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Sales up by double digits at Loblaw in first quarter

Coronavirus outbreak in Canada lifts sales by 10.8%

Russell Redman

April 29, 2020

4 Min Read
Loblaws-supermarket-storefront.png
Loblaw estimated that stock-up shopping by consumers amid the pandemic lifted retail sales by about $768 million in the quarter.Loblaw Cos.

A late surge from coronavirus-driven purchases hoisted retail sales and net earnings at Loblaw Cos. for the fiscal 2020 first quarter.

Overall retail sales in the 12-week quarter ended March 21 climbed 10.8% to $11.58 billion (Canadian) from $10.45 billion a year earlier, Loblaw said Wednesday. Excluding franchise consolidation, retail sales grew 9.3%.

Loblaw estimated that stock-up shopping by consumers amid the pandemic lifted retail sales by about $768 million in the quarter, including a favorable impact of $91 million from the consolidation of franchises.

“Late in the quarter, the company experienced unprecedented consumer demand and stockpiling relating to COVID-19, with sales surging in the final two weeks of March. The result was both a sharp increase in revenue and profit, followed by ramp-up in spending to protect and benefit colleagues and customers,” Loblaw stated. “Following the initial surge in March, demand has moderated, with continued strength in essential food categories and pressure on sales in pharmacy and some discretionary areas of the business.”

Food retail sales in the first quarter totaled $8.33 billion, up 10.9% from $7.52 billion a year ago. Same-store sales for food jumped 9.6% year over year, fueled by increased traffic and a bigger basket size, Loblaw said, noting that the company saw a 2% food retail comparable-sales gain in the 2019 quarter.

Related:Loblaw looks to build on ‘positive momentum’ from fiscal 2019

In the drug retail segment, Loblaw’s Shoppers Drug Mart chain, sales rose 10.7% to $3.25 billion from $2.94 billion. Same-store sales also grew 10.7%, reflecting gains of 10.7% in the front end and 10.6% in the pharmacy. Loblaw said COVID-19 positively impacted Shoppers Drug Mart’s comp sales. Prescription count advanced 5.5%, while the average prescription value increased 4.8%.

Galen_Weston-Loblaw_Companies_CEO.jpg“These are unprecedented times, and I am incredibly proud of how our colleagues have risen to the challenge of ensuring that Canadians have access to the food and health essentials they need. And we will continue to make significant investments to keep our colleagues and customers safe through the pandemic,” Loblaw Executive Chairman Galen Weston (left) said in a statement. “As we remain focused on long-term value creation, and we see signs of fundamental change in consumer behavior, our conviction around the strategic importance of our leading positions in loyalty, digital retail and connected health care is stronger than ever.”

Loblaw said its coronavirus-related investments include enhanced customer convenience via more store staff, expanded PC Express e-commerce services, and eliminating fees and reducing prices with online services; safety measures such as store cleaning, hiring of security and ambassadors to manage social distancing, new customer protocols, and plexiglass barriers at checkouts and counters; and temporary pay premiums and pay protection safeguards for workers in stores and distribution centers. In addition, the retailer is providing financial aid to communities across Canada through large-scale donations to food and wellness programs and to President's Choice Financial Mastercard customers via new financial hardship programs.

Related:Loblaw tests micro-fulfillment for online grocery

“The company’s response and costs related to COVID-19 have accelerated following the end of the quarter, putting pressure on the business,” Loblaw said.

At the bottom line, first-quarter net income available to common shareholders was $240 million, or 66 cents per diluted share, compared with $198 million, or 53 cents per diluted share, a year ago. Adjusted net earnings available to common shareholders came in at $352 million, or 97 cents per diluted share, versus $290 million, or 78 cents per diluted share, in the prior-year period.

Analysts, on average, had forecast adjusted earnings per share (EPS) of 85 cents, according to Zacks Investment Research.

Initial demand for grocery and pharmacy products in March after the COVID-19 outbreak in Canada boosted first-quarter net EPS by 14 cents, Loblaw estimated.

Also in the quarter, Loblaw recorded $19 million restructuring and other related charges, including $15 million from the previously announced closing of two distribution centers in Laval, Quebec, and Ottawa, Ontario. The company said it plans a “modern and efficient” expansion of its DC in Cornwall, Ontario, to serve food and drug retail in Ontario and Quebec. Both the Laval and Ottawa are slated to transfer their volumes to Cornwall over the next two years.

“Uncertainty over the duration and severity of the pandemic make reliable estimates of the second-quarter and full-year COVID-19-related impacts on the financial results and operations of the company impossible,” Loblaw said.

At the close of the first quarter, Loblaw’s retail network spanned 2,430 stores, including 547 corporate-owned supermarkets under multiple banners, 539 franchised grocery stores and 1,344 Shoppers Drug Mart/Pharmaprix associate-owned drugstores.

For our most up-to-date coverage, visit the coronavirus homepage.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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