Loblaw raises dividend as Q1 profit narrowly misses
BRAMPTON, Ont. -- Loblaw Companies Ltd. (L.TO) reported "sluggish" same-store sales again in its most recent quarter, but raised its dividend for common shareholders.
"For the second quarter in a row (Loblaw) delivered solid and slightly better-than-expected financial results for Q1, but story today is once again likely going to be sluggish (same-store-sales) growth as shift in general merchandise strategy continued to weigh on reported sales," wrote Irene Nattel, an analyst with RBC Dominion Securities Inc., in a note.
She once again said the key retail metric lagged the forecast.
Loblaw reported its food retail business same-store sales grew two per cent for the first quarter ended March 23. Its drugstore same-store sales growth, which includes its Shoppers Drug Mart business, was 2.2 per cent as pharmacy same-store sales growth was 1.2 per cent and front store same-store sales growth was 3.1 per cent.
Nattel noted Loblaw competitor Metro Inc. reported same-store sales growth of 4.3 per cent or 1.8 per cent after inflation in its most recent quarter, which ended March 16.
The timing of the Easter holiday, as well as health-care reform and general merchandise shopping impacted Loblaw's same-store sales performance, chief financial officer Darren Myers said during a conference call Wednesday.
The company is starting to see improvement in its general merchandise performance, added president Sarah Davis.
Loblaw said its profit attributable to common shareholders was $198 million or 53 cents per share for the quarter. That compared with a profit of $377 million or 98 cents per share a year ago. Revenue totalled $10.66 billion, up from $10.34 billion.
On an adjusted basis, Loblaw said it earned a profit from continuing operations attributable to common shareholders of 78 cents per share, down from 81 cents in the same quarter last year.
Loblaw's adjusted profit was expected be 80 cents per share on $10.59 billion on revenues, according to analysts polled by Thomson Reuters.
Excluding an accounting change related to its leases and a change related to the spin-out of the company's stake in Choice Properties, Loblaw said it earned an adjusted profit of 84 cents per share in its most recent quarter.
The grocery and drugstore retailer said it will now pay a quarterly dividend of 31.5 cents per share, up from 29.5 cents per share.