Hedge fund tycoon Eddie Lampert controls Sears Canada, and the famed penny pincher reportedly is apparently trying to force suppliers into sharing profits gained through the strength of the Canadian dollar.
“Canada has told its suppliers it will cut its payouts for merchandise shipments because of a recent surge in the value of the Canadian dollar versus the greenback,” the New York Post recently reported.
“The rise of Canada's so-called loonie, which has risen more than 20 percent versus the U.S. dollar since January 2009, has benefited many suppliers who export to the retailer's Canada-based stores.”
The retailer said it will unilaterally cut payments for shipments by as much as 10 percent and it will bill vendors to claw back its share of past currency-related profits.
"This looks opportunistic, and not in a good way," said Catherine Swift, president and CEO of the Canadian Federation of Independent Business, which has received more than 20 complaints from Sears vendors.
Sears Canada officials didn't respond to calls seeking comment.
Sears Canada executives in an April 29 letter said the retailer has been harmed as Canadians have engaged in more "crossborder shopping" in search of cheaper goods at America stores.
"This adjustment is only a fraction of the benefit derived by your company" from currency moves, Sears Canada executives wrote in the letter to suppliers.
"But [it] represents a shared reflection of the commercial reality of [the] vendor/retailer partnership."
Noting that Sears Canada recently reported more than $1.3 billion in cash on its balance sheet, one supplier complained that "someone is being greedy."
Recent improvements in consumer spending are likely to embolden suppliers, especially larger ones, and so the move may backfire, said Bob Carbonell, chief credit officer at Bernard Sands, told the Post.
© 2017 Newsmax Finance. All rights reserved.