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Loblaw Divides Operations

TORONTO — Loblaw Cos. is splitting its merchandising and operations teams to focus exclusively on its discount and conventional businesses, officials of the retailer said last week.

“There are two businesses at Loblaw, and those two businesses are very different,” Allan Leighton, Loblaw's president and deputy chairman, said at the CIBC World Markets Retail and Consumer Conference here. “The discount business is about lowest price and lowest cost. And the conventional business is about being fabulous at fresh and fabulous at service. They are very different things, which is why most businesses don't have both in their portfolio.”

The discount division will encompass Loblaw's No-Frills and Superstore banners. The moves are part of what Leighton described as “building out from the core” following a five-year program of rebuilding Loblaw's infrastructure that is in its final year now.

“We have been much more infrastructure oriented than we've been merchandise focused and that will start to change in the next 12 to 18 months,” he said. Loblaw is also working to focus on demographic trends of aging consumers and ethnic shoppers — “two big opportunities that we are not prepared to miss,” he said.

Leighton said Loblaw would look to double the size of its T&T Supermarket division serving East Asian shoppers in Canada in the next three to four years and is starting to develop South Asian, East African and Middle East focused businesses. The aging population in Canada, he added, represents a potential boost to pharmacy, health and wellness, and fitness business lines.

While Leighton said food store expansion was unlikely in 2011, four units of its Joe Fresh apparel stores will be opening in New York later this year in what Leighton described as a pilot program.

The company last week also announced fourth-quarter and 2010 fiscal year results. Quarterly sales fell by 2.1% to $7.1 billion and same-store sales declined 1.6%. Net earnings of $151 million declined 8.1%. For the fiscal year, Loblaw reported earnings of $681 million on sales of $31 billion. Sales improved by 0.9% and earnings by 3.8% vs. 2009.