CORRECTED-UPDATE 1-Canadian grocer Loblaw to close 52 unprofitable stores

(Corrects title of Karabus in paragraph 6)
July 23 (Reuters) - Loblaw Cos Ltd L.TO , Canada's largest
food retailer, said it would close 52 unprofitable stores
following a review of its 2,300 grocery and other locations
launched last year.
Loblaw's shares rose as much as 4 percent to C$70.42 on the
Toronto Stock Exchange on Thursday after the company also
reported a slightly better-than-expected profit on cost savings
from its acquisition of Shoppers Drug Mart in 2014.
Despite the closures, Loblaw will increase its network this
year, President and Executive Chairman Galen Weston said on a
post-earnings call.
Apart from its namesake stores, Loblaw's banners include No
Frills and Wholesale Club as well as Shoppers Drug Mart.
Loblaw said in March it would invest more than C$1.2 billion
($920 million) in Canada this year to open more than 50 stores
and renovate more than 100. ID:nL4N0WB3OE
"It's better to cut your losses and move on, and I suspect
that's what they've done," said Antony Karabus, chief executive
officer at HRC Advisory.
Loblaw is facing increasing competition in its grocery
business from Wal-Mart Stores Inc WMT.N as well from as
domestic rivals such as Sobeys Inc SOBEF.UL , owned by Empire
Co Ltd EMPa.TO , and Metro Inc MRU.TO .
Its pharmacy business has also been hurt by price-controls
imposed on generic drugs, aimed at cutting costs for government
and private health programs.
"Looking ahead, the grocery industry remains highly
competitive and healthcare reform continues to put pressure on
our pharmacy business," Weston said in a statement.
ID:nCNWcbjVNa
The store closures will reduce sales by about C$300 million
a year but add about C$35-C$40 million to operating income,
Loblaw said. It did not specify which stores would close.
The company said the closures and related charges would
amount to about C$120 million, of which about $45 million was
recorded in the second quarter ended June 20. About C$70 million
will be recorded in the current quarter.
Excluding items, Loblaw earned 85 Canadian cents per share
in the second quarter, beating analysts' average estimate of 83
Canadian cents, according to Thomson Reuters I/B/E/S.
Revenue rose 2 percent to C$10.54 billion, short of the
average estimate of C$10.61 billion.
($1 = C$1.2973)