Loblaws closing 52 unprofitable stores over next 12 months
Company's quarterly consolidated sales up 2.2% over same quarter last year
Loblaw Companies Ltd. plans to close 52 unprofitable stores in Canada over the next year, it says in its second-quarter earnings release.
The company made the announcement Thursday, saying the closures will affect all of its banners and formats.
"The list includes gas bars, Joe Fresh standalone stores and select pharmacies and grocery stores," a spokesperson with the company told CBC News.
More store closures than normal
President and executive chairman Galen Weston Jr. said in a conference call with analysts that the company was focused on finding efficiencies as growth slows.
In a normal year, he added, the company would close 10 to 15 stores.
"Yes, it's an increase, but it's not radically different," he said. "It doesn't signal any kind of change from a strategic perspective."
The closures are distributed across the country, he said, and affect around one per cent of the company's total retail square footage.
Loblaw Companies has more than 2,300 stores, including Loblaws, Provigo, and Extra Foods. It also owns Shoppers Drug Mart. The spokesman added that even with the store closures, Loblaw is on track to grow the number of jobs in its network of stores this year.
An academic who specializes in retailing said the closings seem like normal business.
"Time and again, these big retailers, whether it's Metro or Sobeys or Loblaws, they reorganize, reconfigure their locations, clean up house," says Mandeep Malik, an assistant professor of marketing at McMaster University.
"In my perspective, they're just closing down a handful of underperforming stores and probably reassigning monies to intensely populated, core-urban markets."
2nd quarter earnings report
Loblaws said the closures will cut its annual sales by roughly $300 million a year, but will result in a $35 million to $40 million improvement in its operating income.
The closures are expected to cost the company approximately $120 million. Of this amount, a charge of $45 million was taken in the second quarter ended June 20, including $30 million for severance and lease termination costs.
The report shows the grocery retailer's consolidated sales rose 2.2 per cent to $10.54 billion from the same quarter last year.
The firm said it made a second-quarter profit of $185 million, or 45 cents per share, compared with a loss of $456 million or $1.13 a share a year ago.
On an adjusted basis, it said it earned $350 million or 85 cents per share in the quarter compared with an adjusted profit of $297 million or 74 cents per share a year ago.
"Looking ahead, the grocery industry remains highly competitive and health-care reform continues to put pressure on our pharmacy business," Weston said in a statement.
- An earlier version of this story said Loblaw Companies has more than 2,000 stores. In fact, there are more than 2,300.Jul 23, 2015 11:13 AM ET
With files from The Canadian Press