Two of the country’s largest supermarket chains reported disappointing earnings Wednesday as evidence mounted that increased competition for Canadian consumers is beginning to take a bite out of profits.
Loblaws reported a 29-per-cent drop in profits for the third quarter, and said its profit this year will be flat compared with 2012, the result of reduced margins as the grocery company focuses on winning over customers in an increasingly competitive marketplace.
Metro, meanwhile, reported a 1.8-per-cent decline in same-store sales and cited “intense competition,” particularly in Ontario, for the decline.
Loblaw and Metro stock dropped six per cent and five per cent, respectively, at the opening of markets Wednesday on the news.
But what's bad news for the grocery chains is better news for consumers. Both the grocery giants have signalled they are cutting prices in response to the arrival of Target, whose department stores offer a selection of grocery items, putting added pressure on grocers.
Walmart Canada has been ramping up its food selection, and most recently, Amazon Canada announced it would be selling dry goods through its website.
Robert Sawyer, a former Metro exec, recently described the retail scene in Ontario as a “bloodbath,” the Globe and Mail reported.
Another sign the retail market in Canada may be getting saturated is Target Canada’s performance so far. The U.S.-based retailer, which this month is opening another 33 stores in Canada, has warned that it won’t turn a profit in its first year of operations, the Wall Street Journal reports. The company expects its Canadian operations to be a drag on earnings for the year.
“Canadian shoppers failed to buy enough of the food and household items that prompt frequent trips,’ the Journal reported.
— With files from The Canadian Press
100 Gift Ideas $20 And Under
Colourful Vases(01 of100)
Open Image ModalWooden Game(02 of100)
Open Image ModalWine Toppers(03 of100)
Open Image ModalFacebook Stamps(04 of100)
Open Image ModaliPad Case(05 of100)
Open Image ModalOffice Supplies(06 of100)
Open Image ModalMeasuring Spoons(07 of100)
Open Image ModalSqueaky Toys(08 of100)
Open Image ModalPhone Case(09 of100)
Open Image ModalCandles(10 of100)
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Open Image ModalApron(12 of100)
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Open Image ModalOven Mitts(14 of100)
Open Image ModalPlay 'N Go Table(15 of100)
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Open Image ModalChocolate(58 of100)
Open Image ModalPopcorn Popper(59 of100)
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Open Image ModalAll those times you feel guilty about the kids in your life just looking at a screen while playing an iPad can come to an end with Apptivity figurines, which make games literally come to life. Works with Fruit Ninja, Batman, Cut The Rope, Monster High, Hot Wheels and Angry Birds. Apptivity figures, $14.99, available at Walmart, Toy R’ Us, LCL, Future Shop, Best Buy, Showcase, Chapters/Indigo. (credit:Mattel)