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Grocer Loblaw to eliminate about 275 jobs

TORONTO (Reuters) - Loblaw Co Ltd , facing increased competition from foreign-owned and domestic retailers, is cutting about 275 jobs as part of its drive to improve operations, Canada's largest grocer said on Wednesday.

Loblaw, which is buying Shoppers Drug Mart Corp for C$12.4 billion ($11.98 billion) to strengthen its competitiveness, said the cuts would come from management and administrative positions.

"We are streamlining our organization to strengthen our competitive position," said Melinda Metcalfe, director of public relations for the grocer.

Loblaw shares, which have risen some 12 percent this year, were up 1.9 percent to C$46.87 in Toronto.

Canadian retailers have come under increasing pressure from U.S. retail giants like Wal-Mart Stores Inc and newcomer Target Corp . Domestically, Empire Co Ltd , which owns Sobeys, is buying Safeway Inc's Canadian assets, solidifying its position as Loblaw's closest Canadian supermarket rival.

Metcalfe said the layoffs would eliminate duplication, cut expenses and are part of Loblaw's efforts to operate more efficiently. The company has 134,000 full- and part-time employees working for the company and its franchised stores.

The layoffs, following upon cuts of about 750 positions a year ago, will occur in the next few days and are mostly located at the head office, BMO Capital Markets' Peter Sklar said in a research note.

"While the anticipated savings from the current restructuring actions are not material, we characterize this development as slightly positive," said Sklar, who is estimating about C$30 million in annual savings.

Loblaw, whose brands include Joe Fresh apparel, raised its full-year operating income forecast in late July.

($1 = 1.0349 Canadian dollars)

(Reporting by Solarina Ho; Editing by Jeffrey Hodgson and Theodore d'Afflisio)

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