Discount stores

Canadian shoppers turn to discount stores as inflation soars: Loblaw – National

Canada’s largest food retailer says people are shopping more often, buying less with each visit and turning to discount stores as pandemic restrictions ease and inflation soars.

Loblaw Companies Ltd. underlined the growing importance of consumers to value as it increased its quarterly dividend and announced that its first-quarter profit was up nearly 40% from a year ago.

The grocery and drugstore retailer said Wednesday that its discount division, which includes No Frills and Maxi, posted strong growth in the quarter _ a period marked by the highest annual inflation rate in Canada in more than 30 years.

Read more:

High Food Costs Shape Shopping Habits and Habits, Says Metro CEO

Its conventional grocery stores, which include Zehrs, Provigo and Fortinos, have been affected by the shift to discounts, the company said.

The story continues under the ad

Shoppers have also increasingly opted for the company’s house brands, or private labels, in an effort to save money on groceries.

“After President’s Choice, our No Name brand is the second largest (private label) brand in the country,” Loblaw President and CEO Galen G. Weston said in a conference call.

“Thanks to the promise of great products at incredibly low prices, sales are at record highs,” he said. “It’s an indication of the growing importance that Canadian consumers place on value.

During the quarter ended March 26, Loblaw’s food business struggled with continued global supply chain challenges and cost increases, including for fuel, shipping, ingredients and packaging, he said.

Still, the company said its earnings available to common shareholders were $437 million or $1.30 per diluted share for the 12-week period, down from $313 million or 90 cents per diluted share a year. earlier.

Loblaw said it will pay a quarterly dividend of 40.5 cents per share, down from 36.5 cents per share.

The company’s pharmaceuticals business stood out in the quarter and drove a significant portion of sales and gross margin growth, Weston said.

Click to play the video:

How to save on groceries in the face of rising food prices

How to save on groceries in the face of rising food prices – April 20, 2022

Loblaw’s pharmacies, which include Shoppers Drug Mart and Pharmaprix, saw strong in-store and prescription sales.

The story continues under the ad

“As consumer behavior normalized, customers were returning to our Beauty Shoppers counters, driving great results in our higher-margin categories like cosmetics,” he said.

“Cough and colds have strengthened significantly, the number of prescriptions has increased and pharmacy services have continued their multi-year expansion.”

Same-store retail drug sales increased 5.2%, same-store drugstore sales increased 6.8% and forward same-store sales increased 3.6% %.

Read more:

Grocery shoppers use coupons to save money amid inflation

Same-store sales in the grocery retail sector increased 2.1%, helped by higher than normal levels of in-home consumption.

Revenue for the quarter totaled $12.26 billion, compared to $11.87 billion in the same quarter last year.

On an adjusted basis, Loblaw said it earned $1.36 per diluted share, up from adjusted earnings of $1.13 per diluted share a year ago.

Irene Nattel, an analyst at RBC Dominion Securities Inc., said in a client note that Loblaw posted another quarter of strong and better-than-expected results, underscoring the “change in favorable momentum” for the business.

© 2022 The Canadian Press