Loblaw Companies, a corporation that recorded a second-quarter profit of $185 million and currently operates over 2,300 stores, will close 52 unprofitable locations across Canada over the next year.
President and executive chairman Galen Weston Jr. said the decision is part of finding efficiencies in the face of slowed growth. In a typical year, only 10 to 15 Loblaw locations are closed.
Despite quadruple the amount of stores shutting down, the closures will only affect one per cent of the company’s total retail square footage.
Though a sound business decision – annual sales will drop by roughly $300 million a year, but will result in a $35 million to $40 million improvement in its operating income – some are criticizing the company’s lack of commitment to the communities in which it operates.
“Time and again, these big retailers…reorganize, reconfigure their locations, clean up house,” says Mandeep Malik, an assistant professor of marketing at McMaster University. “In my perspective, they’re just closing down a handful of underperforming stores and probably reassigning monies to intensely populated, core-urban markets.”
The closures will affect all banners and formats of Loblaw Companies Ltd., including Loblaws supermarkets, Joe Fresh, Shoppers Drug Mart, Provigo, and Extra Foods.