Canadian retailer Loblaw recorded an increase in quarterly profit today (17 November), but warned its performance would be challenged in the months ahead.
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Net earnings for the third quarter increased by C$32m (US$) to reach C$189m for the period.
Sales however, were negatively impacted by 0.5% from the sale of the company’s food service business in the fourth quarter of 2008. Sales decreased 0.2% to C$9.47bn.
Operating income edged up to C$378m, an increase of 21.2% on the previous year.
“As we progressed through the third quarter, our sales were increasingly impacted by the significant decline in inflation and the ramp-up of our pricing investments. Earnings benefited from cost containment and supply chain efficiencies.” said Galen Weston, executive chairman, Loblaw Companies Limited.
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By GlobalDataHe added: “We expect that sales and margins will be challenged due to decreasing inflation, competitive intensity and our ongoing renovation and infrastructure programs.”
Same-store sales fell 0.6%. Thanksgiving added 0.5% to the quarter, while the acquisition of Asian supermarket chain T&T in September, added 0.2%.
“The company continues to progress in its turnaround efforts, focusing on food offering enhancements, product innovation, store renovations, infrastructure improvements and increasing customer value,” Loblaw said.
