www.weston.ca
George Weston is one of North America's largest food processing and distribution groups through its subsidiaries, Weston Foods and Loblaw.
The Weston Foods operating segment is primarily engaged in the baking industry within North America. Loblaw is Canada's largest food distributor and a leading provider of general merchandise, drugstore and financial products and services.
George Weston Q1 adjusted profit drops on weak Loblaw performance
Toronto-based baked goods and grocery company George Weston (TSE:WN) reported Tuesday first-quarter net earnings grew, but adjusted profit was hurt on a decline in operating performance at its grocery store chain Loblaw unit, due to higher input costs.
Net earnings attributable to shareholders grew to $171 million, or 89 cents per share on several fair value adjustments, with $7.22 billion in revenue for the 12-weeks that ended March 24.
That compared to a year-earlier profit of $165 million, or 74 cents a share, on $7.14 billion in revenue.
On an adjusted basis, however, earnings per share fell to 89 cents from $1.07 a year earlier.
On average, analysts had expected per-share earnings of 88 cents, on $7.20 billion in sales, according to Bloomberg.
The company’s Weston Foods segment saw sales grow to $425 million, up from $410 million a year prior. The increase stemmed from higher pricing across key product categories, partly offset by volume declines, the company said.
Revenue from the Loblaw unit rose 0.9 percent to $6.93 billion compared to $6.87 billion in 2011. Same-store sales in the segment fell 0.7 percent.
Comparable store sales are a key metric to gauge a retailer’s health as it excludes sales from stores that recently opened or closed during the year.
The company noted sales were strongest for apparel and at its gas bars, while sales were flat in food, drugstore and general merchandise.
In the latest quarter, the company said Loblaw sales were positively impacted by growth from its financial services unit, which includes President’s Choice Bank.
Looking ahead, the company said it expects higher commodity and input costs in its Weston Foods segment to continue into the second quarter, which will pressure margins.
"Weston Foods will continue to reduce costs through improved efficiencies and ongoing cost reduction initiatives in an effort to achieve full year operating margins in line with those in 2011," George Weston said in a release.
The Loblaw unit’s operating income is expected to be down, with more pressure in the first half of the year.
For 2012, George Weston anticipates adjusted earnings to be lower year-over-year, mainly due to the impact of incremental costs tied to IT and supply chain investments at Loblaw.
Shares of the company closed at $60.48 each on Monday.
