Price pressure hurts Loblaw earnings

Shares of Loblaw Companies Ltd. touched a new 52-week lowbefore reboundingon Thursday after the company reported fourth-quarter results that missed Bay Street expectations.

The grocery store chain posted adjusted earnings, which factor out one-time items, of 43 cents a share. The consensus forecast of analysts was for a profit of 56 cents a share. In the same quarter the previous year, Loblaw's adjusted earnings per share came in at 58 cents.

Loblaw shares slipped seven cents to end at $30.73 onthe TSX. The stock touched a one-year low of$29.52.

The company posted a net profit for the quarter of $40 million, or 14 cents a share, compared to a loss of $756 million, or $2.76 a share, a year earlier, which included an $800-million goodwill impairment charge.

Sales at the company rose 2.7 per cent to $6.97 billion from $6.78 billion.

However, the company said its gross margin declined approximately $60 million from last year, mainly due to price reductions and changes in sales mix. Loblaw has been facing stiff competition and has been cutting prices in response.

"Sales volumes have been positively responding to our investments in lower prices to give value to our customers," the company said in a release.

"We expect this to continue in 2008. Investments in price will also continue. However, we expect that cost reductions in 2008 will help to support our profitability," the firm said.