Teutonic Knight

Canadian Retailers in the U.S.: A Recipe for Disaster?

Larry provided great insights for present and future Canadian investors who try their foray into the U.S. markets. As a former British colony and dominion, Canadians are more conservative in their temperament by heritage.

Recent high-profile examples of failed Canadian attempts to penetrate the U.S. markets could be illustrated in the following two classic examples. In the 1980's Woody Gundy Ltd., then a premier brokerage house tried unsuccessfully to expand into the U.S. equity market until being bought out by CIBC in 1988. Likewise, Canadian Tire, their top hardware and automotive retailer's foray had to fold with a loss of about $300M.

However, Canadian's conservatism could be a double-edged sword. While they might seemingly lack the "aggressiveness" of their U.S. counterparts in leveraging to driving sales velocity, their intrinsic risk-adverse might indeed at times save them from hot water -- Canadian banks such as Royal, CIBC, TD, and the Bank of Nova Scotia had escape the current sub-prime carnage that is prevalent around the world.

Lately, however, we see TD aggressively pushing into the U.S. banking retail market by teaming with Commerce Bank offering seven-day counter service. A change in temperament in the making?