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Acquisitions, fresh boost Loblaw in Q3

Loblaw Cos. said Wednesday that the addition of Shoppers Drug Mart and progress on fresh initiatives in food stores helped to boost sales and productivity during the fiscal third quarter.

Quarterly sales of $12 billion (U.S.) improved by 35.9% or 2% excluding Shoppers Drug Mart, while same store sales excluding the acquisition improved by 2.6%. Store traffic was up slightly, and basket sizes grew as a result of loyalty participation and additional fresh penetration, officials said. Net earnings were down by 8% related to the Shoppers Drug acquisition but excluding those costs, earnings improved by 81% to $227.9 million (U.S.).

In a conference call discussing results, Galen Weston, Loblaw’s chairman and president, touted the evolution of its President’s Choice private brand behind the Crave More campaign that he said responds to new consumer attitudes about food.

“Over the last few years, it's become clear to us that customers are thinking, caring and talking more than ever about food. They are seeking new exciting flavors. They are passionate about where their food comes from and how it's made. And they're obsessed over what is healthy and what is not,” Weston said.

Weston likewise attributed increased fresh penetration to initiatives the company has undertaken in its “inspire” stores, including prepared foods and fresh juice bars.


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“What we are seeing is consumers making a very distinctive choice to buy fresh food,” he said. “We've upgraded our investment in convenience prepared foods. The quality is higher. The price is a little bit higher, but what we're seeing is consumers making that choice, because they're beginning to see it less against what they might spend in the grocery aisle, or the frozen aisle, and more versus what they might spend if they went out to a restaurant instead.”

At juice bars — now in 50 Loblaw stores — customers are willing to spend $7 or $8 for fresh juice, and are eschewing the $2.49 bottles of Tropicana, Weston said.

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