Canadian retailer Loblaw has forecast annual earnings above analysts' expectations, helped by strength in its pharmacy business and as demand holds up for groceries.
Loblaw expects full-year 2023 adjusted earnings per common share to grow in low double-digits compared with the average analyst estimate of 9.64%, according to Refinitiv IBES data.
Rising prices are forcing budget-conscious consumers to prioritize spending on essentials like food and medicines and trade down to cheaper private-label items from higher-priced brands, benefiting retailers such as Loblaw.
The company's fourth-quarter revenue rose about 10% to C$14.01 billion (€9.76 billion), topping the average estimate of C$13.75 billion (€9.58 billion).
On an adjusted basis, Loblaw earned C$1.76 (€1.23) per share, beating analysts' expectations of C$1.71 per share (€1.19).
The group's fourth-quarter performance was driven by strong growth in both its Food and Drug businesses, the company said.
The growth in Drug Retail sales was due to continued strong demand for cough and cold products, as well as in high margin beauty and cosmetics categories. Food Retail sales reflected the company's 'efforts to provide value to its customers', while the Discount stores outperformed due to increased consumer focus on price.
“Loblaw used its assets to provide value to customers in a period of continued inflation,” commented Galen G. Weston, chairman and president, Loblaw Companies Limited. “Consumers responded favourably to those efforts and continued to benefit from our extensive private label offering, leading loyalty program and targeted promotions.”
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