(Reuters) - Loblaw Cos Ltd (L.TO), Canada’s largest grocer, reported an 18 percent fall in fourth-quarter profit on a restructuring charge, and said sales growth in 2013 would be moderated by the entry of a new competitor.
No. 2 U.S. discount retailer Target Corp (TGT.N) is opening its first Canadian stores in 2013, posing a new threat to Loblaw, already under pressure from Wal-Mart Stores Inc (WMT.N) expanding its grocery business in Canada.
“Sales growth in 2013 will be moderated by a competitive environment characterized by ongoing square footage expansions, a new competitor’s entry into the market and generic drug deflation,” the company said.
Net earnings fell to C$143 million ($141 million), or 48 Canadian cents per share, from C$174 million, or 60 Canadian cents per share, a year earlier.
Loblaw said in October that it planned to cut about 700 head office and administrative jobs.
The company said on Thursday it took a related C$61 million, or 16 Canadian cents per share, restructuring charge in the fourth quarter.
Sales at the company, majority-owned by George Weston Ltd (WN.TO), rose marginally to C$7.47 billion.
Sales at established stores, a key measure for retailers, were flat for the quarter.
Analysts on average had expected earnings of 63 Canadian cents per share on revenue of C$7.44 billion, according to Thomson Reuters I/B/E/S.
The company said it would restate its 2012 financial results that would reduce earnings by about C$16 million, or 6 Canadian cents per share, due to amendments to accounting standard related to employee benefits.
Shares of the company closed at C$39.75 on the Toronto Stock Exchange on Wednesday.
($1 = 1.0148 Canadian dollars)
Reporting by Ankur Banerjee in Bangalore; Editing by Sriraj Kalluvila