TORONTO — Loblaw Cos. said it expects net income for fiscal 2012 to be lower than 2011 as it undertakes several investments and focuses on improving its store base.
The company said it planned to invest about $1.1 billion (U.S.) in capital expenditures in 2012, including 40% on IT and supply chain and 60% on store renovations and new stores.
Loblaw said it expects that “operations will not cover the incremental costs related to the investments in IT and supply chain and its customer proposition,” putting downward pressure on earnings.
The company also reported a 5.5% gain in net income for the 12-week fourth quarter, which ended Dec. 31, to $174 million. Revenues increased 3.6%, to $7.4 billion. For the full year, net income rose 13.9%, to $769 million, on a 1.3% gain in revenues, to $31.3 billion.
Same-store sales growth for the fourth quarter was 2.5%, with an extra day of store operations having a positive impact estimated to be between 0.8% and 1%.
Separately, in an investor conference last week, Loblaw detailed some of its plans to become “the best in Canada” by 2014, in the words of Vincente Trius, president.
“It’s all about performing consistently well every day a store is open and improving the process of moving product with a better mix, less shrink and a staff that’s more engaged with customers,” he explained.
“It starts by building a culture focused on the customer, executing well in the stores every day, driving relentless efficiency, offering strong store brands and developing growth engines like loyalty cards.
Trius said Loblaw plans to roll the loyalty card program out in 2013. The chain currently offers a MasterCard from President’s Choice Financial, a program that generates less than 25% of Loblaw sales, Trius noted.
Loblaw also intends to localize its offerings more, he added, by leveraging the power of its own brands and adding more ethnic assortments.