Canadian retail giant Loblaw has warned its profits this year will be flat after it stepped up investment in response to rivals expanding in the country.
Loblaw expects its adjusted operating income and operating income in 2013 to match that recorded in 2012.
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The retailer said it had had to invest more in “targeted food categories” due to an “increasingly competitive environment” that, it said, was “driven by greater than historical square footage expansion”.
Loblaw insisted: “The company remains committed to its strategy to drive its customer proposition, including investments in food margins, in the fourth quarter of 2013.”
The warning came as Loblaw reported its third-quarter results. Net earnings for the 16 weeks to 5 October were C$154m (US$146.7m), down from C$217m a year earlier. Operating income dropped 5.9% C$381m.
The retailer’s revenue was up 1.9% at C$10.01bn. Same-store sales growth was weaker, inching up 0.4%. Loblaw said the timing of Thanksgiving hit sales by that metric by 0.5 to 0.7 percentage points.
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By GlobalDataLoblaw shares closed down 7.55% at C$44.23.
Click here for the full statement from Loblaw.
