February 20, 2014 / 1:08 PM / 5 years ago

Loblaw sees no letup in 'extreme' competition in first half

(Reuters) - Loblaw Cos Ltd (L.TO), Canada’s largest grocer, said the Canadian supermarket industry will remain “extremely competitive” in the first half of 2014 after it reported a 9 percent drop in quarterly net profit.

A Loblaws store is pictured in Ottawa February 24, 2011. REUTERS/Chris Wattie

U.S. retailers such as Wal-Mart Stores Inc (WMT.N) and Target Corp (TGT.N) have expanded in Canada over the past year, posing a threat to local retailers such as Loblaw, Canadian Tire Corp Ltd (CTCa.TO) and Metro Inc (MRU.TO).

Loblaw said it expected the pace of store openings by rivals to moderate in the second half of the year.

The company’s net income fell to C$127 million ($115 million), or 45 Canadian cents per basic share in the fourth quarter ended December 28, from C$139 million, or 49 Canadian cents per basic share, a year earlier.

Excluding some items, Loblaw earned 65 Canadian cents per basic share.

The company, whose C$12.4 billion deal to buy Shoppers Drug Mart is expected to close this quarter, said total revenue rose 2.3 percent to C$7.64 billion.

Retail sales rose just 1.8 percent while sales at established stores rose 0.6 percent. Loblaw is also involved in property leasing and financial services.

Net interest and other financing charges jumped 68 percent to C$141 million.

Loblaw shares have fallen about 19 percent from their 52-week high of C$52.06 reached on July 15, the day it announced the Shoppers Drug Mart deal.

The TSX-Toronto Stock Exchange 300 Composite Index .GSPTSE has risen about 12 percent in the same period.

Loblaw shares closed at C$42.28 on Wednesday on the Toronto Stock Exchange.

Reporting by Sayantani Ghosh in Bangalore; Editing by Maju Samuel and Ted Kerr

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