Loblaw is part-way through turnaround

Loblaw is part-way through turnaround

Canadian retailer Loblaw has seen its full-year earnings jump almost 19% but warned it expects trading conditions to remain tough.

Loblaw said today (17 February) that its annual net earnings per share climbed 18.9% to C$2.39 despite a fall in the fourth quarter of 2009. Fourth-quarter basic net earnings per common share fell 14.3% compared to last year.

Executive chairman Galen Weston said conditions in 2010 would be tough, not least with Loblaw part-way through its turnaround programme.

"We are three years into our renewal programme and making progress with two of the toughest years ahead," Weston said.

"As we enter 2010, we continue to expect sales and margins to be challenged by deflation and increased competitive intensity. The company plans to step up its investment in information technology and supply chain, which will negatively impact operating income by approximately C$185m (US$177m) over 2009, while at the same time maintaining its capital expenditures at approximately C$1bn."

Sales for the fourth quarter decreased by 5.6% to $7.3bn. Same-store sales dropped 7.8% including the impact of the extra selling week in the fourth quarter of 2008.

Annual turnover in 2009 dipped 0.2% to $30.7bn. Same-store sales fell 1.1% including a decline of 1.8% due to the extra selling week.

Net earnings for the fourth quarter decreased 13.2% to C$165m but were up over the year by 19.3% to C$656m.