Maybe Galen Weston is a better salesman than people thought.

Loblaw Companies Ltd. posted a 32.5 per cent jump in its third-quarter earnings, thanks in part to a 3.5 per cent rise in sales, the company said Thursday.

And part of the credit for that strong quarterly performance might be due to the bespectacled billionaire and his "aw shucks" television ads, trying to lure customers back to the grocery chain.

"Third-quarter performance showed some signs of progress towards our goal of becoming an effective selling organization," said Weston, who doubles as Loblaw's executive chairman.

Same store strength

The company posted same-store sales growth of three per cent, modest in stronger economic times, but an impressive number considering Canada's ongoing financial slowdown.

Loblaw's rise in same-store sales, which eliminates revenue increases due to new outlet openings, was almost twice the 1.6 per cent growth rate the company experienced in 2007, when economic times were more buoyant.

Three month stock chart for Loblaw Companies Ltd.

The company's revenue in the latest quarter took a hit because of a calendar quirk which placed sales for the Thanksgiving holiday in the fourth quarter of this year.

That shift cost Loblaw an additional 0.7 per cent in sales in the third quarter, a figure which should improve the company's results for the final financial period.

Profits rise, economy slumps

Overall, Loblaw earned $155 million, or 56 cents a share, for the three months ended October 4. That compared favourably to a profit of $117 million, or 43 cents a share, for the same period one year earlier.

Sales topped out at $9.453 billion for the last period compared with $9.137 billion for the third quarter of 2007.

Loblaw's 3.5 per cent revenue rise outpaced cost increases of 3.3 per cent, which boosted operating income by $61 million, reaching $311 million in the third quarter.

Loblaw, which has suffered in recent years from deteriorating stores and supply-chain problems, is in the second year of a transformation strategy that could take the corporation as long as five years to implement.

Weston's iconic ads have him wandering farmers' fields with the chain's suppliers and talking about Loblaw's efforts at greening its product lines.

The company's plan also is to spruce up existing stores, especially those facilities that post high sales per foot, rather than gaining new sales by opening new stores.

The supermarket chain said it expected to spend between $700 million and $800 million on capital improvements this year versus $613 million in fiscal 2007.

Loblaw also engaged a trio of software companies earlier this year to help it track its produce and simplify its distribution networks. All told, the company expects to spend $90 million on its information technology improvements, $57 million of which relates to employee terminations.

The strategy is important because the coming months will be "challenging" for the company, Weston said.