(Reuters) - Loblaw Cos Ltd, Canada’s largest grocer, reported a better-than-expected quarterly profit as it benefits from the Shoppers Drug Mart acquisition, and said it was on track to achieve the targeted savings from the deal.
The company’s shares rose as much as 3 percent to a near nine-year high of C$59.82 on Wednesday.
Loblaw bought Shoppers Drug Mart last year to ward off rising competition as U.S.-based rivals such as Wal-Mart Stores Inc and Target Corp expanded their Canadian business.
The company said it remained on track to achieve C$100 million in savings in the first year following the closing of Shoppers Drug Mart acquisition.
The deal, which closed in March, helped Loblaw save about C$44 million in the third quarter, the company said.
Loblaw’s revenue increased 36 percent to C$13.6 billion ($12 billion) in the quarter ended Oct.4, with Shoppers Drug Mart accounting for a quarter of the sales.
The company, which cut 200 jobs during the third quarter, said it was looking to further reduce costs.
“We still have a few quarters of potential restructurings and things that are going to lead to one-time charges,” President Galen Weston said on a post-earnings conference call.
Weston, son of the founder of George Weston Ltd — Loblaw’s largest shareholder — was appointed president in July as part of a management shakeup.
Loblaw said it incurred C$46 million in costs related to the restructuring and reorganization.
Overall same-store sales, excluding Shoppers Drug Mart, grew 2.6 percent. Same-store sales at Shoppers Drug Mart rose 2.5 percent.
Adjusted basic net earnings was 90 Canadian cents per share.
Analysts on average had expected a profit of 87 Canadian cents on revenue of C$13.60 billion, according to Thomson Reuters I/B/E/S.
The company’s shares were trading at C$59.81 in late afternoon on the Toronto Stock Exchange.
Up to Tuesday’s close, Brampton, Ontario-based Loblaw’s stock had risen about 37 percent this year.
Reporting By Tanvi Mehta and Manya Venkatesh in Bangalore; Editing by Savio D'Souza, Joyjeet Das and Sriraj Kalluvila