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TORONTO -- Montreal-based food retailer Provigo, a banner of Loblaw Co. here, will close several unprofitable supermarkets as part of a long-term strategy to strengthen its network.
Loblaw posted a higher third-quarter profit yesterday but lowered its earnings per share forecast for 2006, and admitted it has encountered problems streamlining its supply chain and increasing its general merchandise items so as to better compete with the Wal-Mart Supercenters entering Canada. The store closures reflect those problems, although the company said that its supply chain performance has now stabilized.
"There is still a tremendous amount of work to do, and it will take up to three years to get ourselves back to where we need to be," executive chairman Galen G. Weston noted during a conference call.
Loblaw has also undertaken a review that it anticipates will result in a "simpler, more efficient and leaner" business, according to president and c.m.o. Mark Foote.
The closures, which will go into effect early in 2007, apply to 19 Maxi and Provigo supermarkets in the province of Quebec.
The decision came after an analysis of the location and strategic position of each store in its market. Loblaw said it decided to close these 19 stores because its volume of business doesn't allow it to profitably offer the entire line of products and services needed to serve customers appropriately.
The Provigo, L'intermarche, Axep, Maxi, Maxi & Cie, and Loblaws banners are present in every part of Quebec through their network of more than 400 stores. Provigo and its franchisees and partners employ almost 30,000 people in the province.
In other Loblaw news, the chain said this week that Peter McMahon would stay on as the company's supply chain e.v.p., less than two months after he announced his imminent departure for family reasons.