Loblaw Companies Limited Provides Preliminary Unaudited Financial Update for the 2007 Fourth Quarter and Fiscal Year Ended December 29, 2007.(1)



    BRAMPTON, ON, February 7, 2008 /CNW/ - Loblaw Companies Limited (TSX: L)
("Loblaw" or the "Company") today is providing a financial update for the
fourth quarter of 2007 and the fiscal year ended December 29, 2007, based on
management's review of preliminary unaudited results for these periods. The
financial results for the fourth quarter of 2006 are unaudited.

    
    Fourth Quarter Highlights

    For the periods ended
     December 29, 2007
     (unaudited) and
     December 30, 2006

                        --------                  ---------
    ($ millions except     2007     2006              2007      2006
     where otherwise        (12      (12               (52       (52
     indicated)           weeks)   weeks) Change     weeks)    weeks) Change
    -------------------------------------------------------------------------
    Sales               $ 6,967  $ 6,784    2.7%  $ 29,384  $ 28,640    2.6%
    Operating income
     (loss)                 134     (695) 119.3%       736       289  154.7%
    Net earnings (loss)      40     (756) 105.3%       330      (219) 250.7%
    Basic net earnings
     (loss) per common
     share ($)             0.14    (2.76) 105.1%      1.20     (0.80) 250.0%
    -------------------------------------------------------------------------
    Same-store sales
     increase (%)          2.6%     1.3%              2.4%      0.8%
    Adjusted EBITDA(2)      349      414  (15.7%)    1,589     1,892  (16.0%)
    Adjusted operating
     income(2)              221      286  (22.7%)    1,034     1,326  (22.0%)
    Adjusted operating
     margin(2)             3.3%     4.4%              3.7%      4.9%
    Adjusted basic net
     earnings per common
     share(2) ($)          0.43     0.58  (25.9%)     2.05      2.72  (24.6%)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                        --------                  ---------

    -   Same-store sales increased 2.6% during the quarter compared to last
        year.

    -   Internal retail food price deflation is estimated at 1.6%.

    -   Sales volume based on retail units sold increased 3.6% during the
        quarter compared to last year.

    -   Gross margin declined approximately $60 million from last year, which
        represents 0.9% of sales, primarily due to targeted price reductions
        to provide value to customers and changes in sales mix partially
        offset by improvements in shrink.

    -   A non-cash fixed asset impairment charge of $33 million was
        recognized in the fourth quarter related to specific store locations.

    -   A non-cash loss on equity forwards of $55 million was recognized
        resulting from a decline in the Company's share price during the
        fourth quarter of 2007.

    -   Free cash flow(2) for 2007 is anticipated to be in the range of
        $375 million to $450 million compared to $70 million in 2006.

    (1) This News Release contains forward-looking information. See Forward-
        Looking Statements of this News Release for a discussion of material
        factors that could cause actual results to differ materially from the
        conclusions, forecasts and projections herein and of the material
        factors and assumptions that were applied in presenting the
        conclusions, forecasts and projections presented herein. This News
        Release must be read in conjunction with Loblaw Companies Limited's
        filings with securities regulators made from time to time, all of
        which can be found at www.sedar.com and at www.loblaw.ca.
    (2) See Non-GAAP Financial Measures of this News Release.
    

    Business Update
    ---------------
    The fourth quarter concluded a year of transformational change, amidst
intense competition and consequent pressure on earnings. Despite these
challenges, progress was made on our multi-year turnaround plan. This quarter
provided indications of progress towards Making Loblaw the Best Again, with
encouraging advances in the Company's four major initiatives, Project
Simplify, Fix the Basics, optimizing the Real Canadian Superstore ("RCSS")
banner, and Credit for Value.
    In the fourth quarter we completed Project Simplify, our plan to improve
effectiveness through clearer accountabilities and centralization where it
counts. We begin 2008 with the structure and processes of a truly national
retailer, enabling Loblaw to leverage its scale for the first time. Our focus
now is on stabilizing the business and improving execution at stores,
distribution centres and store support centres.
    Fix the Basics is our strategy to be known once again as one of the
world's best retailers and to have industry-leading availability and a
world-class supply chain. During the fourth quarter we tested and started to
implement several of our Fix the Basics store performance improvements. 233 of
our highest sales stores are now running our new Always Available program.
Stores that have fully implemented this program have improved availability
within range to achieve our in-stock food target for these stores. Our new
produce shrink reduction processes are driving shrink to levels below last
year. We have implemented national standards for front-end customer experience
and have improved our productivity in items per minute scanning rate.
    The Milton Superstore pilot continues to help us identify both general
merchandise and food productivity improvements that will be selectively rolled
out to other existing Superstores where we can achieve the appropriate return
on capital. Our Great Food pilots are similarly identifying in-store operating
improvements and fresh enhancements, especially in produce. Once fully tested,
these results will also be rolled out as appropriate to our existing store
base.
    Credit for Value is our strategy to lower retail prices to deliver
excellent value to customers and to ensure they recognize the benefit of lower
prices in our stores where it matters. Our continued investment in pricing was
a significant factor in the fourth quarter. We believe our commitment to lower
prices is sustainable, will provide value to our customers and improve our
competitiveness. Our pricing investments helped us to retain retail price
levels comparable to or better than those of our local benchmark competitors
in Hard Discount and Superstore formats across Canada during the fourth
quarter.
    We consider price investments to be a major factor in driving our
same-store sales and market share growth in the fourth quarter of 2007. Price
investments will continue to be made in 2008. However, we expect that cost
reductions in 2008 will help to support our profitability. Costs remain a
critical focus for management. Our actions show that we are committed to
driving costs out of our business. We have made some progress but we need to
make more.

    Results of Operations
    ---------------------

    Sales

    Total sales for the fourth quarter of 2007 increased $183 million, or
2.7%, to $6.97 billion compared to $6.78 billion in the fourth quarter of
2006. Sales volume based on retail units sold grew by 3.6% in the fourth
quarter compared to the same period last year. Same-store sales increased by
2.6%. Total sales excluding the impact of tobacco sales and variable interest
entities(1) increased by 2.9%.
    Total sales increases in the fourth quarter of 2007 were achieved by
positive growth in both item and customer counts despite internal food price
deflation. Total sales increases were realized in Ontario, Quebec and western
Canada. Total sales increased in food and drugstore while general merchandise
sales were lower because of the intentional restriction of inventory as we
continued to work on optimizing inventory controls, product mix and markdown
strategies.


    
    Total Sales and Sales Excluding the Impact of Tobacco Sales and VIEs(1)

    For the periods ended
     December 29, 2007
     (unaudited) and
     December 30, 2006

                               ----------              ----------
                                    2007        2006        2007        2006
    ($ millions)               (12 weeks)  (12 weeks)  (52 weeks)  (52 weeks)
    -------------------------------------------------------------------------
    Total sales                 $  6,967    $  6,784    $ 29,384    $ 28,640
    Less:
      Sales attributable to
       tobacco sales                 219         242       1,013       1,423
      Sales attributable to
       the consolidation of VIEs     108          92         456         383
    -------------------------------------------------------------------------
    Sales excluding the impact
     of tobacco sales and
     VIEs(1)                    $  6,640    $  6,450    $ 27,915    $ 26,834
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                               ----------              ----------


    Sales Growth and Same-Store Sales Growth

    For the periods ended
     December 29, 2007
     (unaudited) and
     December 30, 2006

                               ----------              ----------
                                    2007        2006        2007        2006
    (percentage)               (12 weeks)  (12 weeks)  (52 weeks)  (52 weeks)
    -------------------------------------------------------------------------
    Total sales growth              2.7%        3.5%        2.6%        3.7%
    -------------------------------------------------------------------------
    Less:
      Impact on sales growth
       attributable to tobacco
       sales                       (0.4%)      (2.0%)      (1.7%)      (1.2%)
      Impact on sales growth
       attributable to the
       consolidation of VIEs        0.2%       (0.2%)       0.3%       (0.1%)
    -------------------------------------------------------------------------
    Sales growth excluding the
     impact of tobacco sales and
     VIEs(1)                        2.9%        5.7%        4.0%        5.0%
    -------------------------------------------------------------------------
    Same-store sales growth         2.6%        1.3%        2.4%        0.8%
    -------------------------------------------------------------------------
    Same-store sales growth
     excluding the impact of
     decreased tobacco sales(1)     2.7%        3.3%        3.4%        2.0%
    -------------------------------------------------------------------------

                               ----------              ----------

    The following factors explain the major components in the change in fourth
quarter sales over the prior period:
    -   continued sales growth in the Real Canadian Superstore banner in
        Ontario;
    -   national food price inflation as measured by "The Consumer Price
        Index for Food Purchased from Stores" ("CPI") was 0.8% for the fourth
        quarter of 2007 compared to approximately 1.5% in the same period of
        2006. This measure of inflation does not necessarily reflect the
        effect of inflation on the specific mix of goods offered in Loblaw
        stores. The Company's analysis indicates that it had internal retail
        food price deflation of approximately 1.6%;
    -   positive volume growth of 3.6% based on retail units sold; and
    -   8 new corporate and franchised stores were opened and 8 were closed
        during the fourth quarter resulting in a net increase of
        0.1 million square feet, or 0.1%, compared to the third quarter of
        2007.

    Sales for 2007 increased $744 million, or 2.6%, to $29.38 billion compared
to $28.64 billion in 2006. Total sales excluding the impact of tobacco sales
and VIEs(1) increased by 4.0%. The following factors in addition to the
quarterly factors mentioned above further explain the change in full-year
sales over 2006:
    -   same-store sales growth excluding the impact of decreased tobacco
        sales increased 3.4%. In the third quarter of 2006, a major tobacco
        supplier commenced shipping directly to certain customers of our
        cash & carry and wholesale club network, adversely impacting sales.
        This loss of sales affects comparisons to 2006 for the first
        three quarters of 2007;
    -   national food price inflation as measured by "The Consumer Price
        Index for Food Purchased from Stores" ("CPI") was 2.7% for 2007
        compared to approximately 2.3% in 2006. The Company's analysis
        indicates that its internal retail food price inflation for 2007 is
        approximately 1.3% compared to last year;
    -   positive volume growth of 1.9% based on retail units sold; and
    -   34 new corporate and franchised stores were opened and 79 stores were
        closed, including 46 stores that were closed as part of a
        previously announced store operations restructuring plan, and stores
        which underwent conversions and major expansions. Net retail square
        footage decreased 0.1 million square feet, or (0.2%), in 2007 from
        year end 2006.

    Operating Income

    Operating income of $134 million for the fourth quarter of 2007 increased
by $829 million, or 119.3%, compared to an operating loss of $695 million in
2006. Operating margin was 1.9% compared to (10.2%) in the fourth quarter of
2006. The 2006 operating loss was affected by an $800 million non-cash
goodwill impairment charge related to the goodwill associated with the
acquisition of Provigo Inc. in 1998.
    In the fourth quarter of 2007, the Company recognized the following in
operating income:
    -   charge of $29 million (2006 - nil) related to Project Simplify
        involving restructuring and streamlining of merchandising and store
        operations. Costs comprised $19 million for employee termination
        benefits including severance, additional pension costs resulting from
        the termination of employees and retention costs; and $10 million of
        other costs, primarily consulting;
    -   charge of $7 million (2006 - nil) in connection with the previously
        announced plan to restructure the Company's supply chain network;
    -   nil (2006 - $35 million) in connection with the previously announced
        closure of certain stores in the Quebec and Atlantic markets and in
        the wholesale network that were part of the store operations
        restructuring activities;
    -   charge of $52 million (2006 - income of $6 million) for the net
        effect of stock-based compensation and the associated equity
        forwards. The majority of the expense in the fourth quarter of 2007
        included a non-cash loss on equity forwards of $55 million
        (2006 - income of $10 million) resulting from a decline in the
        Company's share price during the fourth quarter of 2007. At the end
        of fourth quarter of 2007, the Company had cumulative equity forwards
        to buy 4.8 million (2006 - 4.8 million) of its common shares;
    -   charge of $3 million (2006 - $68 million) from the previously
        announced liquidation of excess general merchandise inventory in the
        fourth quarter of 2006. The liquidation was completed as expected in
        the fourth quarter of 2007;
    -   income of $4 million (2006 - nil) resulting from the consolidation of
        VIEs;
    -   nil (2006 - charge of $800 million) for a non-cash goodwill
        impairment charge related to the goodwill established on the
        acquisition of Provigo Inc. in 1998; and
    -   nil (2006 - charge of $84 million) related to the ratification of a
        new four-year collective agreement with members of certain Ontario
        locals of the UFCW.

    After adjusting for the above-noted items, adjusted operating income(1) in
the fourth quarter of 2007 decreased by $65 million, or 22.7%, to $221 million
compared to $286 million in the fourth quarter of 2006. Adjusted operating
margin(1) decreased to 3.3% in the fourth quarter of 2007 compared to 4.4% in
2006 as growth in operating expenses exceeded growth in sales. Adjusted EBITDA
margin(1) decreased to 5.3% from 6.4% in 2006.
    In addition, adjusted operating income(1) in the fourth quarter of 2007
was influenced by the following items:
    -   gross margin declined approximately $60 million from 2006, which
        represents 0.9% of sales, primarily due to targeted price reductions,
        to provide value to customers and drive same-store sales and sales
        volumes, and changes in sales mix partially offset by improvements in
        shrink;
    -   incremental consulting costs compared to the prior year, other than
        those in connection with Project Simplify, amounted to $12 million
        including expenses related to new supply chain and information
        technology improvement initiatives of $6 million;
    -   a gain of $11 million from the sale of an office building in
        Calgary, Alberta; and
    -   incremental non-cash fixed asset impairment charge of $9 million
        related to asset carrying values in excess of fair values at specific
        store locations. The charge in the fourth quarter of 2007 was
        $33 million compared to $24 million in the fourth quarter of 2006.

    Gross margin percentage continued to decline in the fourth quarter of 2007
as a result of the Company's continued investment in lower prices, as part of
its Credit for Value initiative, to drive same-store sales growth in a
targeted manner across the country. Sales increases in the quarter were
insufficient to offset margin declines. The Company continues to experience
higher store labour costs due to marketplace pressures and achieved reduced
inventory shrink expenses in the fourth quarter of 2007 compared to the same
quarter last year.
    The following table outlines items which were excluded in arriving at
adjusted operating income(1), adjusted operating margin(1), adjusted
EBITDA(1), and adjusted EBITDA margin(1):


    For the periods ended
     December 29, 2007
     (unaudited) and
     December 30, 2006

                               ----------              ----------
                                    2007        2006        2007        2006
    ($ millions)               (12 weeks)  (12 weeks)  (52 weeks)  (52 weeks)
    -------------------------------------------------------------------------
    Net earnings (loss)         $     40    $   (756)   $    330    $   (219)
    Add (deduct) impact of the
     following:
      Minority interest                8          (1)          4           1
      Income taxes                    27           2         150         248
      Interest expense                59          60         252         259
    -------------------------------------------------------------------------
    Operating income (loss)          134        (695)        736         289
    Add (deduct) impact of the
     following:
      Net effect of stock-based
       compensation and the
       associated equity
       forwards                       52          (6)         72          37
      Restructuring and other
       charges                        36          35         222          44
      Inventory liquidation            3          68          15          68
      VIEs                            (4)          -         (11)         (8)
      Goodwill impairment charge       -         800           -         800
      Ontario collective labour
       agreement                       -          84           -          84
      Departure entitlement
       charge                          -           -           -          12
    -------------------------------------------------------------------------
    Adjusted operating income(1)     221         286       1,034       1,326
    Add (deduct) impact of the
     following:
      Depreciation and
       amortization                  134         133         588         590
      VIE depreciation and
       amortization                   (6)         (5)        (33)        (24)
    -------------------------------------------------------------------------
    Adjusted EBITDA(1)          $    349    $    414    $  1,589    $  1,892
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                               ----------              ----------

    Adjusted operating margin(1) is calculated as adjusted operating income
    divided by sales excluding the impact of tobacco sales and VIEs(1).
    Adjusted EBITDA margin(1) is calculated as adjusted EBITDA(1) divided by
    sales excluding the impact of tobacco sales and VIEs(1).

    Operating income of $736 million for 2007 increased by $447 million, or
154.7%, compared to $289 million in 2006, and resulted in an operating margin
of 2.5% as compared to 1.0% in 2006.

    During 2007, the Company recognized the following in operating income:
    -   charge of $197 million (2006 - nil) related to Project Simplify
        involving restructuring and streamlining of merchandising and store
        operations. Costs comprised $139 million for employee termination
        benefits including severance, additional pension costs resulting from
        the termination of employees and retention costs; and $58 million of
        other costs, primarily consulting. Total restructuring costs under
        this plan, comprised primarily of severance costs, are now
        anticipated to be approximately $200 million with the remaining costs
        to be expensed in 2008;
    -   charge of $9 million (2006 - $8 million) in connection with the
        previously announced plan to restructure the Company's supply chain
        network;
    -   charge of $16 million (2006 - $35 million) in connection with the
        previously announced closure of certain stores in the Quebec and
        Atlantic markets and in the wholesale network that were part of the
        store operations restructuring activities;
    -   charge of $72 million (2006 - $37 million) for the net effect of
        stock-based compensation and the associated equity forwards. The
        majority of the expense in 2007 included a non-cash loss on equity
        forwards of $67 million (2006 - $32 million) resulting from a decline
        in the Company's share price during the year;
    -   charge of $15 million (2006 - $68 million) for the liquidation of
        general merchandise inventory discussed previously;
    -   income of $11 million (2006 - $8 million) resulting from the
        consolidation of VIEs;
    -   nil (2006 - charge of $1 million) related to the head office move and
        reorganization of our operation support functions;
    -   nil (2006 - charge of $800 million) for a non-cash goodwill
        impairment charge related to the goodwill established on the
        acquisition of Provigo Inc. in 1998;
    -   nil (2006 - charge of $84 million) related to the ratification of a
        new four-year collective agreement with members of certain Ontario
        locals of the UFCW; and
    -   nil (2006 - charge of $12 million) related to a departure entitlement
        charge.

    After adjusting for the above-noted items, adjusted operating income(1)
for 2007 decreased by $292 million, or 22.0%, to $1.03 billion compared to
$1.33 billion in 2006. Adjusted operating margin(1) decreased to 3.7% in 2007
compared to 4.9% in 2006 as growth in operating expenses exceeded growth in
sales. Adjusted EBITDA margin(1) decreased to 5.7% from 7.1% in 2006.
    In addition, the 2007 adjusted operating income(1) was also influenced by
the following items:
    -   incremental consulting costs compared to the prior year, other than
        those in connection with Project Simplify, amounted to $75 million
        including expenses related to new supply chain and information
        technology improvement initiatives of $16 million;
    -   pharmacy-related operating income was reduced by $25 million due to
        legislative changes introduced in 2006 by the Ontario government;
    -   adjustments in estimates related to post-employment and long term
        disability benefits and deferred product development and information
        technology costs reduced operating income by $24 million;
    -   costs associated with the change in the Company's executive bonus
        plan were $11 million;
    -   a gain of $11 million from the sale of an office building in
        Calgary, Alberta;
    -   incremental non-cash fixed asset impairment charge of $6 million
        related to asset carrying values in excess of fair values at specific
        store locations. The 2007 charge was $33 million compared to
        $27 million in 2006; and
    -   the gross margin percentage decreased as described previously.

    For the fourth quarter of 2007, basic net earnings per common share were
$0.14 compared to basic net loss per common share of $2.76 in 2006, an
increase of 105.1%. For the year, basic net earnings per common share were
$1.20 compared to basic net loss per common share of $0.80 in 2006, an
increase of 250.0%.
    Basic net earnings per common share were affected in the fourth quarter of
2007 by the following:
    -   charge of 21 cents (2006 - income of 2 cents) per common share for
        the net effect of stock-based compensation and the associated
        equity forwards;
    -   charge of 9 cents (2006 - 9 cents) per common share related to
        restructuring and other charges;
    -   charge of 1 cent (2006 - 16 cents) per common share related to
        inventory liquidation;
    -   charge of 2 cents (2006 - income of 1 cent) per common share related
        to the consolidation of VIEs;
    -   income of 4 cents (2006 - nil) per common share related to changes in
        statutory income tax rates;
    -   nil (2006 - charge of $2.92) per common share related to the goodwill
        impairment charge previously discussed; and
    -   nil (2006 - charge of 20 cents) per common share related to the
        ratification of a collective agreement.

    After adjusting for the above noted items, adjusted basic net earnings per
common share(1) were 43 cents for the fourth quarter of 2007 compared to 58
cents for the fourth quarter of 2006. Adjusted basic net earnings per common
share(1) for 2007 were $2.05 compared to $2.72 for 2006.
    The following table outlines items that were excluded in arriving at
adjusted basic net earnings per common share(1):


    Basic Net Earnings (Loss) Per Common Share and Adjusted Basic Net
    Earnings per Common Share(1)

    For the periods ended
     December 29, 2007
     (unaudited) and
     December 30, 2006

                               ----------              ----------
                                    2007        2006        2007        2006
    ($)                        (12 weeks)  (12 weeks)  (52 weeks)  (52 weeks)
    -------------------------------------------------------------------------
    Basic net earnings (loss)
     per common share           $   0.14    $  (2.76)   $   1.20    $  (0.80)
    Add (deduct) impact of the
     following:
      Net effect of stock-based
       compensation and the
       associated equity
       forwards                     0.21       (0.02)       0.30        0.17
      Restructuring and other
       charges                      0.09        0.09        0.53        0.11
      Inventory liquidation         0.01        0.16        0.04        0.16
      VIEs                          0.02       (0.01)       0.02       (0.01)
      Goodwill impairment charge       -        2.92           -        2.92
      Ontario collective labour
       agreement                       -        0.20           -        0.20
      Departure entitlement
       charge                          -           -           -        0.03
      Changes in statutory
       income tax rates            (0.04)          -       (0.04)      (0.06)
    -------------------------------------------------------------------------
      Adjusted basic net
       earnings per common
       share(1)                 $   0.43    $   0.58    $   2.05    $   2.72
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

                               ----------              ----------
    

    We are continuing to invest in what we believe will be higher return
expansions and renovations to our existing store base, with a focus on
improving same-store sales. As stated last quarter, we expect to invest an
estimated $700 to $800 million in net capital expenditures. Approximately
two-thirds of these funds are expected to be used in remodeling, expanding and
maintaining existing stores and a small increase in square footage, with the
remainder split two-thirds in upgrading information systems and one-third on
supply chain infrastructure.
    During the quarter as planned, we sold property and a partially
constructed building for a purchase price of $110 million. We leased back the
property from the buyer for a term of 20 years, with options to renew, and in
turn, subleased the property to a third party logistics provider. We have also
entered into a warehousing and distribution agreement with the third party
logistics provider, which will use this property to provide services to
Loblaw.

    Liquidity and Capital Resources
    -------------------------------
    Subsequent to the end of the third quarter, Dominion Bond Rating Service
("DBRS") placed the Company's long term and short term credit ratings Under
Review with Negative Implications; and Standard & Poor's placed the Company's
long term and short term credit ratings on CreditWatch with negative
implications. A downgrade in the Company's short term credit ratings would
impact its ability to access short term financing through its commercial paper
program which would increase borrowing costs. The Company anticipates it will
continue to be able to obtain external financing.
    In the event of a further downgrade of the Company's long term credit
rating issued by DBRS and a possible termination of the independent funding
trust agreement, the Company's franchisees' access to financing through the
structure involving independent funding trusts would be affected and the
standby letter of credit in the amount of $44 million provided to the
independent funding trust by Loblaw would be drawn upon. The gross principal
amount of the franchisee loans outstanding at the end of 2007 was $418
million. The Company is exploring alternative financing arrangements for the
benefit of its franchisees to address this issue. In the event the Company
restructures the independent funding trusts, any new alternative financing
structure which may be implemented would need to be reviewed to determine if
there are any implications with respect to the consolidation of VIEs.

    Outlook(2)
    -------
    Sales volumes have been positively responding to our investments in lower
prices to give value to our customers. We expect this to continue in 2008.
Investments in price will also continue. However, we expect that cost
reductions in 2008 will help to support our profitability. Sales, margins and
profitability in the first half of 2008 in relation to 2007 may be affected by
more difficult comparables.

    
    (1) See Non-GAAP Financial Measures below.
    (2) To be read in conjunction with "Forward Looking Statements" of this
        News Release.
    

    Non-GAAP Financial Measures
    ---------------------------
    The Company reports its financial results in accordance with Canadian
GAAP. However, the Company has included certain non-GAAP financial measures
and ratios which it believes provide useful information to both management and
readers of this News Release in measuring the financial performance and
financial condition of the Company for the reasons set out below. These
measures do not have a standardized meaning prescribed by Canadian GAAP and,
therefore, may not be comparable to similarly titled measures presented by
other publicly traded companies. They should not be construed as an
alternative to other financial measures determined in accordance with Canadian
GAAP.

    Sales and Sales Growth Excluding the Impact of Tobacco Sales and VIEs

    These financial measures exclude the impact on sales from the decrease in
tobacco sales and from the consolidation by the Company of certain independent
franchisees. Tobacco sales continued to decrease through the end of third
quarter 2007 as a result of a major tobacco supplier shipping directly to
certain customers of the Company's cash & carry and wholesale club network
commencing in the third quarter of 2006. These impacts on sales are excluded
because the Company believes this allows for a more effective analysis of the
operating performance of the Company. A reconciliation of the financial
measures to the Canadian GAAP financial measures is included in the table
"Total Sales and Sales Excluding the Impact of Tobacco Sales and VIEs" of this
News Release. Same-store sales growth and same-store sales growth excluding
the impact of decreased tobacco sales is included in the table "Sales Growth
and Same-Store Sales Growth" of this News Release.

    Adjusted Operating Income and Margin

    The table of this News Release reconciles operating income and adjusted
operating income to Canadian GAAP net earnings measures based on management's
review of preliminary unaudited results for the twelve and fifty-two week
periods ended December 29, 2007 and December 30, 2006. Items listed in the
reconciliation are excluded because the Company believes this allows for a
more effective analysis of the operating performance of the Company. In
addition, the excluded items affect the comparability of the financial results
and could potentially distort the analysis of trends. The exclusion of these
items does not imply they are non-recurring. Adjusted operating income and
margin are useful to management in assessing the Company's performance and in
making decisions regarding the ongoing operations of its business.

    Adjusted EBITDA and Margin

    The table of this News Release reconciles adjusted earnings before
interest, income taxes, depreciation and amortization ("EBITDA") to adjusted
operating income which is reconciled to Canadian GAAP net earnings measures
based on management's review of preliminary unaudited results for the twelve
and fifty-two week periods ended December 29, 2007 and December 30, 2006.
Adjusted EBITDA is useful to management in assessing the Company's performance
of its ongoing operations and its ability to generate cash flows to fund its
cash requirements, including the Company's capital investment program.

    Adjusted Basic Net Earnings per Common Share

    The table "Basic Net Earnings (Loss) Per Common Share and Adjusted Basic
Net Earnings Per Common Share" of this News Release reconciles adjusted basic
net earnings per common share to Canadian GAAP basic net earnings (loss) per
common share measures based on management's review of preliminary unaudited
results for the twelve and fifty-two week periods ended December 29, 2007 and
December 30, 2006. Items listed in the reconciliation are excluded because the
Company believes this allows for a more effective analysis of the operating
performance of the Company. In addition, the excluded items affect the
comparability of the financial results and could potentially distort the
analysis of trends. The exclusion of these items does not imply they are
non-recurring. Adjusted basic net earnings per common share is useful to
management in assessing the Company's performance and in making decisions
regarding the ongoing operations of its business.

    Free Cash Flow

    The Company calculates free cash flow as cash flows from operating
activities less fixed asset purchases and dividends. The Company believes free
cash flow is a useful measure of the change in the Company's cash available
for additional funding requirements.

    2007 Annual Consolidated Financial Statements and MD&A
    ------------------------------------------------------
    The Company's audited consolidated financial statements and Management's
Discussion and Analysis ("MD&A") for the year ended December 29, 2007 will be
released on or before March 28, 2008. Both documents will be contained in the
Company's 2007 Annual Report and will be available in the Investor Zone
section of the Company's website at www.loblaw.ca or at www.sedar.com.

    Investor Relations
    ------------------
    Shareholders, security analysts and investment professionals should
direct their requests to Inge van den Berg, Vice President, Investor Relations
at the Company's National Head Office or by e-mail at investor@loblaw.ca.
    Additional information has been filed electronically with various
securities regulators in Canada through the System for Electronic Document
Analysis and Retrieval (SEDAR) and with the Office of the Superintendent of
Financial Institutions (OSFI) as the primary regulator for the Company's
subsidiary, President's Choice Bank.

    Conference Call and Webcast
    ---------------------------
    Loblaw Companies Limited will host a conference call as well as an audio
webcast on February 7, 2008 at 11:00 a.m. (EST).
    To access via Tele-conference please dial (416) 644-3416. The playback
will be made available one hour after the event at (416) 640-1917, passcode:
21258049 followed by the number sign. To access via webcast please visit
www.loblaw.ca, go to Investor Zone and click on webcast. Pre-registration will
be available.

    Investor Meeting and Webcast
    ----------------------------
    Loblaw Companies Limited is also hosting an investor meeting on
February 19, 2008 from 8:30 a.m. (EST) to 12:00 p.m. (EST), via conference
call as well as an audio webcast. The materials for the investor meeting will
be posted on www.loblaw.ca.
    To access the investor meeting via Tele-conference please dial (416)
915-5762. The playback will be made available one hour after the event at
(416) 640-1917, passcode: 21259443 followed by the number sign. To access via
webcast please visit www.loblaw.ca, go to Investor Zone then click on webcast.
Pre-registration will be available.
    Full details are available on the Loblaw Companies Limited website at
www.loblaw.ca.

    FORWARD-LOOKING STATEMENTS

    This News Release for Loblaw Companies Limited and its subsidiaries
(collectively, the "Company" or "Loblaw") contains forward-looking statements
about the Company's objectives, plans, goals, aspirations, strategies,
financial condition, results of operations, cash flows, performance, prospects
and opportunities. These forward looking statements include a preliminary
unaudited financial update for its fourth quarter and fiscal year 2007. Words
such as "anticipate", "expect", "believe", "could", "estimate", "goal",
"intend", "plan", "seek", "strive", "will", "may" and "should" and similar
expressions, as they relate to the Company and its management, are intended to
identify forward-looking statements. These forward-looking statements are not
historical facts but reflect the Company's current expectations concerning
future results and events.
    These forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results or events to differ materially
from current expectations. These risks and uncertainties include, but are not
limited to: changes in economic conditions; changes in consumer spending and
preferences, heightened competition, whether from new competitors or current
competitors; changes in the Company's or its competitors' pricing strategies;
failure of the Company's franchised stores to perform as expected; risks
associated with the terms and conditions of financing programs offered to the
Company's franchisees; failure to realize anticipated cost savings and
operating efficiencies from the Company's major initiatives, including
investments in the Company's information technology systems, supply chain
investments and other cost reduction and simplification initiatives; the
ability of the Company's information technology infrastructure to support the
requirements of the Company's business; the ability of the Company to
indentify obsolete or excess inventory and to control shrink; failure to
execute successfully and in a timely manner the Company's major initiatives,
including the implementation of strategies and introduction of innovative
products; unanticipated costs associated with the Company's strategic
initiatives, including those related to compensation costs; the ability of the
Company's supply chain to service the needs of the Company's stores;
deterioration in the Company's relationship with its employees, particularly
through periods of change in the Company's business; failure to achieve
desired results in labour negotiations, including the terms of future
collective bargaining agreements; changes to the regulatory environment in
which the Company operates; the adoption of new accounting standards and
changes in the Company's use of accounting estimates including in relation to
inventory valuation; fluctuations in the Company's earnings due to changes in
the value of equity forward contracts relating to its common shares; changes
in the Company's tax liabilities resulting from changes in tax laws or future
assessments; detrimental reliance on the performance of third-party service
providers; public health events; the ability of the Company to obtain external
financing; the ability of the Company to attract and retain key executives;
and supply and quality control issues with vendors. These and other risks and
uncertainties are discussed in the Company's materials filed with the Canadian
securities regulatory authorities from time to time, including the Risks and
Risk Management section of the MD&A included in the Company's 2006 Annual
Report. Other risks and uncertainties not presently known to the Company or
that the Company presently believes are not material could also cause actual
results or events to differ materially from those expressed in its
forward-looking statements.
    In addition to these risks and uncertainties, the material assumptions
used in making the forward looking statements contained herein and in
particular in the section entitled "Outlook" of this News Release, include:
there is no material change in economic conditions from those of 2007;
patterns of consumer spending and preferences are reasonably consistent with
historical trends; there is no significant change in competitive conditions,
whether related to new competitors or current competitors; there is no
unexpected change in the Company's or its competitors' current pricing
strategies; the Company's franchised stores perform as expected; anticipated
cost savings and operating efficiencies are achieved, including those from the
Company's cost reduction and simplication initiatives; and there are no
significant regulatory, tax or accounting changes or other significant events
occuring outside the ordinary course of business.
    Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect the Company's expectations only as
of the date of this News Release. The Company disclaims any intention or
obligation to update or revise these forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by
law.





For further information:

For further information: Inge van den Berg, Vice President, Investor
Relations, (905) 459-2500, investor@loblaw.ca


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