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For Loblaws, tech investments begin to pay off

E-commerce, in-store initiatives lead to positive second quarter, despite cost pressures

Canadian grocery and pharmacy chain Loblaw Cos.’ quarterly profit topped analysts' estimates on Wednesday, driven by higher food and drug same-store sales. The company said food retail same-store sales grew 0.8% while drug retail same-store sales rose 1.7%.

“Our base businesses continued to perform well in a very competitive marketplace despite significant cost pressures,” said Galen G. Weston, chairman and CEO, in announcing the second-quarter results. "We are executing our strategy, improving processes, reducing cost and expanding our digital presence to deliver the best in food, health and beauty, for Canadians.”

The Brampton, Canada-based company has been refurbishing and expanding its online presence to carve out more market share in the face of stiff competition from companies such as Amazon. In addition, Loblaws has been working to increase in-store technology, including self-checkout technology, which is now available in more than 350 stores covering all provinces.

In a conference call with analysts, Weston added, “In our retail businesses, we are enhancing our e-commerce services through PC Express and home delivery options, the recent launch of our mass beauty assortment online and serving a rapidly growing number of patients and caregivers through our e-pharmacy. And six months after the launch of PC Optimum, our loyalty scan rates are higher than ever, establishing our powerful platform that will play an increasingly fundamental role in our relationship with customers.”

Revenue was $10.9 billion Canadian, a decrease of $157 million, or 1.4%, compared to the second quarter of 2017. The company’s net income fell to $50 million Canadian, or 13 cents per share, in the second quarter ended June 30, from $359 million, or 90 cents per share, a year earlier.

The second quarter of 2018 included the negative impacts of minimum wage increases and incremental healthcare reform as well as the effects of the consolidation of franchises, the disposition of gas bar operations and the acquisition of Canadian Real Estate Investment Trust (CREIT) by Choice Properties' Real Estate Investment Trust. 

Loblaws operates more than 2,000 supermarkets and pharmacies across Canada.

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