Loblaw announces major international Joe Fresh expansion; 120 stores in 4 years

Published: February 20, 2014

A Joe Fresh garment made in Bangladesh is shown at a Loblaws outlet in Montreal, Thursday, April 25, 2013. THE CANADIAN PRESS/Graham Hughes

LINDAY NGUYEN
THE CANADIAN PRESS

Grocery giant Loblaw Companies Ltd. (TSX:L) is bringing its Joe Fresh discount clothing line overseas in a major expansion that will target fashionistas in key growth markets like the Middle East and North Africa.

The company said Thursday the rollout includes the addition of 120 Joe Fresh stores in 25 countries, including South Korea and eastern Europe over the next four years.

“This is representative of what has been a long-standing belief on our part that there is an international level of opportunity for the Joe Fresh brand,” said Galen G. Weston, the company’s executive chairman.

Currently, Loblaw sells the apparel brand at more than 300 locations inside its Canadian supermarkets, and in 12 stand-alone and studio stores. It also has six locations in New York and New Jersey.

The clothing line is already available in J.C. Penney stores in the U.S., but Weston said the deal hasn’t gone according to plan due to restructuring and leadership changes at the struggling U.S. retailer.

“It obviously hasn’t gone like we hoped that it would,” he said. “But we are comfortable they are committed to some lower volumes but to a sustained relationship with Joe Fresh so we continue to be optimistic about that.”

Last year, tragedy overshadowed the clothing brand after a factory in Dhaka, Bangladesh, that produced Joe Fresh clothing collapsed, killing 1,100 people. Loblaw responded to the accident by providing financial compensation for workers and dependents of the company who made the clothing.

Meanwhile, Loblaw president Vicente Trius said Loblaw will also be expanding its e-commerce platform this year by running a test pilot on a “click-and-collect” option for groceries at three of its Toronto locations.

This online strategy, which has been gaining popularity in the U.K., will allow customers to purchase food online and pick up their order at the store.

Earlier Thursday, Loblaw reported better fourth-quarter financial results than analysts were expecting.

The company had $183 million or 65 cents per share of adjusted net earnings in the quarter, down 1.1 per cent from a year earlier but 10 cents above the general estimate. Revenue was up 2.3 per cent to $7.64 billion, also better than expected.

Same-store sales, an important measure in the retail industry, edged up 0.6 per cent compared with a year earlier.

Trius said it was important to note that same-store sales, from locations open at least a year, benefited from the timing of the Thanksgiving holiday but were hurt by an ice storm in Eastern Canada and a strike in Alberta.

Analysts had estimated 55 cents of adjusted earnings and less than $7.6 billion of revenue in the fourth quarter, according to Thomson Reuters.

Among the fastest growing sources of revenue for Loblaw was its Presidents Choice financial services segment, which contributed $204 million in the quarter, up 15.9 per cent from a year earlier. Since launching its PC Plus program In November, the company said it has signed up more than four million users.

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