By David Friend, The Canadian Press
Loblaw Companies Ltd. (TSX:L) is cutting its management and administrative ranks by 275 employees as it tries to reduce expenses alongside its acquisition of Shoppers Drug Mart.
While Canada's largest grocer provided no details on the downsizing in a brief email response Wednesday, the company is continuing to grapple with heightened competition from fellow grocers and a consolidation of the industry.
It said the move was being made to streamline the organization and strengthen its competitive position.
Loblaw, which had 134,000 employees at the end of last year, did not give a breakdown on what areas of management would be affected.
It was also unclear if all or most of the job cuts would be at company headquarters in Brampton, Ont., or whether some of the cuts might involve retirements.
"This move is part of our commitment to becoming a more agile company better prepared to compete in the marketplace and with a continued focus on our customers' experience in our stores," said a statement emailed by spokeswoman Melinda Metcalfe.
"A key to our long-term success will be our steadfast commitment to managing administrative costs and improving processes while we continue to invest in strategies that focus on our customer and her needs and wants."
The company said the cuts will also eliminate duplication in its operations, a decision that comes ahead of its acquisition of Shoppers Drug Mart Corp. (TSX:SC.TO - News) for $12.4 billion, which still requires approval from the Competition Bureau later this year.
Canadian retailers have been bulking up their operations and trimming down their expenses in response to the heightened presence of U.S. retailers like Walmart, and the entry of Target Corp. into the country.
Others in the grocery industry have made moves similar to Loblaw, including Sobeys, which reached an agreement in June to buy the Canadian assets of U.S. grocer Safeway for $5.8 billion. The deal will expand its reach in key urban markets in Western Canada, and also still requires the approval of the Competition Bureau.
Loblaw is trying to lure away consumers from other U.S. companies like Whole Foods with a pilot store called Nutshell Live Life Well, a health food test store that will open in downtown Toronto this fall.
Loblaw president Vicente Trius told a Scotiabank conference last month that the increase of square footage, an industry barometer that uses retail floor space to gauge competitive pressure, has been on the upswing with the entry of U.S. retailers.
"Right now you have a consumer that's spending a little bit less,'' he said. "My gut feeling is this is going to level off, but you will have a very competitive environment'' for the next eight months, he added.