Wednesday, May 4, 2011

Loblaw Earnings Rise $30 Million, but Supply Chain Investments Hurt Results.

According to Reuters News Agency, Loblaw Companies Ltd (TSE: L), owner of Loblaws, No Frills, Zehrs, PC Bank, and other ubiquitous brands, posted a higher quarterly profit on Wednesday. Canada's leading grocer, however, said investments in information technology and supply chain infrastructure weighed on its operating income for the year.

First-quarter earnings rose to C$162 million, or 58 basic Canadian cents a share, from C$132 million, or 48 basic Canadian cents a share, a year ago, but revenue fell 0.6 percent to C$6.87 billion. The quarter, essentially, was not bad, but the company seriously needs to get its infrastructure and supply problems under control as it has been weighing on earnings and disappointing shareholders for years. Rivals, such as Metro (TSE: MRU.A) and Wal-Mart (NYSE: WMT) have not been experiencing the same disruptions in business as of late, and Loblaws' shareholders are suffering as a result. If you are a Loblaws shareholder, the company is still generating reasonable enough profits to maintain your shares, but be careful about more impending supply-chain and management problems going forward.

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