Loblaw said Thursday it would close 52 money-losing stores over the next 12 months.
The stores represent around $300 million (Canadian) in annual sales but their closure will result in a favorable impact to operating income of approximately $35 million to $40 million.
The Brampton, Ontario-based retailer announced the pending closures Thursday while reviewing financial results for the fiscal second quarter ended June 20. Net earnings of $142 million (U.S.) for the quarter include a $35 million charge associated with the closures. Loblaw reported a loss of $456 million in the same period last year due to a charge associated with its acquisition of Shoppers Drug Mart.
Sales for the period totaled $8.1 billion (U.S.), a 2.2% increase from the same period last year. Non-fuel identical-store sales increased by 2.1%. Loblaw termed food sales “strong” in the period while pharmacy and HBC sales were moderate; general merchandise was flat; and gas sales declined due to price decreases.
Adjusted gross profit as a percent of sales increased to 26.4% from 26.3% in the same period last year.
"I am pleased with our overall performance in the second quarter, as we continued to execute well against our strategic framework," Galen G. Weston, president and executive chairman of Loblaw, said in a statement. "Looking ahead, the grocery industry remains highly competitive and healthcare reform continues to put pressure on our pharmacy business. We are well positioned to achieve earnings growth through a stable trading platform, incremental efficiencies, synergies and a stronger balance sheet.”
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