Loblaw’s Provigo closing’ Provigo and Maxi supermarkets in Quebec

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This article was published 16/11/2006 (6872 days ago), so information in it may no longer be current.

MONTREAL (CP) – Provigo Inc. will close’ money-losing Provigo and Maxi supermarkets in Quebec as it tries to improve its profitability in the province and minimize job losses as its parent, Loblaw Cos. Ltd. (TSX:L), struggles with wider problems.

In Quebec, the- Provigo and six discount Maxi stores will close in early 2007.

“We believe these stores are unprofitable,” Loblaw spokesman Geoff Wilson said Thursday. “We want to move forward with strong profitable stores and we believe that business in Quebec will be much better because of these decisions.”

A Provigo spokeswoman said late Thursday the stores are mainly located off the island of Montreal.

Provigo stores slated to close are in Amos, Beauport, Carleton, Dolbeau, L’Ancienne-Lorette, Mascouche, Matane, Repentigny, Rock Forest, St-Donat, Ste-Marthe-sur-le-lac and Thetford Mines, said Josee Bedard, a Provigo spokeswoman.

Two Montreal-area Maxi stores are affected as are stores in Granby, Rimouski, Shawinigan-Sud, Longueuil and St-Jean-de-Matha.

Bedard could not confirm how many employees will be cut. She said the’ stores employ about 500 people and some of them could still remain with the chain in other places.

The decision to close the’ stores is expected to cost Provigo parent Loblaws around $40 million.

Provigo and its franchisees and partners employ nearly 30,000 people in Quebec.

Wal-Mart’s long-anticipated emergence as a full-service player in the Canadian grocery business, which began last week in Ontario, is expected to change the competitive landscape.

“We don’t talk about any one competitor,” Wilson said. “Clearly, some of the initiatives and actions we are undertaking to make our business stronger are gearing us and preparing us for the future so that we can withstand any competitive threat.”

Wilson also said efforts are being made to minimize the number of job losses.

“We are going to attempt to redistribute our employees affected the best we can. We want to minimize job losses. We’re trying to move our employee base around. Any employees that we have to part ways with, we would be looking after as we always do.”

A spokesman with the United Food and Commercial Workers Canada Local 500 was surprised by the scope of the closures.

“It’s not unusual to see stores closing, but’ in the province is a lot of stores,” said Antonio Filato.

He said his local represents nine of the’ stores slated to close, touching 400 unionized employees alone.

Filato said the supermarket industry is changing with a trend toward larger and larger stores “but Wal-Mart is having an effect, I’m sure.”

Filato said the union will work to get the affected employees into other stores in the chain and help negotiate severance packages.

Loblaw Cos. also said Thursday it will close 24 wholesale outlets affected by Imperial Tobacco’s change to in-house distribution.

Executive chairman Galen Weston Jr., son of controlling shareholder Galen Weston of George Weston Ltd. (TSX:WN), said the company is simplying its structure.

“And we’re closing the unprofitable elements of our stores. The way to think about the work that’s being done is that we’ll start to build and get to where we need to be in approximately three years.”

Loblaw earned $203 million or 74 cents per share in the 16 weeks ended Oct. 7, up from year-ago $192 million or 70 cents per share. Sales increased 4.6 per cent to $9.01 billion.

The company said earnings excluding one-time items were 90 cents per share. Analysts were expecting EPS of 88 cents, according to Thomson Financial.

The Provigo, L’intermarche, Axep, Maxi, Maxi & Cie and Loblaws banners are present in every region of Quebec through their network of more than 400 stores.

Shares in Loblaw Cos. closed at $47.32, up $2.40, Thursday on the Toronto Stock Exchange.