Strong performance in drug retail during the first quarter has Loblaw feeling better about the rest of the year.
Brampton, Canada-based Loblaw announced first quarter earnings on May 3, and revenue increased by 6% at almost $13 billion. Drug retail, emboldened by a higher margin in beauty and cough and cold products, registered a 7.4% increase vs. Q1 2022. Front store same-store sales growth for drug retail was up 10.3% while pharmacy same-store sales grew 4.7%. Food retail same-store sales increased just 3.1%.
E-commerce also was a soft spot for Loblaw during the first three months of 2023, as the grocer experienced just a 1.1% uptick compared to the first quarter of 2022.
Operating income was $769 million (up 4.2%) while adjusted EBITDA was over $1.4 billion (up 7.8%).
“In the face of ongoing inflation, we are working hard to deliver the value and choice Canadians are looking for,” said Galen Weston, Chairman and President, Loblaw Companies Ltd. “I’m pleased that customers are responding positively to the breadth of our offerings including our diverse store formats, market prices, private label brands, and loyalty offers.”
Looking at the rest of 2023, Loblaw is expecting the retail business to grow earnings faster than sales and will be investing $1.6 billion in capital expenditures.
In late April, Weston announced he would be stepping down as Loblaw’s president. He will be replaced with Danish retail executive Per Bank. Right now, Bank is the CEO of Danish retail chain Salling Group A/S, which has a network of 1,700 grocery stores in three European countries.
When Weston took over for Sarah Davis back in 2021 the CEO position at Loblaw, headquartered in Brampton, Canada, was never filled. According to the company, Bank will take over this role while Weston will still serve as company board chair and will continue to be CEO of George Weston Ltd., a parent company of Loblaw.
In a call with financial analysts, Weston said he is going to take the time to figure out his natural role as a controlling shareholder.
