Loblaw, Metro Earnings Show Trouble At The Grocery Till

What’s good for consumers is causing indigestion for grocery retailers.

Mounting competition from giant U.S. chains is forcing supermarkets to lower their prices, a trend that hit grocers Loblaw Cos. Ltd. and Metro Inc. in their latest financial quarter. Basic commodities such as corn and sugar have also fallen this year, meaning there is virtually no inflation pressure in food to help the bottom line.

That combination has sapped the earnings power of Loblaw, the country’s largest grocery chain, which said third-quarter profit dropped 29 per cent to $154-million and which lowered its 2013 forecast. Metro reported a larger-than-anticipated 40-per-cent drop in its fourth-quarter profit.

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