Price Cuts Sink 3Q Earnings for Loblaw

TORONTO — Loblaw stock traded down around 13% Thursday after the retailer here said aggressive price investments hacked deeply into quarterly profits. Lower prices, particularly at Loblaw’s discount and Real Canadian Superstore banners, sparked a 2.8% comparable-store sales gain, but helped to send operating income down by 37.8%, EBITDA falling by 16.1% and earnings per share tumbling 45.9% during the 16-week third quarter ending Oct. 7. Adjusted earnings of 43 Canadian cents per share were far below analyst expectations of 77 cents. “This has been a tough quarter,” Galen Weston, executive chairman, confessed in a conference call. “When we first laid out our plan for turning around the company we were clear the road would be long and difficult, and we hit some bumpy patches along the way. All of those characteristics were evident in our third-quarter results.” Overall sales for the quarter increased 1.4% to $9.5 billion (U.S.), with traffic counts and basket sizes also increasing.

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