Canadian Grocer Loblaw Posts Stronger Profit

Canada's Loblaw Cos. on Wednesday reported a stronger-than-expected third-quarter profit on improved same-store sales in both its main food and drug retail operations.

Toronto-based Loblaw, which operates grocery stores and the Shoppers Drug Mart pharmacy chain, said overall revenue rose 2.6% to 13.95 billion Canadian dollars ($10.5 billion) in its latest quarter. That is more than the C$13.87 billion analysts polled by Thomson Reuters had expected.

Loblaw said net earnings rose 17% to C$166 million, or 40 Canadian cents a share, in its latest quarter. Adjusted to exclude items, earnings climbed 10% to C$408 million, or 99 Canadian cents a share, above the 97 Canadian cents analysts had expected.

The company said retail same-store sales in its food network were up 3.1% in the quarter, which excludes gas-station sales and certain changes made by a tobacco retailer. Drug retail same-store sales were up 3.5%, it said.

"While the grocery industry remained intensely competitive, and the regulatory environment in health care challenging, we maintained a stable trading platform, achieved incremental efficiencies and delivered planned synergies," President Galen G. Weston said in a release.

Loblaw purchased Shoppers Drug Mart last year for C$12.4 billion and has been investing in building and refurbishing its stores network, while closing unprofitable locations.

The company announced in July it would close 52 retail sites across its operations. It said Wednesday it expects the closures to be completed by the end of the second quarter of 2016, resulting in overall restructuring costs of about C$140 million. The latest quarter included a charge of C$86 million related to the closures.

Write to Judy McKinnon at [e-mail]

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(END) Dow Jones Newswires

November 18, 2015 08:55 ET (13:55 GMT)

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