BRAMPTON, Ontario — Loblaw Cos.'s new president, in his first public statements since talking over Canada's largest grocer, vowed to stay the course of predecessor Allen Leighton — at least for now.
“I have had an in-depth look at our business and have thoroughly reviewed our strategy and plans,” Trius, who joined Loblaw three months ago, said in a conference call last week. “Our strategy is the right one. Its foundation is strong and we have a solid base to build from.”
When asked by an analyst to expound on his understanding of Loblaw's strategy, the former Carrefour and Wal-Mart Stores executive was vague, referring to Loblaw “building out from the core” and ongoing IT and supply chain infrastructure projects.
The question appeared to speak to a long-standing sense among analysts that Loblaw had been too preoccupied with infrastructure under Leighton and not enough on operations. If a significant change is afoot, Trius isn't revealing it yet.
“There are opportunities going forward where we can, I believe, improve the business, and we will be more than happy to share that in the New Year,” he said.
For the fiscal third quarter that ended Oct. 8, improved execution and cost controls drove a 19.8% gain in net earnings on a 2% improvement in sales vs. a year ago, officials said.
However, ongoing infrastructure investments will likely lead to negative pressure on operating income in the months to come, Galen G. Weston, Loblaw's executive chairman, said. These investments include $20 million toward its supply chain and as much as $30 million associated with transitioning conventional stores in Ontario.
Sales for the 16-week quarter totaled $9.5 billion (U.S.), with comparable sales increasing by 1.3% compared with the same period a year ago. Net income was $230 million, and EBITDA margin as a percent of sales increased 50 basis points to 6.6%. The company said its internal price inflation was flat during the quarter, although it experienced “moderate” inflation overall. Tonnage and customer counts were down as compared to last year but trends were improving.
Trius said store visits in his first few months on the job revealed a company that is improving its execution. “This is a business about being consistent because our stores are open between 8 a.m. and 10 p.m., or 7 a.m. and 11 p.m., seven days a week,” he said. “It's about having the processes that allow you to be consistent, and it's building on that. We need to do that and we see some positive trends.”
