Loblaw will give more help to victims of Bangladesh tragedy; hikes dividend - Macleans.ca

Loblaw will give more help to victims of Bangladesh tragedy; hikes dividend


Loblaw Companies Ltd. is pledging more help to victims in the collapse of an illegally built factory in Bangladesh where some of its Joe Fresh clothing was made.

“I’m deeply shaken by the event as are our colleagues throughout our Joe Fresh and Loblaw business,” executive chairman Galen Weston said Wednesday.

More than 400 people died in the collapse and Loblaw has already said it will pay compensation to the victims and their families.

“Our thoughts and prayers continue to go out to those who were injured and to all of the families who have lost loved ones,” Weston told a conference call.

“We have taken action to address the situation, including the announcement of a fund to provide relief to victims of this tragedy. There is more we will do and we will make that public over the next few days.”

Also on Wednesday, Loblaw (TSX:L) reported a 40 per cent increase in first-quarter profits and raised its dividend just over nine per cent.

“This performance instills in the board of Loblaw the confidence to increase the dividend for the second time in less than six months,” Weston told financial analysts.

The quarterly dividend will increase to 24 cents per common share from 22 cents. Based on the stock’s closing price Tuesday of $42.75, that would produce an annual yield of just under 2.25 per cent.

RBC Capital Markets analyst Irene Nattel called the dividend increase a “positive surprise,” given that Loblaw had also increased it in its third-quarter of 2012.

Canada’s largest supermarket operator said it earned $171 million or 61 cents per share, up from $122 million or 43 cents in the year-earlier period.

Revenue rose to $7.2 billion from $6.94 billion.

Loblaw also said it expects to file a preliminary prospectus for its real estate investment trust in late May and complete an initial public offering in early to mid-July.

The REIT would operate as a subsidiary of Loblaw and would see Canada’s biggest supermarket operator contribute real estate assets with a current market value of more than $7 billion to the venture.

Senior investment adviser Allan Small of DWM Securities said the REIT will contribute to Loblaw earnings.

“That’s a key driver,” Small said. “The real estate alone that their buildings sit on is worth a certain amount in terms of earnings per share.”

RBC’s Nattel noted that Loblaw’s quarterly results look like the company is turning a corner.

“Loblaw’s Q1 financial results suggest that the heavy lifting done over the past several is finally paying off, with same-store sales growth of 2.8 per cent, the best print in several years,” Nattel said in a research note.

Same-store sales refer to stores that have been open for at least a year.

Despite the strong start to the year, Nattel said the tone of Loblaw’s outlook for 2013 remains cautious due to a number of factors such as intense competition.

Loblaw president Vicente Trius said Loblaw will launch PC Plus on Friday in Ontario Loblaw stores, an all-digital retail loyalty program that’s expected to appeal to more customers.

Trius added there hasn’t been an impact on Loblaw stores near Walmart or Target stores that opened last year.

“We prepared on all of those stores before those Zellers stores reopened as a Target or Walmart. That strategy was led by food and fresh… and improved customer experience.”

Loblaw operates 22 different banners, including Independent, Zehrs, Superstore, Wholesale Club, Value-mart, No Frills, Maxi, Loblaws and Provigo.

Shares in Loblaw were up 4.9 per cent, or $2.10, at $44.85 in noon trading Thursday on the Toronto Stock Exchange.

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Loblaw will give more help to victims of Bangladesh tragedy; hikes dividend

  1. Shameful day for Canada indeed, all because of Corporate greed and their “shareholdfers”.

    How will the “greed” of Galen Weston and their shareholders replace the “murder” of the over 400 lives in Bangledash ?

    The wives and children of those dead want ALL the Owners, .., resposible, to be charged with murder and hung.

    Well, maybe we really should do the right thing here, and now. !

    Finally, canadians everywhere get to see the “Fruits Of Outsourcing”.

    It’s also absolutely unbelievable that galen quickly said:”…we’ll still make all our clothes there…”
    wow, I guess even Human lives’ can not even stop the “March of Profits”, …

    Hey Weston !,

    why don’t you just charge a bit more and you could have had all your “Joe Fresh” products made right here in Canada, creating hundred’s of canadian jobs. God knows we have enough Canadians-East-Indians to make them right here in Canada for you.

    Oh wait a minute, You’re right ! how could you ever make thousand% profit by doing that ?

    I mean, that would actually mean you’d have to provide “safe” working conditions, “decent” canadian-wages, …

    Every single Canadian should think before ever shopping at any Loblaws today.
    Weston and his greedy cohorts should simply be charged.

    • Yes, because you would prefer the other factory workers to starve to death or become prostitutes rather than working at the factory again? Yes these conditions are awful and this situation is not right, but it would be real people that would be hurt if everyone suddenly stops buying Joe Fresh clothing.

    • Most of the merchandise in Canadian stores is made by cheap labour abroad. This is not just Loblaw’s fault. They are responding, as are all retailers, to the demand for cheap products. How much stuff in a Dollar Store is made in North America? Almost nothing! I think Weston’s handled this well. This has more to do with the absence of laws in 3rd world countries that should protect workers. It will require a concerted effort by retailers on this side of the ocean to insist on worker safety or take their business elsewhere. Then we will have to see if graft & corruption to skirt those regulations will prevail. Remember, the poor have no power, particularly over there. They deserve better but removing the jobs for now is not the answer. Let’s wait to see how Bangladesh authorities respond to demands from retailers here.