Pharmaprix-Exterior-big.jpg Loblaw Cos.
Loblaw's Pharmaprix and Shoppers Drug Mart pharmacy network faces a government-mandated reduction in generic drug pricing.

Loblaw voices concern over ‘regulatory headwinds’

Rising minimum wage, healthcare changes damper grocer’s outlook

Ontario’s Loblaw is “satisfied” with a 3.2% rise in revenue, a 1.2% climb in same store food retail sales and $364 million in net earnings for the second quarter ended June 17.

But the satisfaction is tempered by concerns over “significant incremental, regulatory headwinds” said Loblaw Cos. Chairman and CEO Galen Weston during Wednesday’s second-quarter earnings call.

Weston was referring to an upcoming “aggressive” increase in minimum wage and a government-mandated reduction in generic drug pricing.

“These recent developments create a gap for 2018 that we must work hard to close,” said Weston. He added that Loblaw is looking for ways to “accelerate the efficiencies” across the company to accommodate added pressures.

The wage changes would grant more than 25% of local workers a pay increase and would raise part-time hourly rates to match those of full-time workers.

Weston said that Loblaw will be “speeding up” planned upgrades to analytics and adding self-checkouts to stores to streamline operations in the face of the coming changes.

“We have a lot of work ahead of us as we are still assessing the extent to which we can mitigate these headwinds,” he said.

As Weston prepares Loblaw for a new industry climate, he also told investors on Wednesday that the brand’s commitment to e-commerce is not currently slated to advance past click-and-collect at this time.

“At this stage, we still feel that click-and-collect should be the predominant strategic focus for our business,” Weston said when asked if a delivery option was on the horizon.

While home delivery is currently not in the plans, he conceded that it would receive more consideration if customer demand rose.

Contact: [email protected]

Twitter: @DanAMX

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