Canadian supermarkets are doing better than their U.S. and European counterparts in maintaining profit margins and credit quality, according to a Moody's analysis released Tuesday.
The credit rating agency does not usually look at the big three Canadian grocers — Loblaw Companies Ltd., Empire's Sobeys and Metro Inc. – but was asked for its opinion in the wake of Loblaw’s $12.4-billion merger with Shoppers Drug Mart and Sobey’s $5.8-billion acquisition of Canada Safeway.\
"Our main finding is that although the Canadians are smaller and less diverse, they have good margins and superior credit metrics," Moody’s said.
It had a generally beneficial view of the Loblaw's takeover, saying the company’s debt load will rise following the Shoppers deal, but should come down within two years. Loblaw will pay for Shoppers in cash and stock.
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