North West Company Inc Q4 2019 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : I just had a couple of questions about the GT sale. Most -- just maybe firstly, can you just talk a little bit about how the sale was precipitated? How's it coming about? I mean, obviously, I understand that you haven't been happy with the performance recently, but was it something where they came to you? Or was it something where you went to the buyer and sort of tried to negotiate a deal that way?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Right. Okay. And did I understand correctly that you'll be supplying -- you're still using to have a food supply agreement with Giant Tiger and then they also be supplying general merchandise to you? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MARCH 13, 2020 / 6:00PM, NWC.TO - Q4 2019 North West Company Inc Earnings Call

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Right. Okay. And just to clarify, and I know you'll be providing maybe some more disclosure down the road around how to model this, but did I understand correctly, so if you lose sales of $295 million, are you gaining back $125 million of sales that you'll be supplying to Giant Tiger?

Question: Stephen MacLeod - BMO Capital Markets Equity Research - Analyst : Okay, okay. That's helpful. And then when you think about the Giant Tiger business, and you talked a little bit about taking away management tension from Northern Canada, what part of the Northern Canada business would you characterize as suffering or as having suffered?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Just, I guess, the thought process. You've talked a little bit about it already, but just around going a bit more lower priced. I guess, with the rising, I guess, investment in Northern Canada over the last little while, are you just seeing more competition? Are you seeing people being a little bit more careful with the spend? Or is it just directionally you think that's better for your longer-term positioning in that market?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : And then are you seeing any changes in shopping patterns with regards to e-commerce? I think you mentioned a while back was something you might think about. But are you seeing any other players kind of getting any online market share? And are you thinking about it right now?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay, great. And then you kind of alluded to this in a response to your question earlier, but apart from Giant Tiger, did you also potentially consider other options for the sale, maybe selling to a third-party? Or any other options beyond maybe just dealing with the franchisor?

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Okay. And then just one last one for me. I guess, with the stuff that's happened with COVID and the potential impact in the Caribbean market, is there any potential to pick up some business interruption coverage from reinsurance side at all? Or with this kind of the current environment, not qualify for that? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. MARCH 13, 2020 / 6:00PM, NWC.TO - Q4 2019 North West Company Inc Earnings Call

Question: Sabahat Khan - RBC Capital Markets, Research Division - Analyst : Yes. Like if they just don't shut down the stuff, yes.