Loblaw swings to profit, will shutter 52 stores

Brampton, Canada – Loblaw Companies Ltd. swung from loss to profit in the second quarter of fiscal 2015, but still plans to improve profitability even more. Loblaw reported net income of $185 million, compared to a net loss of $456 million the same period a year earlier.



However, that impressive shift is not enough to prevent Loblaw from planning to close 52 unprofitable stores during the next year. The closures are expected to reduce annual sales by $300 million per year, but add $35-$40 million in annual operating income. Loblaw expects to incur charges of about $120 million in costs related to the closures, including $45 million recorded in the second quarter.



Consolidated sales increased 2% to $10.53 billion, from $10.31 billion.



"I am pleased with our overall performance in the second quarter, as we continued to execute well against our strategic framework," reported Galen G. Weston, president and executive chairman of Loblaw. "Looking ahead, the grocery industry remains highly competitive and healthcare reform continues to put pressure on our pharmacy business. We are well positioned to achieve earnings growth through a stable trading platform, incremental efficiencies, synergies and a stronger balance sheet."