Loblaw Cos. Ltd. posted 20 per cent higher profits in the latest quarter despite flat sales, thanks to improved supply chain efficiencies at the grocery chain.

Canada's largest supermarket operator said Tuesday it earned net income of $189 million or 69 cents a share for the quarter ended Oct. 10.

Jasmin Monroe wheels groceries out of the Loblaws store in Brossard, Que. The company posted improved earnings on flat sales Tuesday. (Ryan Remiorz/Canadian Press)

That was well above last year's level of $157 million or 57 cents per share.

Total revenue came in at $9.47 billion for the quarter, compared with $9.49 billion last year.

The profit bested Bay Street expectations of 62 cents per share before one-time items, but revenue was short of the $9.62 billion that analysts polled by Thomson Reuters were expecting.

And the company warned that sales and profit margins face continuing challenges from slack food-price inflation, intense competition and long-term infrastructure and renovation spending.

Loblaw, whose banners include No Frills, Zehrs, Fortinos and Real Canadian Superstores, said the quarter's bottom line was negatively affected by a one-time charge of $25 million related to an information technology and supply chain investment.

"As we progressed through the third quarter, our sales were increasingly impacted by the significant decline in inflation and the ramp-up of our pricing investments," executive chairman Galen Weston Jr. said.

Same-store sales fell 0.6 per cent in the quarter despite Thanksgiving holiday sales that helped boost the top line, the company said.

Loblaw recently acquired Asian-focused T&T Supermarket Inc. for $225 million. That transaction closed during the recently completed quarter but was not a factor in earnings, the company said.