Loblaw closing 52 stores across its sprawling retail empire

WATCH ABOVE: Jamie Sturgeon breaks down Loblaw’s decision to close dozens of locations over the coming months.

Loblaw Co. Ltd. said Thursday it plans to close 52 unprofitable stores across its sprawling network of supermarkets, pharmacies and other retail outlets over the next year.

The decision follows a review from the country’s largest retailer of its 2,300 locations over the past year. Loblaw did not disclose specific locations or the number of employees that would be affected.

“Through the process we identified 52 consistently underperforming and unprofitable stores that we will close,” Bob Chant, the company’s senior-vice president of communications, said in a statement.

On a conference call, Galen Weston, Loblaw executive chairman and president, said it was a “difficult decision,” though he said Loblaw would still open new stores in better locations this year, leading to a net addition to the company’s retail footprint.

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Loblaw acquired Shoppers Drug Mart, the largest pharmacy chain in Canada, in early 2014 and had be reviewing the combined company’s retail locations since.

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The grocer operates a number supermarket banners across the country, including its flagship Loblaw banner as well as mid-market operator Great Canadian Superstore and discounters like No Frills and Extra Foods.

In addition to grocery stores and pharmacies, the list of locations slated for closure includes gas bars and standalone locations for its Joe Fresh apparel brand (which also has locations in the United States).

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Loblaw said in March it was spending $1.2 billion as part of its normal capital spending plans. Part of that plan involved opening new locations and adding about 5,000 net new jobs to the organization.

“We are on track to grow the number of jobs in our network of stores this year,” Chant said.

Loblaw’s move to prune its number of stores and rid it of money-losing locations follows a similar wave of closures implemented by chief rival Sobeys last summer following its acquisition of Safeway Canada.

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Profits up

The move will reduce annual sales by $300 million. However Loblaw says operating income will rise by $35 million to $40 million as a result.

The company announced the closures as it reported a second-quarter profit of $185 million, or 45 cents per share, which compares to 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, compared with an adjusted profit of $297 million or 74 cents per share a year ago.

Total sales during the the three-month stretch topped $10.54 billion, up 2.2 per cent from $10.31 billion a year ago.

WATCH: A tougher economy is forcing Canada’s largest food retailer to tighten its belt. Mike Drolet reports.

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