The ratings on Loblaw Companies Ltd. (Loblaw) reflect its leading Canadian market position, consistent operating performance and very strong cash flow generation, a high-quality store portfolio, and a powerful controlled-label program. These factors are partially offset by the company's high leverage for the rating given a very aggressive capital expenditure program and continued competitive operating environment in Canadian food retailing. Loblaw's above-average business risk profile reflects its leading regional market shares, as well as its scale. Fiscal 2004 sales of C$26.2 billion are sizable by North American standards and more than double those of the company's nearest national competitor, Sobeys Inc. (BBB-/Stable/--). Loblaw successfully operates a multiple-banner portfolio strategy catering to specific markets based on location demographics, market ethnicity, and
