Loblaws Canada recently announced in its second quarter earnings release that it plans to shut down 52 unprofitable stores over the next year.
These closures will affect all brands and banners under the Loblaws company including gas bars, Joe Fresh standalone stores and other grocery chains such as Superstore, Provigo, Zehrs, and No Frills. Loblaws also recently acquired pharmacy chain Shoppers Drugmart, which was the reason for an earlier quarter’s loss. As of now, Loblaws owns more than 2300 stores across the country.
Loblaws said the closures will cut its annual sales by roughly $300 million a year, but will result in a $35 million to $40 million improvement in its operating income. The closures are expected to cost the company about $120 million. Of this amount, a charge of $45 million was taken in the second quarter which ended June 20, including $30 million for severance and lease termination costs.
On a conference call, Galen Weston, Loblaw chairman and president, said it was a “difficult decision,” though he said Loblaws would still open new stores in better locations this year, leading to a net addition to the company’s store network.
Loblaws has only said the 52 stores closing are unprofitable, but have not divulged which locations will be closed or how many employees will be affected.