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02/22/2018

Loblaw says fourth quarter results hit by PC Optimum costs

Company says profit to shareholders fell $182 million year over year

Loblaw Companies Ltd. reported a drop in its fourth-quarter profit compared with a year ago, hit by costs related to the announcement of its PC Optimum loyalty rewards program.

The company merged the Shoppers Optimum and PC Plus programs this year under the PC Optimum brand.

The retailer, which includes Loblaws and Shoppers Drug Mart, says its profit available to common shareholders totalled $19 million for the quarter. That compared with a profit of $201 million in the final quarter of 2016.

READ: PC Optimum launch hits technical snafu

On an adjusted basis, Loblaw says its earnings available to common shareholders totalled $441 million, up from $393 million in the fourth quarter of 2016.

Revenue for the 12-week period fell to $11.03 billion compared with $11.13 billion a year earlier due to the sale of the company's gas bar operations.

Food retail same-store sales were up 0.5%, excluding gas bar operations, while drug retail same-store sales increased 3.6%.

The company had warned in November it expected 2018 would "be a very difficult year" as the Canadian grocery industry faces pressures from multiple fronts, including discount and online retailers, and minimum wage increases in some provinces.

At the time, the company announced it would close 22 stores and launch home delivery in Toronto and Vancouver.

READ: Court documents name players allegedly involved in bread price-fixing scheme

Loblaw has been in the public spotlight recently since admitting the company, along with its parent George Weston Ltd., participated in an alleged industry-wide bread price-fixing scheme for more than a decade.

The two companies tipped off the Competition Bureau and received immunity from criminal proceedings in return.