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Canadian retailers Loblaw Cos. Ltd. and Metro Inc. have reported their respective quarterly results, revealing a mixed bag in terms of earnings and sales in a competitive retail landscape.
For its third quarter ended Oct. 5, Brampton, Ontario-based Loblaw posted revenue of CAN $10 billion (US $9.6 billion), an increase of 1.9 percent over the third quarter of 2012, although its adjusted basic net earnings per common share were down 3.7 percent to 78 cents, versus 81 cents in the third quarter of 2012, and its basic net earnings per common share fell 28.6 percent to 55 cents, compared with 77 cents in the year-ago period.
The company also reported retail sales growth of 1.5 percent and same-store sales growth of 0.4 percent over the third quarter of 2012. According to Loblaw, retail same-store sales growth was negatively affected by the timing of the October Thanksgiving holiday, estimated at 0.5 percent to 0.7 percent.
Following the end of the 2013 third quarter, the company said it would eliminate 275 store-support positions.
“During the third quarter, we remained focused on our strategy to invest in the customer proposition, and this resulted in the third straight quarter of same-store sales growth in an intensely competitive environment,” noted Loblaw Executive Chairman Galen G. Weston. “At the same time, we continued to create efficiencies in our business, particularly in labor and supply chain. Unfortunately, due to incremental margin investment in the back half of the year, we are lowering our earnings growth expectations for 2013.”
Continued Weston: “Despite this disappointment, confidence remains high: Our customer proposition continues to improve, cost reductions and efficiencies have momentum, and SAP is scaling up. Over the next three quarters, we will carefully balance our commitment to competitiveness and financial performance. Looking forward, the strength of the core business, combined with the acquisition of Shoppers Drug Mart, will powerfully position Loblaw Cos. to deliver long-term earnings growth.”
Meanwhile, for a 12-week 2013 fourth quarter versus last year’s 13 weeks, Montreal-based Metro logged adjusted net earnings from continuing operations of CAN $113 million (US $108 million), up 0.2 percent based on 12 weeks in 2012. The company’s adjusted fully diluted net earnings per share from continuing operations were $1.19, up 4.4 percent from last year. Sales, however, were down 1.1 percent to CAN $2.6 billion (US $2.5 billion) from last year, with same-store sales declining 1.8 percent.
“Sales in the fourth quarter of fiscal 2013 were impacted by intense competition, especially in Ontario, resulting from an increase in competitive square footage that exceeded market growth,” explained Metro President and CEO Eric R. La Flèche. “Still, we achieved net earnings and earnings per share growth in the quarter and for the year, due to good margin management, operating cost control, and our share repurchase program. We have begun the reorganization of our store network in Ontario, and we will be investing nearly $250 million [US $238.8 million] in our network in 2014. We are confident that these measures, coupled with efficient merchandising strategies, will allow us to continue to grow in the next fiscal year.”
For Metro’s 52-week fiscal year 2013, versus 53 weeks in 2012, adjusted net earnings from continuing operations came to $478.4 million (US $456.9 million), up 3.9 percent from last year, adjusted fully diluted net earnings per share from continuing operations were $4.92, a 8.1 percent increase from the year-ago period, and sales dipped 0.4 percent to $11.4 billion (US $10.9 billion) from fiscal 2012.