BRAMPTON, Ont. - Loblaw Companies Ltd. (TSX:L) has turned out better fourth-quarter financial results than analysts were expecting from Canada's largest grocery retailer.
The company reports it had $183 million or 65 cents per share of adjusted net earnings in the fourth quarter, down 1.1 per cent from a year earlier but 10 cents above the general estimate.
Revenue was up 2.3 per cent to $7.64 billion, also better than expected.
Same-store sales, an important measure in the retail industry, edged up 0.6 per cent compared with a year earlier.
Loblaw said the same-store sales, from locations open at least a year, benefited from the timing of the Thanksgiving holiday but hurt by an ice storm in Eastern Canada and a strike in Western Canada.
Analysts had estimated 55 cents of adjusted earnings and less than $7.6 billion of revenue in the fourth quarter, according to Thomson Reuters data.
Among the fastest growing sources of revenue for Loblaw was its Presidents Choice financial services segment, which contributed $204 million in the quarter, up 15.9 per cent from a year earlier.
Its newly spun off Choice Properties real estate trust (TSX:CHP) contributed $165 million of revenue to the parent company in the fourth quarter.
The main retail segment, which operates under several banners including the Joe Fresh clothing chain, had $7.41 billion of sales, up 1.8 per cent or $130 million from $7.29 billion.
The grocery retailer's net income â€” which isn't as closely tracked by analysts â€” fell to $127 million or 45 cents per share, down 8.6 per cent from $139 million a year earlier.
Loblaw said its net income was down primarily because of higher interest expenses and other financing charges.
Like other Canadian retailers, Loblaw is facing intense competition from its domestic and foreign rivals â€” including Sobeys, Metro, Walmart and the newcomer Target, which entered the market about a year ago.
The company's Provigo subsidiary announced last month that it will spend about $110 million this year on renovations and upgrades to its Quebec stores â€” about $10 million more than it did in 2013.
In addition, Loblaw is in the process of acquiring Shoppers Drug Mart (TSX:SC), which will be operated as a separate division with complementary products.
The company said Thursday that the regulatory process appears to be on track and it expects the deal to be approved in the current quarter.
"In a year of unprecedented retail square footage growth within an intensely competitive environment, we grew same-store sales, revenue and adjusted operating income," said Galen G. Weston, the company's executive chairman.
"This was a result of remaining firmly focused on our strategy to invest in the customer proposition, while at the same time driving efficiencies in our business â€” particularly in administration and supply chain â€” as well as strong performance from President's Choice Financial."
Weston said Loblaw expects to grow revenue and adjusted operating income in 2014 and see significant progress in implementing improvements to its information technology, a multi-year project.
"Finally, we look forward to closing the acquisition of Shoppers Drug Mart, which creates a compelling blueprint for the future, and allows us to capitalize on some of the most important trends in Canadian society, including the imperatives of convenience and value." Weston said.