Private Label Drives Loblaws' Profit Gains

SHARE:

Email

Print

LinkedIn

Facebook

Twitter

May 9, 2011

Aggressive marketing and expansion of its President’s Choice private label line significantly contributed to Loblaws' first quarter earnings and margin increases.

Despite a revenue decline and a slight slip in same-store sales, Canada’s largest retailer saw first quarter operating margins increase 4.4 percent and EBITDA margins rise 6.6 percent, also helped by a decline in net interest expense, a higher Canadian dollar and tighter cost controls, the company reported.

"The promotional programs are getting more aggressive," President Allan Leighton, who is stepping down later this year, told analysts during a conference call. "Consumer confidence is staid, disposable income is being spent on reducing household debt and fuel costs are biting heavily. The balancing act between sales for vanity and profit for sanity is becoming more acute."

Loblaws' first-quarter earnings rose to C$162 million, up 23 percent from C$132 million in the same year-ago period, on revenues of C$6.87 billion, down 0.6 percent. Same-store sales fell 0.1 percent.

Executive chairman Galen G. Weston said he is concerned about soft sales and food price inflation, but noted that all grocers are feeling the same pinch.

“We are concerned about sales growth. No retail business likes to see flat or declining sales,” Weston said at the company’s annual meeting. “However, if you look at what’s happening in the marketplace, you’ll see all of our competitors are, by and large, operating at similar levels of sales. That’s an indication of a market that is under significant consumer pressure.”

Most Read

Guest Columns

Grocery Aisle Innovation Key to Retailer and Consumer Cost Savings

Retailers are redesigning the aisle, appealing to environmentally friendly consumers and capitalizing on market trends to make their private label brands more competitive.

Source: Tetra Pak Inc.

How to Develop a Private Label Expression Aligned with Retail Brand Strategy

By creating private label as a marketing tool rather than just a price alternative, retailers gain the opportunity to tell a complete brand story while simultaneously boosting customer loyalty.

Source: CBX

Using the Store Banner to Endorse Private Label Architecture

Although the economic downturn accelerated private label growth in Europe, there was another key driver -- retailers started to brand their stores.

Source: IPLC

See All Guest Columns »

Press Releases