The ratings on Toronto-based Loblaw Companies Ltd. reflect the company's position as the largest grocer in Canada with the leading market share in most regions, well-established controlled-label programs, and satisfactory operating cash flow generation. These strengths are partially offset by weaknesses in the company's supply chain and IT, contracting profitability margins, weak credit protection measures for the ratings, and challenging market conditions. While the ratings on Loblaw and George Weston Ltd. (BBB/Negative/--), which has a 62% equity interest in Loblaw, are currently the same, the rating relationship between the two remains one of linkage, not equalization, with each rating jointly influenced by the respective credit profiles. With Loblaw comprising a material portion of George Weston's consolidated earnings, the linkage between
