L CN
Loblaw Companies Ltd
Consumer, Event Driven/Special Sit
09/23/2013
Presented
| Date | 09/17/2013 |
| Price | CA$44.53 |
| Market Cap | $10.00B |
| Ent Value | $14.05B |
| P/E Ratio | 459.78x |
| Book Value | CA$31.02 |
| Div Yield | N/A |
| Shares O/S | 282.07M |
| Ave Daily Vol | 1,010,000 |
| Short Int | N/A |
Current
| Price | CA$177.55 |
| Market Cap | $43.11B |
| Loblaw Companies Limited operates as a food retailer; and provides drugstore, general merchandise, and financial products and services primarily in Canada and the United States. It operates in two segments, Retail and Financial Services. The company operates its owned stores under the Atlantic Superstore, Dominion, Extra Foods, Loblaws, Maxi, Maxi & Cie, Provigo, The Real Canadian Superstore, T&T Supermarket, and Zehrs banners; wholesale outlets under the Cash & Carry, Presto, and The Real Canadian Wholesale Club names; and franchised and affiliated stores under the Atlantic SaveEasy, Fortinos, Extra Foods, nofrills, SuperValu, valu-mart, Provigo, and Your Independent Grocer trade names. It operates approximately 1,000 corporate and franchised stores from coast to coast. The company also markets control label products in the food, health and beauty, apparel, and general merchandise categories under the President’s Choice, PC, no name, Joe Fresh, PC Organics, Blue Menu, PC black label, Club Pack, PC G.R.E.E.N, Exact, Teddy’s Choice, PC Home, and Everyday Essentials brand names. In addition, it provides financial products and services comprising the President’s Choice Financial MasterCard, an investment certificate product through the broker channel; personal banking services; deposit taking services; PC points loyalty program; home, auto, travel, and pet insurance; and gift card and mobile phone services, such as The Mobile Shop and PC Mobile. The company was incorporated in 1956 and is headquartered in Brampton, Canada. Loblaw Companies Limited is a subsidiary of George Weston Limited. |
Highlights
Loblaw has been the target of short sellers for some time, primarily because of the potential for margin compression due to increased competition from big box retailers like Wal-Mart and Target expanding their presence in Canada. However, the presenter believes the company’s stock is poised to perform well over the next year. Loblaw’s recently announced, $12.4 billion acquisition of Shoppers Drug Mart (Canada’s largest pharmacy chain) is transformational, and recently listed Choice Properties (which holds ~35 million square feet of Loblaw’s real estate) offers incremental upside, in his opinion. The corporate structure makes modeling Loblaw a challenge, and his work suggests there is material upside for investors who understand the company. His base sum-of-parts value for Loblaw’s shares is $60, and he outlined his thesis as follows:
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