UPDATE 3-Loblaw profit hurt by weak sales, price cuts

(Adds detail from conference call, updates stock prices)

By Susan Taylor

OTTAWA, July 25 (Reuters) - Second-quarter profit at Loblaw Companies Ltd (L.TO: Quote, Profile, Research) tumbled after excluding one-time charges as weaker-than-expected sales growth coupled with price- chopping ate into earnings at Canada's biggest supermarket chain.

Still six to nine months behind schedule on its recovery plan, Loblaw on Friday said profit margins are expected to remain under pressure for the rest of this year.

Revenue at Loblaw, which is majority owned by North America's biggest baker, George Weston Ltd (WN.TO: Quote, Profile, Research), grew 1.5 percent but lagged analyst estimates, while sales growth at stores opened at least a year slowed from a year earlier.

Shares of the Toronto-based company fell 3.3 percent after the report.

"What's driving this is we're not an effective selling organization. The issues that were there, that we made the changes for, doesn't get turned overnight," President Allan Leighton said on a conference call with analysts.

"We're looking at driving sales momentum that is sustainable over a period of time, not that comes and goes on a week-by-week ... basis."

Loblaw is using a strategy of cutting prices to spark revenue growth and to keep its customers as Wal-Mart Stores (WMT.N: Quote, Profile, Research) expands food sales in Canada. It is also trying to pinch expenses to offset lower margins.