Food retail sales edged up in the fiscal 2022 second quarter at Loblaw Cos., with the Canadian supermarket giant topping analysts’ consensus earnings-per-share estimate.
For the 12-week quarter quarter ended June 18, overall retail sales totaled $12.62 billion (Canadian), up 2.8% from $12.28 billion a year earlier, when top-line retail results rose 4.4%, Brampton, Ontario-based Loblaw said Wednesday.
Food retail sales inched up 0.9% to $8.98 billion from $8.88 billion a year ago, which marked a 1.5% gain. Food same-store sales in the 2022 quarter rose 0.9%, following a 0.1% dip in the prior-year period. Comparable-store results benefitted from traffic growth despite a decreased basket size, the company said. Food price inflation for the quarter was 9.6% versus 0.5% in the 2021 quarter.
According to Loblaw, the positive food retail trend reflects a solid performance by conventional stores relative to peers and sales growth in its No Frills and Maxi discount food banners, heightened in part by the company’s No Name value grocery and household own brand.
“Loblaw delivered consistent operating and financial results, as customers recognized the value, quality and convenience delivered through our diverse store formats, control-brand products and our PC Optimum loyalty program,” Loblaw Cos. Chairman and President Galen Weston said in a statement.
Drug retail sales, from the Shoppers Drug Mart subsidiary, climbed 7% to $3.64 billion from $3.4 billion in the year-ago span. Sales rose by 4.6% to $1.83 billion in the front end and by 9.5% to $1.81 billion in the pharmacy. Drug retail comp sales increased 5.6% year over year, including gains of 5.2% in the front end and 6.1% in the pharmacy. Prescriptions filled rose 2.3% overall and on a comp-store basis, while average prescription value was up 3.6%.
Loblaw noted that the performance of the drug retail business in the 2022 second quarter continued to spur overall margin expansion, as higher-margin front-of-store categories lifted sales.
“In the quarter, we also continued to pursue our strategic growth agenda, with the completion of our acquisition of Lifemark Health Group, bolstering our health care services offering and furthering our purpose to help Canadians ‘Live Life Well,’” Weston added. Loblaw closed the acquisition of Lifemark, a provider of outpatient health service and now part of Shoppers Drug Mart, in May.
E-commerce sales decreased 17.5% in the second quarter, which Loblaw attributed to the cycling of elevated online sales amid lockdowns a year ago. That followed a 9.8% decline in the first quarter, which had lapped a 133% jump in the prior-year period.
Last month, Loblaw unveiled a partnership with DoorDash on a 30-minutes-or-less grocery and convenience delivery service. Called PC Express Rapid Delivery, the new Loblaw service will kick off DoorDash’s Rapid Delivery program from purpose-built fulfillment centers, supplied by the Canadian food and drug retailer and owned and operated by DoorDash. Plans call for PC Express Rapid Delivery — incorporating Loblaw’s “PC Express” e-grocery brand — to launch in August and roll out to major Canadian markets, including Vancouver, British Columbia; the greater Toronto area; Calgary, Alberta; and Kitchener, Ontario.
For the 24-week fiscal 2022 first half, Loblaw’s retail sales totaled $24.67 billion, up 3% from a year earlier. Food retail sales rose 1.8% to $17.67 billion during the 24 weeks, with same-store sales up 1.5%. Shoppers Drug Mart’s first-half sales came in at just over $7 billion, an increase of 6.2%. Comp-store sales advanced 5.4%, including gains of 6.4% in the pharmacy and 4.5% in the front end.
At the bottom line, fiscal 2022 second-quarter net income (available to common shareholders) came in at $387 million, or $1.16 per diluted share, compared with $375 million, or $1.09 per diluted share, in the 2021 quarter, Loblaw said. Adjusted net earnings for common shareholders totaled $566 million, or $1.69 per diluted share, versus $464 million, or $1.35 per diluted share, a year earlier.
Analysts, on average, had projected adjusted earnings per share of $1.61, with estimates ranging from $1.58 to $1.66, according to Refinitiv.
Loblaw said it opened 12 nine food and drug stores and closed 17 over the previous 12 months. As of the close of the second quarter, the company’s retail network encompassed 2,437 stores, including 539 corporate-owned supermarkets under multiple banners, 552 franchised grocery stores and 1,346 Shoppers Drug Mart/Pharmaprix associate-owned drugstores.