Stock investment advice: Loblaw continues to rely on private brands

Loblaw Companies Ltd., Toronto symbol L, continues to expand its private-label business. That’s because the company earns higher profits selling private-label merchandise than national brands. In October 2011, Loblaw is launching a new line of gourmet foods under the President’s Choice Black Label brand. These foods include mustards, condiments, dressings and sauces, biscuits, crackers, nuts and desserts. Products like these should help Loblaw compete with high-end food retailers like U.S.-based Whole Foods, which is now expanding in Canada.

Stock investment advice: Loblaw adds to its stand-alone clothing stores

Loblaw has opened five stand-alone Joe Fresh casual-clothing stores since October 2010. It plans to open five more stores by the end of 2011. It eventually wants to expand the chain to 20 stores. As well, Loblaw continues to sell Joe Fresh clothing in its supermarkets. That’s helping it compete with general retailers, like Wal-Mart, which have expanded into groceries. In the quarter ended June 18, 2011, Loblaw’s basic net earnings per share were up 7.7%. Revenue inched up 0.1% over the second quarter a year earlier. Overall sales had a modest increase of 0.2%, with same-store sales declining by 0.4% from the same quarter the year before. The company’s dividend of $0.84 currently yields 2.3%. We gave our stock investment advice on Loblaw in The Successful Investor Hotline for September 23, 2011, which you can view immediately when you take a 1-month free trial to our flagship advisory on Canadian investing, The Successful Investor. Click here to learn how you can start profiting from The Successful Investor right away. (Note: If you are a current Successful Investor subscriber, please click here to view Pat’s recommendation. Be sure to log in first.)

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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