Loblaw Cos. Ltd.

The stable outlook on Loblaw reflects S&P Global Ratings' expectation that consolidated adjusted debt-to-EBITDA will be in the low-to-mid 3x area for parent George Weston Ltd. (GWL) over the next two years, supported by Loblaw's steady profitability. Our rating on Loblaw, which is considered a core member of the GWL group, is limited by our assessment of GWL's group credit profile (GCP) that is determined by the consolidated business and financial risk assessments. We expect Loblaw to maintain debt-to-EBITDA at about 2.75x over the next two years, on a stand-alone basis. We could lower our rating on Loblaw within the next two years if we lower our issuer credit rating on GWL. We could revise downward our stand-alone credit profile

...The largest Canadian food retailer with strong banners and large store portfolio. With 1,086 corporate and franchise retail food stores, along with about 1,344 associate-owned Shoppers Drug Mart stores across Canada, Loblaw Cos. Ltd. has significant geographic diversity with about 30% of the Canadian food market share. At the same time, with well-recognized banners, strong penetration of private label, and retail food stores ranging from discount (45% of stores) to conventional formats, Loblaw is able to service the full spectrum of customers, in S&P Global Ratings' opinion. Shopper's Drug Mart sells higher-margin general merchandise and beauty products that, along with cross-selling of private-label products (President's Choice, No Name), benefits both Loblaw's revenue and EBITDA. Pandemic-driven shopping trends continue to support Loblaw's topline growth. With social distancing and countrywide stay-at-home mandates, consumers initially focused on pantry loading, which elevated Loblaw's...

Full Report