Loblaw to Rebuild Around Lower Prices, Superstores

TORONTO -- Executives of Loblaw Cos. said they will reduce prices, increase private-label penetration, improve fresh food merchandising and revamp the Real Canadian Superstore banner in an aggressive strategy to right the embattled retailer. The plan aims to improve sales by 5% and earnings by 10% annually, and to generate free cash flow of around $215 million (U.S.) over a three- to five-year recovery period, said Galen Weston Jr., the new executive chairman of Loblaw, at an investor presentation here yesterday. “We would not be embarking on this extraordinary list of changes if we did not believe it was absolutely necessary,” Weston said. “We are making these decisions before it is too late.” Loblaw has struggled in recent years due to a poorly executed supply-chain initiative, but Weston acknowledged the company has also been guilty of inconsistent store operations and of store formats lacking distinction. Weston said Loblaw will endeavor to grow private-brand sales to 35% of revenues from the current 25%, and to promote its President‘s Choice label with a $43 million campaign. Superstores will focus on fewer general merchandise categories but will aim to grow the Joe Fresh apparel brand. -- Jon Springer