LOBLAW TESTING DOLLAR MERCHANDISING SECTIONS

David Ghitelman

TORONTO -- Loblaw Cos. here said earlier this month it is testing a dollar store concept within two store formats.

During a conference call with investment analysts to discuss results for the fourth quarter and year ended Dec. 28, John Lederer, Loblaw's president, said, "We are looking at combining a dollar store format with the Maxi and No Frills formats. We're testing this right now, and we think ultimately there is a general merchandise play in the discount market."

No Frills is Loblaw's discount format in Ontario, while Maxi is its conventional supermarket format in Quebec.

During the call, Lederer also said the company is more interested in developing its own stores than in acquiring those of other companies. "We're very comfortable that we can fill out the existing business very nicely with an internal capital program," he explained. "We can organically grow this business."

In the 12-week fourth quarter, sales rose 5.7% to $5.6 billion CDN ($3.7 billion U.S.), same-store sales grew 5%, net income increased 22.4% to $174.3 million, and earnings per share were 62 cents, compared with the previous fourth quarter's 53 cents.

For the year, sales were up 7.8% to $15.2 billion, same-store sales rose 4.6%, net income increased 29.3% to $478.7 million, and earnings per share were $1.72, compared to the previous year's $1.44.