Canada’s largest supermarket chain Loblaw today (23 February) warned that it expects investments in supply chain and market positioning to dent its financial performance this year.
The note of caution over 2012 came as Loblaw booked improved sales and profits for 2011.
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For the year to 31 December, Loblaw said that net earnings rose to C$769m (US$797.2m), up from C$675m in 2010. Revenues also saw solid growth, rising from C$30.84bn to C$31.25bn.
“The ongoing strengthening of our customer proposition delivered improved sales at satisfactory margins, particularly in the second half of the year,” executive chairman Galen Weston said.
However, while Loblaw was satified with its management of upward pricing pressure due to higher commodity costs, the group warned that it expects this year’s profits to be dragged down as it continues to invest in its supply chain.
Weston said the retailer faces a cash outlay of C$70m to bolster its information technology and supply chain and C$40m to continue developing its “customer proposition.”
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By GlobalData“We do not expect our operations to cover these incremental costs and, as a result, we anticipate full-year 2012 net earnings per share to be down year-over-year, with more pressure in the first half of the year,” Weston said.
Shares in Loblaw, a subsidiary of George Weston Ltd, fell 6.05% in early trade, dropping to C$31.10 on the Toronto stock exchange.
