Loblaw Reports 2017 Fourth Quarter and Fiscal Year Ended December 30, 2017 Results(1)

BRAMPTON, ON, Feb. 22, 2018

"We delivered strong results in the fourth quarter and were pleased with our financial performance in 2017," said Galen G. Weston, Chairman and Chief Executive Officer, Loblaw Companies Limited.

"As our Company faces exceptional external headwinds in 2018, we are excited about our future and focused on meeting the changing needs of our customers. We remain committed to our financial framework and continued value creation for shareholders."

2017 FOURTH QUARTER HIGHLIGHTS

The following highlights include the impacts of the consolidation of franchises and disposition of gas bar operations.

• Revenue was $11,030 million, a decrease of $100 million, or 0.9%, compared to the fourth quarter of 2016.
• Retail segment sales were $10,718 million, a decrease of $127 million, or 1.2%, compared to the fourth quarter of 2016.
• The disposition of the Company's gas bar operations negatively impacted Retail sales growth by $350 million.
• Food retail (Loblaw) same-store sales growth was 0.5%, excluding gas bar operations.
• Drug retail (Shoppers Drug Mart) same-store sales growth was 3.6%, with pharmacy same-store sales growth of 3.9% and front store same-store sales growth of 3.5%.
• Operating income was $140 million, a decrease of $309 million, or 68.8%, compared to the fourth quarter of 2016.
• Operating income was negatively impacted in the fourth quarter of 2017 by charges related to the announcement of the PC Optimum Program, restructuring activities and the Loblaw Card Program.
• Net earnings available to common shareholders of the Company were $19 million, a decrease of $182 million, or 90.5%, compared to the fourth quarter of 2016. Diluted net earnings per common share were $0.05, a decrease of $0.45, or 90.0%, compared to the fourth quarter of 2016.
• Adjusted EBITDA⁽²⁾ was $1,013 million, an increase of $57 million, or 6.0%, compared to the fourth quarter of 2016.
• Adjusted net earnings available to common shareholders of the Company⁽²⁾ were $441 million, an increase of $48 million, or 12.2%, compared to the fourth quarter of 2016. Adjusted diluted net earnings per common share⁽²⁾ were $1.13, an increase of $0.16, or 16.5%, compared to the fourth quarter of 2016.
• Normalized for the disposition of gas bar operations, adjusted diluted net earnings per common share⁽²⁾ increased by approximately 20.0%.
• The Company repurchased 2.3 million common shares at a cost of $154 million in the fourth quarter of 2017. In 2017, the Company repurchased 16.2 million common shares at a cost of $1,139 million.
• In 2017, the Company invested $1,259 million in capital expenditures and generated $1,479 million of free cash flow⁽²⁾.
• The disposition of the Company's gas bar operations negatively impacted Retail adjusted EBITDA⁽²⁾ by approximately $20 million and diluted net earnings per common share growth by approximately $0.03 per common share. Gas bar operations were a low gross margin business compared to the Company's overall Retail segment.

See "News Release Endnotes" at the end of this News Release.

CONSOLIDATED RESULTS OF OPERATIONS