Loblaw Companies Ltd. saw its fourth-quarter profit cut by nearly one-third as it recognized a $61-million restructuring charge that chopped 16 cents per share off the bottom line.
Canada’s largest grocer says its net income was $143-million or 48 cents per diluted share in the three months ended Dec. 29, down 31 per cent from $174-million or 60 cents per share in the same 12-week period of 2011.
Revenue rose 1.2 per cent to $7.46-billion from $7.37-billion.
On an adjusted basis, Loblaw reported earnings of $190.9-million or 64 cents per share, beating estimates of $177-million or 63 cents according to a survey of analysts compiled by Thomson Reuters.
For the full year, Loblaw reported net income of $650-million or $2.28 per diluted share on revenues of $31.6-billion, compared with net earnings of $769-million or $2.71 per share on revenues of $31.25-billion in 2011.
“2012 was a pivotal year for Loblaw, improving the customer proposition, driving the infrastructure program, and reducing costs,” executive chairman Galen G. Weston said in announcing the results Thursday.
“Despite challenges during the year, the team delivered on plan. Good performance metrics in the last quarter of 2012 and through the beginning of 2013 indicate that management’s strategy is taking hold.”
“Looking forward, I am confident that our customer offer is improving steadily, the team is driving efficiencies appropriately, and has a disciplined approach to growth. This combination will further strengthen our business and build long term value for shareholders.”
During the fourth quarter of 2012, the company announced a plan that reduced the number of head office and administrative positions. The plan affected approximately 700 jobs.
And last month, Loblaw announced it will form a real estate investment trust that will be one of the country’s largest commercial landlords. The REIT would operate as a subsidiary of Loblaw and sold in an initial public offering expected to be completed in mid-2013, subject to regulatory approvals.
The change would see Canada’s biggest supermarket operator contribute real estate assets with a current market value of more than $7-billion to the venture.
Loblaw isn’t the first such chain to make the move. Empire Co. Ltd., operator of the Sobey’s supermarket chain, spun off a number of properties into Crombie Real Estate Investment Trust in 2006.
The owner of the Loblaws, Real Canadian Super Store, Joe Fresh, President’s Choice and other brands has been undergoing several years of operational changes as it upgrades its information technology system and adjusts its retail network.
Loblaw is in stiff competition with its major rivals, Sobeys Inc. and Metro Inc. as well as other types of retailers that offer food items, including U.S.-based department store chain Walmart and Toronto-based Shoppers Drug Mart Corp. as they compete for scarce consumer dollars in a still weak economy.
Loblaw has about 500 pharmacies within its grocery stores, which operate under various banners including Loblaws, Real Canadian Superstore and Zehrs.
It also has more than 100 medical clinics, 100 optical shops and 60 Goodlife fitness facilities within or near Loblaw-owned locations.