Loblaw Takes Impairment Charge for 1998 Acquisition

BRAMPTON, Ontario -- Loblaw Cos. here said yesterday it will take a goodwill impairment charge related to its 1998 acquisition of Provigo Inc., of about $500 million to $760 million (U.S.) -- for the year that ended Dec. 30, 2006. The company said the decision to take the writedown followed its annual goodwill impairment test analysis, although it did not explain, during a conference call with analysts, why it had taken so long to book the charge. According to one Canadian analyst, the charge was "a huge shock." Loblaw said it expects earnings per common share will be negatively impacted, with a loss in the range of $1.71 to $2.63 per share for the fourth quarter and between 6 cents and 98 cents for the year. For the 12-week quarter, sales rose 3.5% to $5.7 billion (U.S.) and same-store sales jumped 1.3%. For the year, sales increased 3.7% to $24.2 billion and same-store sales rose 0.8%. The company also named a new chief financial officer: William Wells, who is currently CFO at Bunge Ltd., a U.S.-based food processor. Wells is scheduled to join Loblaw April 2. -- Elliot Zwiebach