BRAMPTON, ON, Feb. 21, 2019 /CNW/ - Loblaw Companies Limited (TSX: L) ("Loblaw" or the "Company") today announced its unaudited financial results for the fourth quarter ended December 29, 2018 and the release of its 2018 Annual Report – Financial Review ("Annual Report"), which includes the Company's audited consolidated financial statements and Management's Discussion and Analysis ("MD&A") for the fiscal year ended December 29, 2018. The Company's 2018 Annual Report 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).

"We are pleased to deliver strong operational performance again this quarter, achieving our full year financial targets in a challenging year," said Galen G. Weston, Executive Chairman, Loblaw Companies Limited.

"Our strategy has momentum and we are accelerating our investments to deliver customer and shareholder value over the long-term."

On November 1, 2018, the Company and its parent George Weston Limited ("Weston") completed a reorganization under which the Company distributed its approximate 61.6% effective interest in Choice Properties Real Estate Investment Trust ("Choice Properties") to Weston ("the reorganization" or "the spin-out"). The reorganization simplifies the Company as a pure-play retailer by spinning out a non-strategic business and allows the Company to focus on pursuing its core retail, connected healthcare, digital retail and payments and rewards strategy.

As of the date of the reorganization, the Company no longer retains its interest in Choice Properties and has ceased to consolidate its equity interest in Choice Properties from its consolidated financial statements. The spin-out of the Company's interest in Choice Properties has been presented separately as Discontinued Operations in the current and comparative results. The Company's 2018 financial results from Discontinued Operations include ten months of Choice Properties' financial results compared to a full year in 2017. 

2018 FOURTH QUARTER HIGHLIGHTS

Unless otherwise indicated, the following highlights represent the Company's results from Continuing Operations and also reflect the impact of the consolidation of franchises. The fourth quarter of 2018 included the negative impacts of minimum wage increases and incremental healthcare reform.

• Revenue was $11,218 million, an increase of $226 million, or 2.1%, compared to the fourth quarter of 2017.

• Retail segment sales were $10,976 million, an increase of $181 million, or 1.7%, compared to the fourth quarter of 2017.

  • Food retail (Loblaw) same-store sales growth was 0.8%.

  • Drug retail (Shoppers Drug Mart) same-store sales growth was 1.9%, with pharmacy same-store sales growth of 0.6% and front store same-store sales growth of 2.8%.

• Operating income was $445 million, an increase of $388 million, or 680.7%, compared to the fourth quarter of 2017.

  • Operating income was positively impacted year-over-year by charges recorded in the fourth quarter of 2017 related to the launch of the PC Optimum^®Program, restructuring and other related costs and the Loblaw Card Program.

• Adjusted EBITDA² was $895 million, an increase of $13 million, or 1.5%, compared to the fourth quarter of 2017.

• Net earnings available to common shareholders of the Company from Continuing Operations were $228 million, an increase of $252 million compared to the fourth quarter of 2017. Diluted net earnings per common share were $0.61, an increase of $0.67 compared to the fourth quarter of 2017.

  • Net earnings available to common shareholders of the Company from Continuing Operations were positively impacted year-over-year by the net impact of amounts recorded in the fourth quarter of 2017, as discussed above.

• Adjusted net earnings available to common shareholders of the Company² from Continuing Operations were $388 million, a decrease of $10 million, or 2.5%, compared to the fourth quarter of 2017. Adjusted diluted net earnings from Continuing Operations per common share² were $1.03, an increase of $0.01, or 1.0%, compared to the fourth quarter of 2017.

  • Adjusted net earnings available to common shareholders of the Company² from Continuing Operations included the decline in underlying operating performance of the Financial Services segment, which included investments in digital strategy and was negatively impacted by lower core banking income attributable to the discontinuation of the personal banking services under the PC Financial brand, partially offset by the improvement in underlying operating performance of the Retail segment. The increase in adjusted diluted earnings from Continuing Operations per common share² was due to the favourable impact of the repurchase of common shares.

• Inclusive of Discontinued Operations, adjusted net earnings available to common shareholders of the Company² were $402 million, a decrease of $34 million, or 7.8%. Adjusted diluted net earnings per common share² were $1.07 a decrease of $0.05, or 4.5% compared to the fourth quarter of 2017. Normalized for the impact of the reorganization and Choice Properties' acquisition of Canadian Real Estate Investment Trust ("CREIT"), adjusted net earnings available to common shareholders of the Company² decreased by approximately $4 million and adjusted diluted net earnings per common share² increased by $0.03 or 2.9% per common share compared to 2017.

• The Company repurchased 3.9 million common shares at a cost of $238 million in the fourth quarter of 2018. In 2018, the Company repurchased 16.6 million common shares at a cost of $1,082 million.

2018 SELECT ANNUAL HIGHLIGHTS

Relative to the Company's 2018 Outlook, on a full-year comparative basis, normalized for the disposition of the gas bar business, the impact of the CREIT acquisition and spin-out of Choice Properties in the fourth quarter, the Company delivered essentially flat adjusted net earnings growth of 0.2% with positive adjusted earnings per share growth of 5.0% driven by our share buyback program.

The following annual highlights include both Continuing and Discontinued Operations and also reflect the impact of the consolidation of franchises and the disposition of gas bar operations in the Retail segment as well as the acquisition of CREIT by Choice Properties.

• Inclusive of Discontinued Operations, net earnings available to common shareholders of the Company were $754 million, a decrease of $751 million compared to 2017. Diluted net earnings per common share were $1.99, a decrease of $1.80 compared to 2017.

  • Net earnings available to common shareholders of the Company and diluted net earnings per common share were negatively impacted by the charge related to Glenhuron Bank Limited ("Glenhuron") in the third quarter of 2018. Net earnings available to common shareholders of the Company and diluted net earnings per common share were also negatively impacted year-over-year by the 2017 gain on disposition of gas bars operations.

• Inclusive of Discontinued Operations, adjusted net earnings available to common shareholders of the Company² were $1,746 million, a decrease of $51 million, or 2.8%, compared to 2017. Adjusted diluted net earnings per common share² were $4.60, an increase of $0.08, or 1.8%, compared to 2017. Normalized for the impact of the reorganization, Choice Properties' acquisition of CREIT and the 2017 disposition of gas bar operations, adjusted net earnings available to common shareholders of the Company² increased by approximately $3 million ($0.22 or 5.0% per common share) compared to 2017.

  • The spin-out of Choice Properties in the fourth quarter of 2018 had a negative year-over-year impact on financial performance in 2018. The spin-out negatively impacted adjusted net earnings available to common shareholders of the Company² by approximately $30 million ($0.08 per common share) compared to 2017.

  • Choice Properties completed the acquisition of CREIT in the second quarter of 2018. In 2018, the acquisition resulted in an increase in adjusted net earnings available to common shareholders of the Company² of $2 million. The acquisition had a nominal impact on adjusted diluted net earnings per common share² in 2018.

  • 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 2018. The disposition negatively impacted adjusted net earnings available to common shareholders of the Company² by approximately $26 million ($0.06 per common share) compared to 2017.

• In 2018, the Company invested $1,334 million in capital expenditures and generated $366 million of free cash flow². In 2018, the Company's Continuing Operations invested $1,070 million in capital expenditures and generated $670 million of free cash flow².

Note: This is an excerpt from the full release. To view the complete document, please download the full Q4 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.