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Marvin Ryder of the DeGroote School of Business at McMaster University shared his thoughts on these business stories:
Another GM recall
As General Motors continues to address emerging safety issues with their vehicles, the automaker has announced yet another recall.
GM is now recalling more than 200,000 Chevrolet Aveos from years 2004 to 2008. The automaker says there is a potential fire hazard with these models.
“This is the sign of the leadership of the new CEO of General Motors. She got caught in this previous scandal with these ignition switches which didn’t happen under her term but as she discovered it we have to make this apparent to everybody. ‘We’ve got to do the recall …total transparency.’ So if there is any potential glitch whatsoever she wants to get it out there. This is a new era at GM and ‘we are gonna recall, even if it’s something minor were gonna recall, take our losses but show people that we can be trusted.'”
The recalls come after yesterday’s announcement when 2.4 million U.S. cars and trucks were recalled. It is not clear how many Canadian cars are affected.
Target earnings drop
Target reported another steep drop in profits today.
The retailer’s operating losses in Canada have topped $1.5 billion since stores started opening last spring. The company’s stock has dropped almost 11 per cent so far this year, including 3 per cent yesterday.
This comes after the company fired the head of the Canadian division, Tony Fisher.
“He was successful in opening 120 stores in twelve months and I think for that he deserves credit. That really is an amazing accomplishment but getting them open was only half the issue; you had to operate them profitably and that was not the case.”
Marvin says the “back to school” shopping season will really test Target to see if they can turn a profit.
Target earnings drop
Sears Canada is blaming the weather for their higher losses in their first quarter. The retailer says it lost over $75 million dollars in revenue.
Sears Canada president and CEO Douglas Cambell says the unseasonable weather pushed down sales of their spring merchandise.
The increasing red ink comes just after the company’s U.S. parent said intends to sell its interest in the company.
“Who wants to buy them? Probably somebody who really isn’t interested in the Sears name or even the Sears merchandise, but would be interested in their locations. This is what happened when Zellers got into trouble and Target came to the rescue. The only company like that in the United States is a company called Kohl’s and they’ve made no noise of trying to run forward.”
