Canadian food and pharmacy retailer Loblaw has reported a 5% increase in third-quarter revenue, aided by robust demand for drugs as well as discounted groceries at its stores.
The company maintained its annual target for adjusted net earnings per share to grow in the low double digits and expects profits in its retail business to grow faster than sales.
Soaring food prices and higher borrowing costs have pushed customers to trade down to private-label alternatives at Loblaw and prioritise buying essential grocery items.
Loblaw reported 4.5% same-store sales growth in its food segment, while its pharmacy same-store sales rose 7.4% in the quarter, driven by a steady demand for over-the-counter drugs and private-label food brands.
In April of this year, the retailer and its parent company George Weston Ltd announced the appointment of Per Bank as the new chief executive officer and president of Loblaw.
Food Prices
Recently, Canada's large grocery chains including Loblaw agreed to help the government to stabilise rising food prices. They said the price increases have been largely because of higher input costs passed on to the companies by vendors.
Net income attributable to Loblaw rose 11.7% to C$621 million ($417.9 million) in the quarter ended 7 October. On an adjusted basis, it earned C$2.26 per share, edging past analysts' average estimate of C$2.22, according to LSEG data.
The Canadian retailer's revenue came in at C$18.27 billion (€12.3 billion), up from C$13.73 billion (€9.2 billion), a year earlier. Analysts on average had expected C$18.26 billion (€12.3 billion), according to LSEG data.
“Our stores are delivering more value, including deeper discounts on essentials, and customers are responding positively,” said Galen G Weston, chairperson of Loblaw Companies Limited.
“We remain focused on doing what we can to fight inflation and deliver lower prices for Canadians, while continuing to invest for the future.”
News by Reuters, additional reporting by ESM.
