Loblaw lays off 500 workers in cost-cutting drive

A Loblaws store is seen Monday, March 9, 2015 in Montreal. (THE CANADIAN PRESS/Ryan Remiorz)

Loblaw Companies Ltd. is laying off 500 of its office workers, but the company says it still expects to create more jobs than it eliminates this year.

"Today is a very difficult day," wrote president Sarah Davis in a memo to employees informing them about the job cuts.

Some of the laid off employees were told Monday and many of the positions will be eliminated immediately, she said.

The 500 jobs come from all levels of store-support offices, she said, including various executives.

"Our business is at an inflection point, with growing pressures -- from new costs and new competition -- and with many opportunities to grow and evolve," Davis said, adding the company remains committed to reducing costs and running efficiently.

Loblaw (TSX:L) is making major investments in omni-channel, financial services and other growing areas and expects to create hundreds of near-term jobs and be a "considerable net-job-creator this year," she said.

The decision comes after Metro Inc. (TSX:MRU) announced last week it would eliminate about 280 jobs starting in 2021 as the grocery-store chain modernizes and automates its distribution network. Metro said the choice is unrelated to its efforts to offset added costs from Ontario's rising minimum wage.

Grocers and other retailers have expressed concerns over rising minimum wages in some Canadian provinces.

Loblaw spokesman Kevin Groh said the grocery industry faces a variety of pressures and the announced job cuts don't relate to any single one, including rising minimum wage.

Loblaw employs about 200,000 people, he said.