Troubles Will Pass for Loblaw & Weston

Article Excerpt

LOBLAW COMPANIES $52.05 (Toronto symbol L; SI Rating: Above average) is Canada’s largest supermarket operator, with over 1,600 company owned and franchised stores. It also distributes food and other goods to independent retailers. George Weston Ltd. (see below) owns 63% of the company. Loblaw’s sales rose 1.4% in the three months ended March 25, 2006, to $6.15 billion from $6.06 billion. Earnings per share fell 1.9%, to $0.51 from $0.52. However, if you disregard one-time items, Loblaw’s profits fell 19.4%, to $0.54 from $0.67. Cash flow in the quarter fell 14.5%, to $259 million or $0.94 a share, from $303 million or $1.11 a share. Loblaw’s long-term debt is high at $4.2 billion or 70% of shareholders’ equity of $6 billion. However, the company holds cash of $903 million, and its steady cash flow should help it pay down debt. In 2005, Loblaw launched a new strategy aimed at protecting its market share, and keeping its costs low. The company is overhauling its…

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