The ratings on Toronto-based grocery and general merchandise retailer Loblaw Companies Ltd. reflect the company's leading Canadian market position, its historically consistent operating performance, a high-quality store portfolio and a powerful controlled-label program. These factors are offset by the company's high leverage for the ratings and a very competitive operating environment in Canadian food retailing, exacerbated by recent supply chain restructuring and systems conversions challenges. Loblaw's strong business risk profile reflects its leading regional market shares and a high-quality store portfolio. Loblaw's 2005 sales of C$27.8 billion are sizable by North American standards and more than double those of its two nearest national competitors, Sobeys Inc. (BBB-/Stable/--) and Metro Inc. (BBB/Negative/--). Loblaw operates a multiple-banner portfolio strategy catering to specific
