REIT deal lifts income for Loblaw investors

Article Excerpt

LOBLAW COMPANIES LTD. $67 (Toronto symbol L; Conservative Growth Payer Portfolio, Consumer sector; Shares outstanding: 375.0 million; Market cap: $25.1 billion; Dividend yield: 1.8%; Dividend Sustainability Rating: Highest; www.loblaw.ca) operates 1,093 supermarkets under a variety of banners: Loblaw, Zehrs, Provigo, Real Canadian Superstore and No Frills. In March 2014, the company purchased the Shoppers Drug Mart chain for $12.3 billion in cash and shares. Shoppers now operates 1,335 drug stores across Canada. Thanks to the Shoppers purchase, overall sales for Loblaw increased 44.3%, from $32.4 billion in 2013 to $46.7 billion in 2017. If you exclude costs to integrate Shoppers and other unusual items, earnings soared 158.5%, from $696 million in 2013 to $1.8 billion in 2017. Due to the additional shares outstanding as a result of the Shoppers purchase, per-share earnings rose at a slower rate of 82.7%, from $2.48 to $4.53. For the three months ended June 16, 2018, Loblaw’s overall sales fell 1.4%, to $10.9 billion from $11.1 billion a year earlier. That’s…

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