Supply chain problems and restructuring issues dented the first quarter earnings of Canadian retailer Loblaw, which dropped to C$140 million (US$126 million) compared to last year’s C$142 million. Although overall sales went up by 14 per cent to C$6.1 billion, same-store sales posted a 2.5 per cent drop.

Loblaw has recently streamlined its operations by cutting jobs, closing warehouses and replacing small distribution centres with bigger facilities. To compete with bigger rivals like Wal-Mart, the retailer also widened it general merchandise assortment of itsReal Canadian Superstore chain. But supply chain problems affected product distribution, which led to higher operating costs. Although food sales posted modest gains in the quarter the kinks in the supply chain affected sales of general merchandise. Loblaw expects the impact of the supply chain issues to ease off in the coming months.