Loblaw, Shoppers, GE Announce Earnings for the Quarter. Corporate Profits are Healthy in Canada and the U.S.

General Electric (NYSE: GE)

Revenues and profits soared for the world's largest manufacturer of jet engines and turbines for power plants. Second quarter profit came in at $3.69 billion, up from $3.03 billion last year. On a per share basis this is 35 cents versus 28 cents. This is a healthy gain for a company once written off by many during the recent recession.

Revenues fell slightly to about $36 billion as it sold the majority of its stake in NBC Universal to Comcast Corp. Considering, however, that analyst estimates for GE had been $35 billion, the slight decline is good news. The major developments in the company during the quarter were in the area of its energy business, which made acquisitions totalling over $11 billion. In the future, the upside potential in this business for GE could be substantial.

For more on GE check out Reuters News Service.

Loblaw Companies Ltd. (TSE: L)

Canadian grocery heavyweight Loblaw Companies Ltd. announced stronger second quarter results today. Loblaw's earnings came in at $197 million, or 67 cents on a per share basis. Last year, Loblaw's earned $181 million or 64 cents per share. Revenues also rose by a small margin to $7.28 billion.

However, all is not good news at Loblaw. Already competing against Wal-Mart, Sobeys, Metro, and Costco, the company will soon by vying with Target, which will surely take a bite out of both its grocery business and new Joe Fresh line.

Employee wages, however, have been under intense pressure at the retailer and the UFCW has been unable to effectively keep wages much higher than they are at competitors. Cheaper labour costs will undoubtedly give Loblaw a fighting edge, even though its employee morale is said to be in the basement at most stores.

Shoppers Drug Mart (TSE: SC)

Canada's largest drug store chain announced higher quarterly results today. Even without a permanent CEO, the company edged out many of its rivals and reported a second quarter profit of $148 million, or 68 cents per share. Last year, the company earned $146 million or 67 cents per share. Since analysts were looking for a per share profit of $67 cents for Shoppers, they beat estimates by a penny, and, overall, performed reasonably well.

Performing particularly well were its "front-of-store" sales, which include the items most commonly thought of at Shoppers next to prescriptions... cosmetics etc. Non-prescription sales at Shoppers were up 3.8 percent, which more than made up for a decline in prescriptions of 1 percent.

Many Shoppers' shareholders, including myself, have been worried as of late about the decline in prescriptions due to generic drug pricing in Ontario, and the loss of the company's CEO, but as the numbers indicate, profits are rising, albeit slightly, and good money is being made. Hopefully a new CEO is found soon,  but until then, just stay the course with this Canadian retail gem.

Happy Investing : )

Wal-Mart Invading Urban Canada. New "Wal-Mart Urban 90 Stores" to Attract Even More Buyers.

Wal-Mart (NYSE: WMT) recently announced that it is going to begin opening urban stores in Canada. The first concept store will be opened on an old Zellers property that it will be acquiring from Target. The format of the store will be named "Urban 90," and it will be located in the east-end of Toronto.

The new Wal-Mart's are intended to fill a gap that Wal-Mart experiences in Canada currently. Since the company is usually located on very large suburban lots, they have been unable to reach many dense urban buyers. They hope that the new stores will allow them to expand further into a Canadian marketplace that they have largely saturated.

The new Urban 90 format, being located in dense urban environments, is going to hit the traditional retailers and grocers the hardest. Many Giant Tiger, Loblaws (TSE: L), Metro (TSE: MRU.A), and Sobeys banners are located in urban environments that currently are free from Wal-Mart's tentacles. Soon, however, the ubiquitous yellow smiley face will shower Canada's urbanites as well. Canadian retail investors beware!

Happy Investing, and for more info:

http://www.thestar.com/business/companies/walmart/article/1014669--wal-mart-to-open-urban-store-buys-zellers-sites

Loblaws Brings Joe Fresh to Fifth Avenue: First Foray Into the United States in Years.

Loblaws (TSE:L) announced that it is opening four Joe Fresh branded stores in the United States. Joseph Mimran, the brand's founder, declared that many Americans have been requesting the introduction of the clothing line into the United States and thinks it will be a success. The flagship store will be located on Fifth Avenue in Manhattan, adjacent to the New York Public Library.

Historically, Canadian firms are very hesitant to expand into the United States, where competition is steep and competitors are well-heeled and have deep pockets. Loblaws has attempted to expand into the northern United States before, but retreated in the late eighties and early nineties after they decided to focus on expanding and perfecting their Canadian operations. This turned out to be a very wise move, as Wal-Mart and others entered the American market en-masse and brought profit margins tumbling down in the grocery sector. This time, however, Loblaws is entering on a very small scale and in an industry with much higher profit margins than the grocery sector.

Undoubtedly, the rationale for expanding the Joe Fresh line into the United States has less to do with generating a profit on the U.S. stores than it does with simply exposing the brand and Loblaws to an extensive amount of publicity from more fashion conscious consumers. The company has declared that it wants to achieve 1 billion dollars in annual sales soon, and it now appears that it is bent on achieving that goal.

In reality, few Canadian merchants have ever had any success in the United States. Lululemon (TSE:LLL) has had some, as has Tim Horton's (TSE:THI) now, but Canadian Tire (TSE:CTC.A) tried and failed miserably, as have countless others. Loblaws' decision to enter the market again will bring some bad news in the future as sales at the American Joe Fresh stores are probably not what is expected, but the recognition and marketing advantages that they gain from having a store on Fifth Avenue will bode very well for the clothing line and its status in its customer's eyes. As an investment, however, be careful of Loblaws. Debt levels are creeping higher, and many stores are disorganized and under-staffed, which will make competition with Metro (TSE:MRU.A), Sobeys (TSE:EMP.A), and Wal-Mart (NYSE:WMT) more difficult as time goes on.

For some more information on this news:
http://www.thestar.com/business/companies/article/943842--canadian-retailers-go-global

Happy Investing Intelligent Investors : )