The ratings on Loblaw Companies Ltd. (Loblaw) reflect its leading Canadian market position, consistent operating performance, a high-quality store portfolio, and a powerful controlled-label program. These factors are offset by the company's increasing leverage that is high for the current ratings category, its somewhat limited geographic growth potential in Canada, and a very aggressive capital expenditure program. Loblaw's above-average business risk profile reflects its leading regional market shares, as well as its scale. Fiscal 2003 sales of C$25.2 billion are sizable by North American standards and more than double those of the company's nearest national competitor, Sobeys Inc. Loblaw operates a multiple-banner portfolio strategy catering to specific markets based on location demographics, market ethnicity, and average income levels. The ratings
