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Loblaw looks to fresh; Q2 earnings drop

After battling intense retail competition in Canada from Wal-Mart and Target, Loblaw Cos. reported a loss of $425 million (U.S.) for the fiscal second quarter.

Newly named president Galen Weston noted that average square footage gains in the industry has been 3%, while Loblaw’s has been about 1%.

Loblaw's revenue for the second quarter was $9.6 billion (U.S.), a 37.1% increase compared to the 2013 fiscal second quarter. Loblaw attributed the revenue increases mostly to the completion of the Shoppers Drug Mart acquisition in March. Same-store sales, not including Shoppers, increased 1.8%.

“This was the sixth consecutive quarter of positive same-store sales — the result of a continued focus on our strategy of continuing to invest in the customer proposition led by fresh,” said Weston.

“Despite growing significantly less than the market, we maintained market share in tonnage and dollars, grew basket and increased sales productivity.”

Loblaw has been seeing customers embrace fresh foods in its “inspire” stores that focus more on perishables and foodservice, as well as its superstore formats. The company said it sees room for fresh foods growth in its discount banners.

There are currently 20 “inspire” stores across Canada, and Weston said the company plans to open more than 50 stores depending on the format's performance going forward, perhaps more.

Loblaw also plans to open one or two more locations of "The Box,” a discount banner that it first introduced a year ago.


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“We’re pleased with the way that [The Box] business is performing, but we’re not yet in a place yet where we can draw any conclusions about its ultimate size or potential. We remain cautiously optimistic about what that format may be deliver for us,” said Weston.

Four Loblaw locations are readying for a Click and Collect online pilot, and the company is continuing to move forward with adding enhanced food options to Shoppers Drug Mart, including incorporating President’s Choice private label products. 


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