Toronto, May 5 - Loblaw Companies posted a 73 percent jump in first-quarter profit on Tuesday as it benefited from rising food price inflation and an extra week of sales, sending its shares up more than 5 percent.
Canada's biggest grocery store chain earned C$109 million ($93.1 million), or 40 Canadian cents a share for the quarter ended March 28, up from a profit C$63 million, or 23 Canadian cents a share for the same time last year.
Revenue rose 2.9 percent to C$6.72 billion.
Analysts were expecting an average EPS of 35 Canadian cents before items and revenue of C$6.73 billion, according to Reuters Estimates.
Shares of the company rose 5.7 percent to C$34.70 on the Toronto Stock Exchange.
The supermarket chain -- which operates more than 1,000 stores across the country, made gains on higher food prices as well as a recession-driven shift in consumer trends toward simpler, less expensive meals and away from restaurant visits and high-end goods.
But a costly and prolonged revamp of its computer systems still bit into results. The company said it spent about $23 million on the upgrades during the quarter.
The company said its same-store sales, a figure that tracks the performance of stores open for at least a year, rose 2.1 percent, helped by higher prices and increased sales volumes. This was slightly weaker than the 2.8 percent same store sales growth it achieved for the same quarter last year.
"Obviously inflation and food prices are helping on that same store sales number and we do expect that will not be as prominent in the back half, but they are definitely benefiting a little bit," said Brian Yarbrough, an analyst at Edward Jones in St. Louis.
"I'm not sure how it will last. I would expect after the second quarter they will start not seeing as much of a positive impact from inflation."
Loblaw said its revenue and same stores sales were impacted by the shift of the key Easter holiday into the second quarter of this year and a strike at some of its Quebec-based stores
Operating margin, which measures its operating efficiency and price strategy, was 3.4 percent, up from 2.4 percent.
"Along with the rest of the food retail industry, our results have benefited from food price inflation," Galen G. Weston, executive chairman, said in a release.
"We remain cautious and prepared for continuing challenges through 2009, as inflation could unwind and economic conditions remain volatile."