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TORONTO -- In its annual report yesterday Loblaw Cos. here posted a fourth-quarter loss of CAN $756 million (U.S. 642.3 million), and its first annual loss in 19 years in the wake of goodwill impairment connected with its underperforming Provigo banner in Quebec.
Canada's No. 1 supermarket operator noted that quarterly losses per share were $2.76 for the period ended Dec. 30, vs. last year's profit of CAN $201 million (U.S. $170.8 million), or 73 cents per share. Sales edged up to CAN $6.8 billion (U.S. $5.8 billion) from CAN $6.6 billion (U.S. $5.6 billion).
"Many of the difficulties we faced were the culmination of two important factors," Loblaw explained in its annual report. "First, there have been significant changes in how food retailers compete and how consumers shop in Canada. The second is Loblaw's own structure, with its history of mergers and acquisitions. The organization is more complex and less responsive than it should have been. These two trends collided in 2006. Loblaw lacked the structural agility and vigor to address its changing environment."
In February, when it announced its preliminary fourth-quarter results, the company said it would be adversely affected to the tune of CAN $600 million (U.S. $509.8 million) to CAN $900 million (U.S. $764.7 million), due to the goodwill impairment.
In 2006 Loblaw suffered CAN $219 million (U.S. $186.1 million) in losses, while in 2005 it posted a CAN $746 million profit (U.S. $633.9 million). The company's full-year sales rose from CAN $27.6 billion (U.S. $23.5 billion) to CAN $28.6 billion (U.S. 24.3 billion).
Over the coming 12 months the retailer intends to work on its corporate structure, basic retail operations, and supply chain "to ensure that the business becomes more efficient and agile." It will close a number of stores, including 19 Provigo locations, and, as part of a three-year turnaround strategy, cut as many as 1,000 positions from its organization, which currently has around 134,000 employees.