Loblaw Companies Ltd. says it plans to close 52 unprofitable stores across a range of its banners and formats in a move that will cut sales but boost its operating profit.
The company says the closures will take place over the next 12 months and reduce its sales on an annual basis by about $300 million.
“In the year since our acquisition of Shoppers Drug Mart, we have reviewed in detail all of our 2,300 locations. Through the process we identified 52 consistently underperforming and unprofitable stores that we will close,” Bob Chant, Senior Vice President, Corporate Affairs and Communication, said.
However, Loblaw says the closures will mean an improvement in operating income of $35 million to $40 million.
The company announced the closures as it reported a second-quarter profit of $185 million or 45 cents per share in its latest quarter compared with a loss of $456 million or $1.13 per a year ago.
On an adjusted basis, Loblaw says it earned $350 million or 85 cents per share in the quarter compared with an adjusted profit of $297 million or 74 cents per share a year ago.
Revenue grew to $10.54 billion, up from $10.31 billion a year ago.
Chant said the list of stores to close includes “gas bars, Joe Fresh standalone stores and select pharmacies and grocery stores. With the previously announced plan of $1.2billion in capital spending, we are on track to grow the number of jobs in our network of stores this year.
“Out of respect for our many stakeholders, including colleagues, vendors, landlords and others, we are not disclosing specific locations at this time.”