Loblaw’s profit jumps to $541M
New CEO points to Canadians ‘seeking greater value’ for rise in earnings
Loblaw, Canada’s grocery giant and parent of Loblaws and Shoppers Drug Mart, delivered strong fourthquarter profits and sales backed by Canadians’ ongoing demand for deals.
On Thursday, CEO and president Per Bank led his first analyst conference call since replacing former president Galen Weston last November.
Bank, who previously led Danish grocery giant Salling Group A/S for more than a decade, attributed part of the quarter’s success to Canadians “seeking greater value” in the current uncertain economic environment. They did this in three ways: switching to private-label brands, browsing for promotions and shopping at discount stores (Loblaw also owns No Frills), he said.
Loblaw said it recorded an internal food inflation lower than Canada’s food consumer price index for the quarter. While inflation is showing signs of easing, falling to 2.9 per cent in January, Canadians are still bearing the brunt of an overall increase in food prices of more than 18 per cent in the past two years, and have become more frugal at grocery stores as a result.
“We are pushing back whenever we can on suppliers’ cost increases and we are finding more ways to be efficient to keep prices low,” Bank added.
Loblaw reported profit available to common shareholders was $541 million, or $1.72 a share, in the quarter ended Dec. 30. That compares with $529 million, or $1.62 a share, in the same quarter in 2022. Revenues increased $524 million to $14.531 billion, which was 3.7 per cent higher than the quarter a year prior.
Retail sales also came in higher at $14.157 billion, representing a 3.4 per cent increase. Food retail samestore sales grew by two per cent, while drug retail same-store sales grew 4.6 per cent, with front store same-store sales growth of 1.7 per cent and pharmacy and health care services same-store sales growth at eight per cent.
In a note to clients, RBC analyst Irene Nattel said the results came in better than expected and reinforce “Loblaw’s strong positioning and favourable momentum, particularly against the backdrop of elevated food prices and cash-squeezed consumers.”
The company also shared details of plans announced last Tuesday to further its expansion of Maxi and No Frills, its Quebec and national discount banners, and roughly triple the number of pharmacy-based clinics introduced last year.
This year, it vowed to spend a further $2 billion to build 40 new discount stores and pharmacies, upgrade hundreds of others as well as open another 140 pharmacy care clinics.