Price Investments Boost Sales, Weaken Earnings at Loblaw

TORONTO — Lower prices helped Loblaw Cos. here boost sales during its fiscal first quarter, but accompanying lower margins — along with restructuring costs related to employee severance and other cost-cutting measures — led to a net earnings decline of 61.4% for the quarter ended March 24, the company here said yesterday. Net earnings totaled $48.8 million (U.S.), or 20 cents (Canadian) a share. Sales of $5.8 billion (U.S.) increased 3.3% for the 12-week quarter, with same-store sales increasing by 4%. “The quarter was roughly where we expected it to be,” Galen Weston, Loblaw’s chairman, said in a conference call. “Sales were pretty good but keeping in mind off a low base from 2006. Food sales continue to grow at a satisfactory rate, while general merchandise sales are not as strong. However, they are nicely on our plan.” Loblaw announced a three-year restructuring plan two months ago, including 800-1,000 layoffs. Those costs accounted for 21 cents per share during the quarter.