Operational improvements drive Loblaw profit increase
Canada's largest grocery business, Loblaw Companies, is reporting a 57% jump in fourth-quarter profit.
The company, based in Brampton, Ont., said the increase in its net income for common shareholders was partly due to operational improvements and partly due to special items in both years.
Revenue for the quarter was $11.13 billion, up $265 million or 2.4% -- with most of the increase coming from the retail segment that includes various grocery stores banners and Shoppers Drug Mart.
Loblaw said the timing of New Year's Day this year helped boost same-store sales in both the food and drug retail operations.
The food retail segment, excluding revenue from gasoline sales, saw same-store sales rise 1.1% and same-store sales at Shoppers was up 3.4% -- reflecting sales growth at locations open at least a year.
Loblaw had a $201 million net profit in the fourth quarter, up $73 million from a year earlier.
The company, which is the main subsidiary of George Weston Ltd., said $30 million of the year-over-year improvement was due to operational improvements that followed a reorganization of its retail network last year.
It said $43 million of the improvement was due to a variety of unusual items -- especially negative items recognized in the fourth quarter of 2015, though its Shoppers Drug Mart business recorded a number of negative items related to changes to Ontario's long-term care industry.
On an adjusted basis, Loblaw earned $393 million or 97 cents per share in the 2016 fourth quarter -- up $30 million from $363 million or 87 cents per share in the fourth quarter of 2015.
Loblaw's revenue was above analyst estimates of $10.98 billion and adjusted earnings were in line with estimates compiled by Thomson Reuters.
"Our focus on our strategic framework and financial plan delivered solid financial performance in the fourth quarter and demonstrated the strength of our portfolio of businesses amidst a highly competitive food retail environment, and pressures from health-care reform," Loblaw president and CEO Galen G. Weston said in a statement.
In the fourth quarter of 2015, Loblaw had $10.87 billion of revenue and $128 million of net profit.
Loblaw owns Canada's largest grocery business and the Shoppers Drug Mart pharmacy chain, as well as the Joe Fresh clothing business, PC Financial personal banking and a stake in the Choice Properties real estate investment trust.