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Loblaw Companies Q2 Profit Jumps Above Estimates; Revenues Miss

Loblaw Companies Limited (L) on Wednesday announced its second-quarter earnings that topped estimates. However, revenue fell shy of the Street view.

Net earnings available to common shareholders of the Company were C$387 million or C$1.16 per share as compared to C$375 million or C$1.09 per share in the prior-period quarter.

Net earnings were hurt by $0.25 per common share as a result of the charge related to a PC Bank commodity tax matter.

Adjusted net earnings available to common shareholders were C$566 million, or C$1.69, per share as compared to C$464 million or C$1.35 per share in the corresponding period of the previous year.

8 analysts polled by Thomson Reuters were expecting the company to report earnings of C$1.61 per share. Analysts typically exclude one-time items.

Revenue for the quarter was C$12.85 billion, versus the C$12.49 billion recorded in the prior-period.

6 analysts polled by Thomson-Reuters were expecting the company to report revenues of $12.98 billion during the quarter.

Operating income was C$742 million, as compared to C$752 million recorded in the second quarter of the previous year. Operating income was negatively impacted by C$111 million as a result of a charge related to a President's Choice Bank commodity tax matter.

Adjusted EBITDA was C$1.5 billion, versus C$1.4 billion recorded in the prior-year quarter.

Food Retail same-store sales grew by 0.9 percent in current quarter, versus the decline of 0.1% in the prior-year quarter.

Drug Retail same-store sales grew by 5.6 percent as compared to a 9.6 percent growth in the year-ago period.

On a full year basis, the company continues to expect its Retail business to grow earnings faster than sales and to invest approximately C$1.4 billion in capital expenditures, net of proceeds from property disposals, reflecting incremental store and distribution network investments. It also expects to utilize free cash flow towards share repurchases.

Based on its year-to-date operating and financial performance and momentum exiting the second quarter, the company expects full year adjusted net earnings per common share growth in the mid-to-high teens.

Shares of Loblaw Companies were last traded at C$121.68, up C$2.25 or 1.88 percent from the previous close.

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