Canada Stockwatch – Loblaw to spend $1.2B on 50 new stores in 2015
Canada Stockwatch – Canadian food retailer Loblaw Companies Limited (TSE:L, Mkt cap 25.31B, P/E – , Div/yield 0.25/1.60, EPS -0.02, Shares 412.48M) has announced it will build 50 new stores, under its own banners and that of Shoppers Drug Mart, as part of a $1.2-billion spending plan in 2015.
As the Financial Post reports, the Brampton-based firm will also renovate more than 100 existing stores, as investment shifts away from heavy infrastructure and IT rollout toward customer-facing retail refurbishments.
Loblaw, which has a network of 2,300 locations across the country, estimates the projects will create around 5,000 jobs at its corporate and independently owned grocery outlets.
Loblaw chief financial officer Richard Dufresne explained that move marks a change in emphasis for the retailer:
“The majority [of 2015 capital expenditures] are going into retail, where the portion [spent] on infrastructure is reducing every year, and it’s continuing to reduce next year,” he told analysts on a conference call last week.
Analysts suggest the decision could prove to be a wise one, with grocery retailers required to refresh their formats regularly every few years in order to stay at the forefront of a hyper-competitive Canadian market.
“Every three to five years you have to tune up your footprint as a retailer. You have to keep evolving. If you don’t do that, you start to lose relevance and your customers will take notice, and you will lose market share,” Edward Winder, senior advisor at retail consultancy J.C. Williams Group, told the Post.
He added that the need to remain relevant is especially important for a retailer such as Loblaw, whose consumers are a little more affluent and have greater expectations of their in-store experience.
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