don’t have to clean when the day is done. Moati says 62 per cent of people who book on his site come back for more.
Re-imagining revenue streams
Creating this new niche is a concrete step toward re-imagining what the struggling hotel industry could eventually look like — and Moati says the idea is to eventually monetize every part of a hotel.
“They’ve added revenues for inventory that would otherwise be sitting empty all day,” he said.
“They have to look at the overall picture of the real estate of the hotel and optimize every single asset they have.”
What a difference a few months make. Over the summer, Canadians were riding high on the notion they had flattened the curve. In comparison, COVID-19 infections in the neighbouring United States had spiked to new highs.
Then the fall arrived, and coronavirus case numbers in Canada started to surge.
In response, the European Union removed Canadians from its list of approved travellers on Thursday. Also, U.S. President Donald Trump made a point of noting Canada’s COVID-19 “flare-ups” in a recent speech.
Now, Canada must face an uncomfortable fact: while we’re still faring better than many countries, we’ve lost our coveted image as a nation widely recognized as having flattened the curve.
The turn of events is a reminder that the stealth coronavirus can rebound at any moment, and no country can rest on its laurels in its battle with COVID-19.
“Just because we got through the first wave didn’t mean that we were prepared for what was to come,” said Ashleigh Tuite, an epidemiologist at the University of Toronto.
“I think we got a little bit smug in terms of comparing ourselves to the United States.… I think maybe it adds a sense of complacency.”
EU change of heart not surprising, expert says
Back in June, Canada got a big vote of confidence when European countries began reopening their borders. The EU placed Canada on a list of just 14 countries whose citizens EU officials recommended should be welcome in the 27-nation bloc.
The U.S. didn’t make the cut.
Based on the EU’s recommendation, many member countries flung open their doors to Canadian travellers — with no restrictions.
But that may now change as the EU has officially removed Canada from its approved travel list. The EU said it based its revised list on a number of factors, including COVID-19 case counts and containment efforts.
WATCH | Trump takes note of Canada’s COVID-19 problems:
During his first public event since he was diagnosed with COVID-19, U.S. President Donald Trump said Canada and other countries are experiencing ‘flare-ups’ of the virus. 0:22
Global health specialist Steven Hoffman said the EU’s change of heart isn’t surprising because Canada has entered the second wave of the virus.
Over the past month, COVID-19 infections in Quebec, Ontario, Manitoba, Saskatchewan and Alberta have soared to record highs.
“Our numbers are getting worse and so it makes sense that countries are reacting,” said Hoffman, a professor of global health, law and political science at Toronto’s York University.
Health experts have offered up a myriad of reasons why Canada’s COVID-19 case numbers have climbed since the summer. First, there was the inevitable rise in cases as provinces eased lockdown restrictions in the spring and summer.
Also, some provinces struggled to keep up contact tracing and testing as COVID-19 cases began to mount.
“The testing, the tracing just wasn’t up to the job in terms of handling these larger numbers of people,” said Tuite. “As a result, the whole system got bogged down.”
But Hoffman said that Canadians shouldn’t get too distraught over the EU decision because Canada is still faring better than Europe.
Trump highlighted Canada’s problems in a speech earlier this month.
“All over the world, you see big flare-ups,” he told a crowd of supporters. “Big flare-ups in Canada, very big flare-up.”
This is in sharp contrast to the summer when Canadian COVID-19 case numbers remained low while U.S. infections spiralled out of control. The jarring difference inspired many Canadians to chastise the U.S. on social media for not being able to control the virus. Some even suggested that Canada build a wall.
But times have changed. The U.S. infection rate is still far above Canada’s rate, but some provinces are now rivalling U.S. states once considered hot spots.
According to New York Times data on Friday, Quebec’s COVID-19 infection rate over the past seven days is nearing Florida’s rate and has surpassed the rate in Arizona and California. Alberta’s rate is hovering close to that of California’s.
But Hoffman said Canada can still lay claim to the country where both Canadians and Americans would rather be — when it comes to battling the virus.
“I think every American wishes they were living in Canada right now, because our numbers and our ability to contain this outbreak is far better than what we’ve seen from the United States.”
He also suggested that Canada’s slipping COVID-19 status doesn’t constitute a crisis, but instead it’s a wake-up call to ramp up our efforts.
“This represents a warning for why we need to take this pandemic seriously,” said Hoffman. “We are maybe at this turning point for whether the second wave of this outbreak will be like the first one, or will it be a lot worse?”
WestJet says it will begin providing refunds to passengers whose flights were cancelled due to the pandemic.
The Calgary-based airline said it will begin contacting all eligible flyers with WestJet and Swoop on Nov. 2. It will begin with those whose flights were cancelled in March 2020 at the onset of the pandemic, to offer refunds in the original form of payment.
The process is expected to take six to nine months, the company said. It asked customers to wait to be contacted, in order to avoid overloading its call centre.
“We are an airline that has built its reputation on putting people first,” said Ed Sims, WestJet president and CEO, in an emailed release.
“We have heard loud and clear from the travelling public that in this COVID world they are looking for reassurance on two fronts: the safest possible travel environment, and refunds.”
Sims said in a letter posted to the company’s website that since March, it has done everything it can to reduce costs in the face of a 95 per cent drop in demand.
WATCH | Airlines struggle and plead for aid amid stall in travel:
COVID-19 continues to keep Canada’s airlines at stalling speed and the industry is crying out for aid before it takes an irreparable nosedive. 2:00
“Up until this point, quite plainly, the financial position of airlines around the world has been precarious,” Sims said.
“We went 72 days in a row where cancellations outstripped bookings, something that has not happened — ever — in our almost 25-year history. Thankfully, we are seeing bookings higher than cancellations now but still at a level that sees more than 140 of the 181 aircraft in our fleet parked and more than 4,000 WestJetters permanently laid off.”
The company said it’s the first national airline in the country to proactively begin refunding customers during the pandemic — a comment that Air Canada contested.
“Misleading statement! WestJet is just now catching up to our policy to refund refundable fares. We have already refunded over $1.2 billion in refundable fares to date,” Air Canada wrote on Twitter on Wednesday evening.
Within 10 minutes of that tweet, more than a dozen replies from customers said they still had not received their refund.
Let’s clear the air. We’re offering refunds for guests if we cancelled their flight. Even the lowest cost tickets will be refunded to original form of payment if WestJet caused the cancellation.
Air Canada said in an emailed statement that it has reimbursed refundable tickets since the start of the pandemic, and that vouchers are offered to those who have purchased non-refundable tickets.
In June, both Air Canada and WestJet began offering refunds to some passengers whose flights originated outside of Canada. WestJet offered refunds on flights originating from or landing in the U.S. or U.K., and Air Canada offered refunds to those whose flights originated in the EU — but not in Canada.
Air Canada made the most recent U.S. Air Travel Consumer Report, released in August, for having the most refund complaints of any foreign airline the previous month. It had 1,705 complaints, while WestJet had 346.
The airline industry in Canada has lost billions due to border closures and grounded flights during COVID-19.
Up until now, most Canadian airlines have offered travel vouchers to passengers with cancelled flights. The vouchers were redeemable for two years.
The lack of cash refunds have led to petitions and even possible class action lawsuits against the industry.
The Canadian Transportation Agency said in April that, given the unprecedented nature of the pandemic, vouchers were a reasonable alternative to refunds.
The CTA said in an emailed statement after this article was originally published that it has consistently emphasized that its position changes nothing when it comes to airline obligations and that under the Air Passenger Protection Regulations, airlines are not required to provide refunds when the disruption is outside of their control.
“Any passenger who believes they’re owed a refund under the relevant tariff and hasn’t received one can file a complaint with the CTA. All complaints are dealt with on their merits,” the statement read.
The agency said that between March 15 and Oct. 16, it’s received close to 10,000 complaints. It’s still in the process of reviewing the complaints but said that so far, about 4,300 are related to refunds.
WestJet’s move comes days after opposition parties demanded the federal government ensure passengers receive refunds as a condition of any airline bailouts.
Carriers’ requests for financial assistance from Ottawa have failed to materialize in funding while the United States and some European countries have offered billions in financial aid, with strings attached including partial government ownership and emissions reduction commitments.
Federal Transportation Minister Marc Garneau said WestJet’s move was a step in the right direction.
“Canadians deserve refunds for cancelled trips as a result of [COVID-19],” he wrote on Twitter.
WestJet’s website states those who cancelled their own flights or purchased basic fares will not be refunded.
Passenger rights advocate Gabor Lukacs said the six to nine months WestJet estimates it will take to process refund requests is excessive, calling it “ridiculous” and a “non-starter.”
He also said the refund exclusions violate consumer rights.
“It doesn’t matter whether it was a business class elite fare or a basic fare, they have to refund it equally,” Lukacs said, citing provincial legislation and regulation.
WestJet had started to bleed money from advance ticket purchases even before Wednesday’s announcement.
Of the nearly 16,300 guests who requested chargebacks from their credit card issuers between March and Aug. 19, only 11 per cent were denied, according to an affidavit WestJet regulatory affairs director Lorne Mackenzie filed to the Federal Court in August.
Certification hearings on a class action against WestJet, Air Canada and Transat AT are to begin in Federal Court on Nov. 2, the same day WestJet’s policy goes into effect.
Canada’s hard-hit hospitality industry is asking for more help from government to survive the economic impact of COVID-19. But even as hotel owners are seeking more aid from Ottawa, some workers say they’re not making good use of relief programs already out there.
Hotel workers staged demonstrations in Toronto, Ottawa and Vancouver this week, to draw attention to the plight of an industry that has been hard-hit by the ongoing pandemic.
Hotel bookings are down by 90 per cent in some cases, which has created a drastic drop in demand for workers.
The industry was effectively shut down just as many others were in the early days of the pandemic. The Hotel Association of Canada says most hotels did their best to maintain staffing levels, hoping for a return of paying customers.
Some took advantage of an emergency government program known as the Canada emergency wage susidy, or CEWS, which paid up to 75 per cent of an employee’s salary, as long as they remained on the payroll.
Room attendant Leonora Mulholland lost her job at a downtown Toronto hotel in March when the pandemic struck, but she says her employer eventually brought her back on once CEWS began.
But it didn’t last long. She was laid off again in August.
After 21 years working for the same hotel, she questions why her loyalty wasn’t reciprocated by her employer.
WATCH | Hotel worker Leonora Mulholland explains what workers want:
Leonora Mulholland, a laid-off hotel room attendant from Toronto, says the federal government should work with employers so they’re able to benefit from the Canada Emergency Wage Subsidy, and workers are put first. 0:50
Mulholland was one of about two dozen hospitality workers at a physically distanced demonstration in Toronto this week asking the government to step in and force hotels to use the wage subsidy to hire back like her back.
“I feel insecure,” she said. “Who knows what’s going to happen? How long this pandemic is going to be? We don’t know.”
Susie Grynol, president and CEO of the Hotel Association of Canada, says the industry is sympathetic to the plight of workers, but the industry shut itself down in the interest of public health, which is why the sector needs the government to step up with more support so that hotels can survive long enough to keep employing their workers long term.
“It’s put our industry on life support,” she said in an interview. “We missed the summer season. We’re heading into the off season and we’re not projected to recover until next summer, which means we’re not even halfway through this.”
Many hotels took advantage of CEWS, but recent changes mean the government now pays only about two thirds of the payroll costs, leaving hotels with next to no revenue on the hook for paying one third of the salaries for workers they don’t need.
“The changes to the wage subsidy program has meant that we can’t keep on every employee that we had previously,” Grynol said. “That means that some of our inactive workers are now going to be laid off permanently.”
Grynol says the industry is asking Ottawa to roll back CEWS to its original terms and help the industry secure access to credit because loans from banks are drying up. And, if possible, they would love some help on fixed cost items such as property taxes.
“We’re hoping that we are going to see some support from government so that we can stabilize and ultimately bring back all of our employees,” she said.
The organizers of this week’s demonstrations say they agree that the industry needs more targeted help, but they’re wary of that help coming as a bailout for hotel operators that may do little to help the rank and file.
“Our concern is that any sector relief that’s provided to the industry would go straight to the pockets of the multimillion dollar corporations or the owners of the hotels,” said Shelli Sareen, secretary treasurer of Unite Here, a labour union representing 300,000 workers across the U.S. and Canada.
A blank cheque without accountability, “won’t benefit our members or the hospitality workers [and] frontline workers that have been most heavily impacted by the pandemic,” Sareen said.
Mulholland knows that the hotels themselves must be feeling the pain as well. But whatever the plan to help the industry is, she hopes the workers on the bottom like her get remembered along with the owners at the top.
“When they apply, the employers should put the workers first,” she said. “Not just apply, get the money, and keep it to themselves.”
Carney, who served as governor of the Bank of Canada from 2008 to 2013 before moving on to other roles, described a financial sector that has been energized by a green transformation almost invisible to most of us outside the finance industry.
While ordinary Canadians may observe a few more electric cars on the road, a few more solar panels on roofs, the finance whiz outlined at a virtual conference on Thursday a multitrillion-dollar realignment that is changing the way the world’s money is invested.
Rather than being a laggard because of our commitment to oil and gas, Carney, born in Fort Smith, N.W.T., painted a picture of western innovation and financial-sector success that puts Canada in a leadership position.
‘Commercial opportunity of our time’
In February, Carney famously described the process of stopping the rise of global temperatures as turning “an existential risk into the greatest commercial opportunity of our time.”
“Part of the reason why the Canadian banks are profitable is because they are very good at managing risk,” Carney said. “It’s going to take a couple of years for everybody to be better at managing climate risk and really understanding it, but there’s every reason why our banks could be some of the leaders.”
When Carney was governor of the Bank of England, British Prime Minister Boris Johnson convinced him to take a key role at COP26, the UN Climate Change Conference originally scheduled for next month in Glasgow.
COVID-19 has forced a delay in the 26th world climate conference until November 2021, but a key focus of next year’s gathering over which Carney will help preside remains the same: helping people with money avoid the risk as a changing climate affects the economy.
“It’s going to be the suppliers of capital who will be making the decisions here,” quipped Jim Leech, the chancellor of Queen’s University and former head of the Ontario Teachers’ Pension Plan, who moderated Carney’s talk in Kingston. “It’s not pulled out of the air.”
But as Carney has discussed before, conventional ways of judging the future value of investments you make today just don’t work if in 30 years crops fail and coastal cities begin to flood because of rising temperatures. Assets once considered to have enormous future value, such as coal deposits or pipelines, suddenly have to be reconsidered.
Brown to green
Industries that spew out greenhouse gases will lose value, and those that contribute to reducing global warming will be worth relatively more. Companies actively making the gradual transition from brown to green will be more valuable in any investment portfolio.
But so far, a set of standardized rules to measure those changing values remains a work in progress — although it is coming quickly. Carney said COP26 will work toward that problem by examining issues around reporting, risk, returns and mobilization.
In simplest terms, the financial industry must create conventions for how companies measure and disclose to investors their climate impact, along with a way of judging how badly failure to act will hurt an investment or portfolio, a standard way of measuring the payback from an investment in climate mitigation or adaptation and ways of redirecting capital toward lower climate damage.
One of the concepts under development is to create a percentage “warming potential” of any portfolio, just one way of taking a set of abstruse concepts of risk management and turning them into a user-friendly indicator.
Part of the pressure to make companies follow a standard set of climate accounting principles is coming from $150 trillion in global private capital that wants that risk quantified. There is social pressure, too, as citizens watch their forests burn and ice caps melt.
But Carney says that is not enough. Governments and market regulators must make climate disclosure mandatory so that investors have a transparent view of the climate value and risk of any company as it follows its business plan.
“We’re not flipping a switch here,” Carney said, “but we are transitioning.”
Retailer Le Château is seeking court protection from its creditors while it winds down its operations and liquidates its assets.
The Montreal-based fashion chain with 123 locations across Canada and 1,400 employees said in a release Friday that it has applied for protection from its creditors under the Companies’ Creditors Arrangement Act, or CCAA.
In a release, management said it had “come to the very difficult decision that the company can no longer continue its operations as a going concern after having used its best efforts over the preceding months, with the assistance of professional advisers, to refinance or sell the company to a third party that would continue operating the business.”
The chain said the ongoing COVID-19 pandemic has had an “evident impact on consumer demand for Le Château’s holiday party and occasion wear, which represents the core of our offering [and] has diminished Le Château’s ability to pursue its activities. Regrettably, these circumstances leave the company with no option other than to commence the liquidation process.”
The retailer was scheduled to have its annual general meeting in Montreal on Thursday but abruptly cancelled the event two days prior without explanation beyond saying that the company “will provide further updates in due course.”
In the three-month period up until July 25, Le Château racked up just $14.7 million in sales across its network of stores and online. That’s down from almost $50 million in the same period last year. As of July, the company says it had about $118 million in assets, against $201 million worth of liabilities.
At the time, the chain thanked its landlords for granting it $4.6 million worth of rent relief for July and August. Despite that, it still warned there was some doubt about the chain’s “ability to continue as a going concern for the next 12 months.”
The CCAA proceedings will mean Le Château will soon begin the process of selling off all its remaining merchandise and shutting stores. It brings an end to the chain’s 60-year history and an end to a Canadian brand that was at various points at the top of Canada’s fashion world, fashion journalist Jeanne Beker said.
Founded in 1960 in Montreal, the chain was a major driver of what Beker calls the “youthquake” in fashion at the time, when all of a sudden children didn’t want to wear the clothes their parents got for them, and instead establish a style of their own.
“Le Château was at the vanguard of all that,” Beker said in an interview Friday. “Le Château was the hip place where you went to get the hip cool styles — a lot of styles that had not been that readily available in Canada before … at a price that was affordable, too.”
While COVID-19 seems to have been “the final nail in their coffin,” as Beker puts it, the chain had problems before, as it struggled to keep up with not only the capricious nature of fashion but also a growing movement toward sustainability in supply chains.
“Fashion has changed in a big way. The way that we consume fashion has changed, the way we buy it, the way we wear it — all those things have changed,” Beker said. “It was only a matter of time.”
LISTEN — Jeanne Beker explains what Le Château has meant to Canada’s fashion landscape
8:56Jeanne Beker on Le Château
Fashion journalist Jeanne Beker says the chain that’s seeking court protection from its creditors was on the vanguard of Canadian fashion for many years before falling on tough times. 8:56
Young people who once would have been the chain’s target demographic “are marching to the beat of a whole new drummer now,” she said.
“They don’t want the cheap and cheerful [thing to] wear for a season or two.”
“Value Village … that’s the hip thing to do, not to buy a prom dress at Le Château.”
Exxon Mobil Corp is “very close” to completing its workforce appraisals in the United States and Canada and expects to unveil job cuts, its chief executive told employees in an email on Wednesday.
The second-largest U.S. oil company by market value lost nearly $1.7 billion US in the first six months of the current fiscal year and analysts forecast a third-quarter $1.17 billion loss, according to IBES data from Refinitiv.
The job cuts are part of a plan unveiled this spring to redesign how Exxon works and to increase competitiveness, CEO Darren Woods said in an email to its nearly 75,000-person workforce.
Exxon has exceeded a target of reducing operating expenses by $1 billion and capital budget spending by $10 billion, he wrote. But the COVID-19 pandemic has cut oil demand by about 20 per cent, he said, delivering a “devastating impact” on the oil business.
Woods told employees that “we are very close” to completing the jobs review and that they could expect details soon after the company’s board of directors is briefed.
“I wish I could say we were finished, but we are not. We still have some significant headwinds, more work to do and, unfortunately, further reductions are necessary,” he said in the email.
Exxon was slower than rivals to react to this year’s oil price decline and borrowed $23 billion US to shore up a balance sheet strained by the losses and a nearly $15 billion US annual dividend payment to shareholders.
Royal Dutch Shell and BP have outlined up to 15 per cent workforce cuts while Chevron has asked employees to reapply for their jobs.
Woods said the demand loss is five times the decline of the 2008 financial crisis, but “industry under-investment today will increase the need for our products in the near future.”
All oil companies face the same loss of demand, but Exxon has the burden of promising to keep its huge dividend without adding new debt, said Raymond James analyst Pavel Molchanov. U.S. oil prices must rise another $10 a barrel to cover the payout without borrowing, he estimates.
“If management has to walk back their pledge” not to issue new debt to protect the dividend, “it would damage credibility,” Molchanov said.
Exxon’s dividend yield, the percent of the share price paid annually to holders, was 10.3 per cent, the largest among major oil companies and another sign of Exxon’s weak finances.
Its shares fell 1.6 per cent to $33.14 on Wednesday as oil prices declined on worries that the COVID-19 infections are on the rise globally. The stock is trading near a 18-year low.
The European Union officially removed Canada from a list of countries that should not be subjected to incoming travel restrictions during the COVID-19 pandemic.
CBC News reported about the expected development on Wednesday after EU officials recommended a change to the list the previous day at a regularly scheduled meeting and sent it down to bureaucratic committees to hash out the details.
The 27-nation bloc first put out a list of 15 countries in July that were deemed to be lower risk for transmission of the coronavirus that causes COVID-19. Canada was on the original list and survived the first culling of the list to 11 names in August when Serbia, Montenegro, Algeria and Morocco were booted.
On Thursday, the EU published the new list, and Canada, Georgia and Tunisia had been removed.
“As a result of these discussions, the list of third countries — should be amended. In particular, Canada, Georgia and Tunisia should be deleted from the list while Singapore should be added,” the EU said.
The new list consists of:
China, subject to confirmation of reciprocity.
The EU also said restrictions should be lifted on people coming from Hong Kong and Macao, as long as those jurisdictions do the same for European travellers.
The list does not mean Canadians are forbidden from travelling to the EU, as it is merely a guideline for member nations to follow. But the bloc does nonetheless urge countries to abide by it for everyone’s benefit.
“Member states should … ensure that measures taken at the external borders are co-ordinated in order to ensure a well functioning Schengen area,” the EU said, referring to the 26 European nations that have agreed to allow free travel across their borders, as per an agreement signed in 1985 in Schengen, Luxembourg.
But “the authorities of the member states remain responsible for implementing the content of the recommendation [and] they may, in full transparency, lift only progressively travel restrictions towards countries listed.”
Italy also allows travel to and from Canada as long as people quarantine on arrival and don’t take public transit to get to wherever they are staying in the country as of Oct. 21.
The EU move is well short of an outright ban, but the change does suggest that Canada’s rising COVID-19 numbers — Canada now has more than 205,000 confirmed cases, including 2,266 new ones on Wednesday, according to the CBC’s coronavirus tracker — is becoming something of a concern for the rest of the world.
The EU said it bases its recommendations on a number of factors, including containment efforts but also on comparable ratios, such as the number of cases per 100,000 in the population, the number of tests being done daily and the positivity rate of those tests.