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 weak credit ratios for the ratings and declining profitability due to heavy price discounting in central Canada, exacerbated by recent supply chain restructuring challenges. Loblaw recently installed a new senior management team and has developed a three-year renewal plan, "Formula for Growth," which focuses on positioning the business to succeed in the long term. Management is addressing the many challenges Loblaw faces in its efforts to successfully combine food and general merchandise retailing. Elements of the renewal plan include
