A Loblaws store is seen Monday, March 9, 2015 in Montreal.THE CANADIAN PRESS/Ryan Remiorz
BRAMPTON, Ont. – Loblaw Cos. Ltd. said it’s continuing to expand its footprint of discount stores as consumers trade down after a run of high food inflation.
Loblaw reported its third-quarter profit and revenue rose compared with a year ago, as it said its discount stores saw higher traffic.
“Our Maxi and No Frills stores led the way, generating double-digit growth again this quarter,” said chairman Galen Weston on a conference call with analysts.
Between new locations and converting some stores into discount banners, Weston said the company has opened 23 discount stores so far this year. Next year, the company plans to convert 30 more stores and open 40 new locations across the country, he said.
Those conversions will mainly be in Quebec, added CFO Richard Dufresne on the call. Around 60 per cent of the new stores will be Shoppers Drug Marts, and the rest will mostly be discount grocery stores.
Sales of in-house brands like No Name and President’s Choice continued to outpace national brands as shoppers favoured lower-priced products, said Loblaw.
Weston said he doesn’t see the shift to discount going away any time soon.
“There’s no sign of it slowing down in any meaningful way,” he said. “Our perspective is that this will continue, you know, for the foreseeable future.”
On Wednesday, the parent company of Loblaws and Shoppers Drug Mart reported a profit available to common shareholders of $621 million or $1.95 per diluted share for the 16-week period ended Oct. 7.
The result compared with a profit of $556 million or $1.69 per diluted share in the same quarter a year earlier.
Revenue for the quarter totalled $18.27 billion, up from $17.39 billion in the same quarter last year.
The increase came as food retail same-stores sales rose 4.5 per cent and drug retail same-store sales gained 4.6 per cent, helped by front store same-store sales growth of 1.8 per cent and pharmacy same-store sales growth of 7.4 per cent.
On an adjusted basis, Loblaw said it earned $2.26 per diluted share, up from an adjusted profit of $2.01 per diluted share a year earlier.
The company said its retail gross margin declined as a result of promotions and increased shrink – an industry word for theft – noting that its internal food inflation metric was lower than Canada’s food inflation number.
This report by The Canadian Press was first published Nov. 15, 2023.
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