Loblaw Q4 profit falls less than expected, revenue beats estimates

BRAMPTON, Ont. – Loblaw Companies Ltd. (TSX:L) has turned out better fourth-quarter financial results than analysts were expecting from Canada’s largest grocery retailer.

The company reports it had $183 million or 65 cents per share of adjusted earnings in the fourth quarter, down 1.1 per cent from a year earlier but 10 cents above the general estimate.

Revenue was up 2.3 per cent to $7.64 billion, also better than expected.

Analysts had estimated 55 cents of adjusted earnings and less than $7.6 billion of revenue, according to Thomson Reuters data.

The grocery retailer’s net income — which isn’t as closely tracked by analysts — fell to $127 million or 45 cents per share, down 8.6 per cent from $139 million a year earlier.

Loblaw said its net income was down primarily because of higher interest expenses and other financing charges.

Like other Canadian retailers, Loblaw is facing intense competition from its domestic and foreign rivals — including Sobeys, Metro, Walmart and the newcomer Target, which entered the market about a year ago.

The company’s Provigo subsidiary announced last month that it will spend about $110 this year on renovations and upgrades to its Quebec stores — about $10 million more than it did in 2013.

In addition, Loblaw is in the process of acquiring Shoppers Drug Mart (TSX:SC), which will be operated as a separate division with complementary products.

The company said Thursday that the regulatory process appears to be on track and it expects the deal to be approved in the current quarter.