TORONTO - Two major Canadian retailers, Hudson's Bay Co. and Shoppers Drug Mart have announced job cuts as both companies try to trim costs amid major competitive and regulatory changes in the Canadian marketplace.
Canadian retailing giant HBC said Friday it is laying off 210 employees in Toronto as the company moves its information services department to the United States in a move to slash spending.
Shoppers (TSX:SC) confirmed it will cut 80 jobs — some at the head office and others at regional offices— as it looks for ways to offset the effect of generic drug reform in several provinces to its bottom line.
HBC spokeswoman Tiffany Bourre said 130 jobs from the Canadian information services department will go to an office in St. Louis, Missouri, which will become the headquarters for its information services. Another 80 jobs will be eliminated. The layoffs will happen in the next 12 to 18 months, she said.
Bourre added that the move is part of a plan to adjust its operations, now that the Canadian Zellers chain is being phased out both through the take over of some locations from U.S. retail giant Target Corp. and the closure of most of its remaining stores.
"Since the acquisition of the majority of Zellers locations by Target we have been adjusting our operations, both at corporate office and store level, to reflect a modified organization," she said in an email.
"As we continue to review and assess resources, it is apparent that we must improve the cost effectiveness of the current IS (information services) structure."
Bourre said the realignment makes sense as the closure of Zellers stores reduces HBC's footprint in Canada, while it increases its foothold in the U.S. through the recent acquisition of Lord & Taylor in the U.S.
The layoffs come on top of the thousands of Zellers employees who will lose their jobs at the company as it shutters the majority of its stores, many which will convert to Target stores.
Target purchased the leasehold interests of 189 sites currently operated by Zellers Inc. and it says about $10 million to $11 million will be invested to remodel each facility.
Target has said only that Zellers employees would be encouraged to apply for jobs at their stores, but a Zellers employees' union has launched the Target Fairness campaign to raise awareness about Target's failure to commit to take on Zellers workers.
Meanwhile Shoppers Drug Mart said its decision to cut 80 jobs is part of its strategy to cut costs in response to drug reforms across Canada.
The retailer has faced an onslaught of changes brought in last year in Ontario, Quebec and British Columbia that cut generic drug prices to 25 per cent of the price of patented drugs _ down from 50 per cent. The company has said those reforms affect revenue by an estimated $750-million a year.
But more recent changes in Ontario have further cut the costs for the Top 10 generic drugs to 20 per cent of the price of the branded equivalent, which will hit the company even harder.
"In response to drug reform initiatives across Canada, we significantly reduced our new store capital program and have taken steps to address our cost structure," said spokeswoman Tammy Smitham.
"This includes ensuring that our central office resources are aligned to best support the strategic priorities and initiatives of the business moving forward, allowing us to continue to grow, while delivering acceptable returns."
Shoppers has also been working to mitigate the changes by driving sales at the front of the store, areas of its operations that are separate from its pharmacies, like food and cosmetics.
The company is also looking to improve its supply chain, as well as the productivity at its pharmacy operations, an initiative it expects will provide "significant gains'' over the next year-and-a-half.