Retail Stocks: Winners and Losers in 2017

Dollarama Inc. (TSX:DOL) and Hudson’s Bay Co. (TSX:HBC) have had different experiences with the shifting retail environment in 2017.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Statistics Canada released its report on third-quarter 2017 financial statistics for enterprises on November 24. Overall, operating profits for Canadian corporations were up 17%. Profits in retail trade rose 0.7% to $5.4 billion in the third quarter.

The financial world has been abuzz with stories of failed retailers for the last several years, as the rise of e-commerce giant Amazon.com, Inc. continues to disrupt the industry. However, retail in Canada has boasted some tremendous success stories in 2017. Let’s take a look at some winners and losers from this past year.

Winner: Dollarama Inc.

Dollarama Inc. (TSX:DOL) stock has climbed 65% in 2017 as of close on November 28. In late September, I’d discussed the rise of the dollar and variety store industry in both Canada and the United States. The company released impressive second-quarter results on September 7.

EBITDA jumped 24.1% to $209.2 million, and sales climbed 11.5% to $812.5 million. Dollar stores have emerged from the 2007-2008 Financial Crisis as a force with much broader consumer appeal. As the top dollar store retailer in Canada, Dollarama is well positioned for success looking ahead.

Loser: Hudson’s Bay Co.

Hudson’s Bay Co. (TSX:HBC) stock has dropped 7% in 2017. The company has battled poor quarterly earnings and the rise of an activist shareholder pushing for a turn to real estate. In the second quarter, gross profit as a percentage of revenue was 40.2% — a decline of 130 basis points from the prior year. The company posted a net loss of $201 million compared to a loss of $142 million in the second quarter of 2016.

In late October, CEO Jerry Storch, a veteran in the retail industry, announced that he would depart the company in November. Battling a difficult climate in which its large brick-and-mortar footprint is increasingly becoming a drain, the company will continue to see pressure rise into 2018.

Loser: Roots Corp.

Roots Corp. (TSX:ROOT) has fallen 18% since its initial public offering of $12 per share on October 23. Roots has been a popular Canadian brand since the 1970s, but it also faces challenges with its large physical footprint and drive to improve its e-commerce performance. In a late October article, I’d discussed why Roots is a risky play for investors. Roots has suffered a very rocky start, and the pressure is on with quarterly earnings set for release in the first week of December.

Winner: Shopify Inc.

Shopify Inc. (TSX:SHOP)(NYSE:SHOP) stock has increased over 130% in 2017. The Ottawa-based e-commerce company has been one of the top tech stock performers in both Canada and the United States since its IPO in 2015. E-commerce has shown tremendous growth over the past several years. In its third-quarter results, Shopify saw its revenue climb 72% year over year and gross profit jump 86%.

In September, Shopify found itself the target of short seller Andrew Left, who runs the investment newsletter Citron Research. CEO Tobias Lütke dismissed Left as a “troll,” and the stock has since recovered almost all of its losses since the critique.

Should you invest $1,000 in Shopify right now?

Before you buy stock in Shopify, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Shopify wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Amazon, Shopify, and SHOPIFY INC. Shopify is a recommendation of Stock Advisor Canada.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Investing

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

RRSP Canadian Registered Retirement Savings Plan concept
Retirement

Here’s the Average Canadian TFSA and RRSP at Age 60

Many Canadian retirees have tens of thousands invested in ETFs like the iShares S&P/TSX 60 Index Fund (TSX:XIU).

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

dividend growth for passive income
Investing

5 Canadian Growth Stocks to Buy and Hold for the Next 15 Years

These Canadian stocks have tremendous long-term growth potential, making them five of the best investments you can buy and hold…

Read more »

Man holds Canadian dollars in differing amounts
Stocks for Beginners

Cash Is King? Think Again During Today’s Market Dip

Sure, cash is great, but during a market dip investors may want to consider using some of the cash to…

Read more »

grow money, wealth build
Stocks for Beginners

How I’d Build a $15,000 Portfolio for Income and Growth With Canadian Value Stocks

Looking for some Canadian value stocks to buy without breaking the bank? Here's a trio to consider buying this month.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Investing

3 Canadian Value Stocks I’d Hold in My TFSA Through Market Volatility

Given their healthy growth prospects and discounted stock prices, these three value stocks would be ideal additions to your TFSA.

Read more »