(Toronto's night skyline)
TORONTO, Canada--Standard & Poor's Ratings Services says its ratings on Toronto-based grocery retailer Loblaw Companies Ltd. (BBB/Negative/--) are unaffected by the announced changes to the company's executive team.
Loblaw is entering the second year of its three-to-five year renewal plan to upgrade its IT and supply chain infrastructure, improve its food offerings, and streamline its general merchandising.
We believe that the management team changes will have no material impact on Loblaw's strategic plan. Nevertheless, the announcement highlights uncertainty regarding management's ability to deliver as projected under its turnaround plan, which was already reflected in our negative outlook on the company.
We expect that 2008 wi
ll be challenging for Loblaw since it will remain pressured by Wal-Mart Stores Inc.'s (AA/Stable/A-1+) expansion into food as well as rising commodity prices, while its infrastructure and merchandising initiatives won't deliver meaningful improvements until at least 2009. (Toronto city flag photo at left)
ll be challenging for Loblaw since it will remain pressured by Wal-Mart Stores Inc.'s (AA/Stable/A-1+) expansion into food as well as rising commodity prices, while its infrastructure and merchandising initiatives won't deliver meaningful improvements until at least 2009. (Toronto city flag photo at left)We expect this will result in operating performance in line with that of fourth-quarter 2007 and a slight deterioration of the credit metrics during 2008. Performance below our expectations would create downward pressure on the ratings on Loblaw.
Media Contact:
Media Contact:
David Wargin,
New York
(1) 212-438-1579,
Analyst Contacts:
Maude Tremblay, CFA,
Maude Tremblay, CFA,
Toronto
(1) 416-507-2578
Lori Harris,
Toronto
(1) 416-507-2546
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