George Weston Swings To A 1Q Loss, Hit By One-Time Charges

George Weston (WN) reported a loss in 1Q compared to a profit in the same quarter a year ago, as one-time charges hit its bottom line.

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George Weston, which has significant stakes in Loblaw Companies (L) and Choice Properties REIT (CHP.UN), put its Weston Foods bakery business up for sale in March to focus on its retail and real estate businesses.

George Weston’s revenue for 1Q 2021 came in at C$12.35 billion, an increase of 0.16% from the revenue of C$12.33 billion reported in 1Q 2020.

Meanwhile, the company reported a net loss of C$62 million (C$0.41 per diluted share) for the quarter ended March 27, compared with a profit of C$582 million (C$3.78 per diluted share) in 1Q 2020. The loss was attributed to a liability adjustment resulting from an increase in Choice Properties REIT unit prices.

On an adjusted basis, George Weston earned C$243 million (C$1.59 per diluted share) for the quarter, compared to adjusted earnings of C$239 million (C$1.55 per diluted share) a year ago.

George Weston’s Chairman and CEO Galen G. Weston said, “Both Loblaw and Choice Properties delivered strong operational and financial performance in the quarter. As expected, results in Weston Foods were down compared to the first quarter of 2020, reflecting the negative impact of the resurgence of the pandemic and resulting in stricter lockdown measures on certain segments of the business. Looking through that impact, the business delivered strong operational performance metrics, and we expect that as lockdowns ease, Weston Foods will be well-positioned to return to the momentum demonstrated in the fourth quarter of 2020.”

COVID-19 is expected to continue to generate headwinds during the second quarter, but the company still expects sales to increase and COVID-19 related costs to decrease relative to the second quarter of 2020. (See George Weston stock analysis on TipRanks)

On May 7, RBC Capital analyst Irene Nattel maintained a Buy rating on WN while raising its price target to C$138.00 from C$134.00, for a 20.4% upside potential. Nattel indicated that leadership changes in March signified that Weston wants to improve Loblaw’s “operational efficiency and productivity”, which has been weak.

The rest of the Street is optimistic on WN with a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average analyst price target of C$124.40 implies a 10% upside potential from current levels. Shares have risen by approximately 15% since the start of the year.