Costs associated with the acquisition of the Shoppers Drug Mart chain triggered a 39.8% decline in quarterly net earnings, while sales inched up moderately amid intense competition, Loblaw Cos. said Wednesday.
For the fiscal first quarter ended March 22, the Brampton, Ont.-based retailer reported sales of $6.7 billion (U.S.), a 1.2% increase over the same period in 2013, with same-store sales increasing by 0.9%. Adjusted for the timing of the Easter holiday, same-store sales increased by 1.1%, Loblaw said.
Net income of $94 million (U.S.) declined as a result of higher costs including expenses associated with closing the deal to acquire Shopper Drug Mart, which occurred during the quarter. Income was also negatively affected by higher benefit plan costs, administrative costs associated with its Choice Properties Trust real-estate division, and higher fixed costs, the company said.
“The first quarter of 2014 marked another quarter of steady progress in our core business," Galen G. Weston, executive chairman, said in a statement. “We remained focused on balancing our commitment to competitiveness and financial performance, achieving positive same-store sales and growing adjusted operating income. While the industry backdrop continues to be challenging with the intensely competitive market environment and the continued impact of drug reform, we still expect to advance our combined business both financially and operationally this year.”
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