Canadian grocery retailer Loblaw recorded an increase in net profit during the first quarter, despite sales falling during the period.
The retailer said today (4 May) that net earnings were up 22.7% to CA$162m, despite revenue falling 0.6% to $6.8bn during the quarter.
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The company attributed the net earnings gain to a 4.8% increase in operating income, which reached $303m during the quarter, as well as to a decrease in net interest expense and other financing charges due to a net decrease in debt. Operating income growth was driven by improvements in gross profit and selling, general and administrative expenses.
It’s retail division saw sales fall 0.5% to $6.7bn, while same store-store sales fell 0.1% over the quarter, against a 0.3% gain in the same period of the previous year.
The company said that food sales were flat over the period, with retail sales declines being attributed to reduced drugstore, apparel and other general merchandise sales.
“The company continues to progress with its renewal plan while it begins to turn its focus on new opportunities for growth,” said executive chairman Galen Weston. “We remain focused on executing the plan in an unpredictable and competitively intense market environment. At the same time, we continue to expect our investment in information technology and supply chain infrastructure to negatively impact our operating income in 2011.”
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