Loblaw Cos. Ltd., the country’s largest food retailer, reported a 40-per-cent increase in first-quarter profit and said it plans to compete the initial public offering of its real estate investment trust (REIT) in early to mid-July.
The company, majority-owned by George Weston Ltd., also raised its quarterly dividend by 9 per cent to 24 cents a share. This was the second time in six months that the company raised its dividend.
Loblaw, which also sells clothing, footwear and drugs, reiterated its outlook for 2013 despite increasing competition.
U.S. discount retailer Target Corp. opened its first three Canadian stores in March and plans to have more than 100 by the end of this year.
Supermarket operators such as Loblaw, Metro Inc. and Empire Co. Ltd.’s Sobeys have come under pressure over the last two years as Wal-Mart Stores Inc. expands its grocery business in Canada.
Loblaw’s profit rose to $171-million, or 61 cents a basic share, in the quarter, from $122-million, or 43 cents, a year earlier.
The latest results included a gain of 13 cents a share related to defined-benefit plan amendments.
Metro, Canada’s No. 3 grocer, last week reported a quarterly profit that more than tripled, but it warned of a challenging competitive environment.
Loblaw said total sales rose about 3 per cent to $7.04-billion, while sales at established locations, a key measure for retailers, rose 2.8 per cent.
“Greater assortment and an improved in-store experience are resonating with customers, translating into same-store sales growth and positive trends in tonnage and market share,” Mr. Weston said in a statement on Wednesday.
Loblaw’s first-quarter operating margin rose to 4.3 per cent from 3.4 per cent, a year earlier.
The company said in December it planned to contribute about 35 million square feet of property worth about $7-billion to its proposed REIT, which will allow Loblaw to reinvest in its core business and boost shareholder value.
The company expects to file a preliminary prospectus for the REIT in late May.
With files from Reuters