George Weston Ltd.

The stable outlook on GWL reflects S&P Global Ratings' expectation that, absent any significant debt-financed transaction at Choice, GWL's consolidated adjusted debt-to-EBITDA ratio will be below 3x area through 2022. This reflects our assumption that Loblaw will continue to operate efficiently and protect margins against the backdrop of increased costs associated with the pandemic and continued competition from existing and new players in the food retail industry. We could lower our ratings on GWL if consolidated adjusted debt to EBITDA deteriorates to more than 3.75x, with poor prospects for improvement over a two-year period. We believe that such a scenario could occur if increased competition or operational missteps were to result in a declining EBITDA trend at Loblaw while Loblaw

...The company's subsidiary, Loblaw, will continue to benefit from an extended lockdown and a strong omni-channel strategy. Loblaw is Canada's largest retailer, with 1,098 corporate and franchise retail food stores and about 1,345 associate-owned Shoppers Drug Mart stores. As a subsidiary of George Weston Ltd. (GWL), it generates about 90% of GWL's adjusted consolidated EBITDA. With well-recognized banners, strong penetration of private label, and a well-developed omnichannel strategy, Loblaw has been well positioned to weather the pandemic. While increased consumption of food-at-home has led to higher grocery demand in the first half of 2021, S&P Global Ratings expects the trend will shift to restaurants following reduced restrictions and increased customer mobility in the second half of the year. Also, as shopping patterns begin to normalize, same-store sales at discount and conventional stores will stabilize while sales in the front-end of the pharmacy business should rebound. Loblaw has...

Full Report