BRAMPTON, Ontario — Loblaw Cos. here last week said net income increased by 8.8% despite a 1.4% decrease in same-store sales during the second quarter, which ended June 18.
Galen Weston, Loblaw's chairman, cited “unpredictable and competitively intense market conditions” for pressuring sales but said ongoing infrastructure improvements and cost savings helped boost earnings.
Spending on infrastructure projects would likely keep pressure on profits for the second half of the fiscal year, he added.
Overall sales for the period of $7.7 billion (U.S.) increased 0.2%, while operating income and margin as a percent of sales were flat, Loblaw officials said. Net earnings of $208 million (U.S.) increased due to lower income taxes and decreases in interest and financing charges. The company experienced modest inflation during the quarter, officials said.
Weston noted that Vincente Prius, Loblaw's new president, will take over for Allen Leighton Aug. 2. Weston said Prius was well-suited to take Loblaw to its next phase of growth, citing opportunities to improve store operations and expand Loblaw's ethnic and health and wellness efforts.
“It'll take him a little while to get up to speed, but as I said before he understands the strategy, the path that we're on, and he agrees with it, and so we expect this to be a fairly smooth transition,” Weston said during a conference call.
Leighton said he was pleased with Loblaw's performance in the quarter, noting that while conditions were difficult, Loblaw stuck to its plan to implement merchandising strategies.
“The market is not strong and volume is difficult to get,” he said. “Chasing volume for volume's sake is something to be cautious of.”
