BRAMPTON, ON, July 25, 2018 /CNW/ - Loblaw Companies Limited (TSX: L) ("Loblaw" or the "Company") today announced its unaudited financial results for the second quarter ended June 16, 2018. The Company's 2018 Second Quarter Report to Shareholders will be available in the Investors section of the Company's website at loblaw.ca and will be filed with SEDAR and available at sedar.com(Open in a new tab).

"Our base businesses continued to perform well in a very competitive marketplace despite significant cost pressures," said Galen G. Weston, Chairman and Chief Executive Officer, Loblaw Companies Limited. "We are executing our strategy, improving processes, reducing cost and expanding our digital presence to deliver the best in food, health and beauty, for Canadians."

2018 SECOND QUARTER HIGHLIGHTS

The second quarter of 2018 included the negative impacts of minimum wage increases and incremental healthcare reform. The following highlights also reflect the impact of the consolidation of franchises, the disposition of gas bar operations and the acquisition of Canadian Real Estate Investment Trust ("CREIT") by Choice Properties' Real Estate Investment Trust ("Choice Properties").

• Revenue was $10,923 million, a decrease of $157 million, or 1.4%, compared to the second quarter of 2017.

• Normalized for the disposition of the gas bar operations, Retail segment sales were $10,600 million, an increase of $105 million, or 1.0%, compared to the second quarter of 2017.

  • Food retail (Loblaw) same-store sales growth was 0.8%, excluding gas bar operations.

  • Drug retail (Shoppers Drug Mart) same-store sales growth was 1.7%, with pharmacy same-store sales growth of 0.3% and front store same-store sales growth of 3.0%.

• Operating income was $561 million, a decrease of $66 million, or 10.5%, compared to the second quarter of 2017.

• Adjusted EBITDA² was $1,027 million, an increase of $41 million, or 4.2%, compared to the second quarter of 2017.

• Net earnings available to common shareholders of the Company were $50 million, a decrease of $309 million, or 86.1%, compared to the second quarter of 2017. Diluted net earnings per common share were $0.13, a decrease of $0.77, or 85.6%, compared to the second quarter of 2017.

  • Net earnings available to common shareholders of the Company were negatively impacted in the second quarter of 2018 by the change in fair value adjustment to the Trust Unit Liability and costs related to Choice Properties' acquisition of CREIT.

• Adjusted net earnings available to common shareholders of the Company² were $421 million, a decrease of $25 million or 5.6%, compared to the second quarter of 2017.

  • Normalized for the disposition of gas bar operations, adjusted net earnings available to common shareholders of the Company² decreased by approximately $12 million, primarily driven by the Retail segment.

• Adjusted diluted net earnings per common share² were $1.11, flat compared to the second quarter of 2017.

  • Normalized for the disposition of gas bar operations, adjusted diluted net earnings per common share² increased by approximately 3.7% or $0.04 per common share due to the favourable impact of the repurchase of common shares.

• The Company repurchased 4.6 million common shares at a cost of $300 million.

In the second quarter of 2018, Choice Properties completed the acquisition of CREIT. The acquisition resulted in an increase in consolidated revenue of approximately $69 million, adjusted EBITDA² of approximately $48 million and net interest expense and other financing charges of approximately $48 million in the second quarter of 2018. The acquisition had a nominal impact on adjusted net earnings available to common shareholders of the Company².

The disposition of the Company's gas bar operations, in the third quarter of 2017, had a negative year-over-year impact on financial performance in the second quarter of 2018. The disposition negatively impacted Retail sales growth by $376 million, EBITDA² by approximately $20 million, net earnings available to common shareholders of the Company by approximately $13 million and diluted net earnings per common share by approximately $0.04 per common share.

Note: This is an excerpt from the full release. To view the complete document, please download the full Q2 2018 news release(Open in a new tab).

¹ This News Release contains forward-looking information. See "Forward-Looking Statements" section of this News Release for a discussion of material factors that could cause actual results to differ materially from the forecasts and projections herein and of the material factors and assumptions that were used when making these statements. This News Release should be read in conjunction with Loblaw Companies Limited's filings with securities regulators made from time to time, all of which can be found at sedar.com(Open in a new tab) and at loblaw.ca.

² See "Non-GAAP Financial Measures" section of this News Release, which includes the reconciliation of such non-GAAP measures to the most directly comparable GAAP measures.