Discount stores

Loblaw Discount Stores on the Rise after ‘Leak to Conventional Stores’: Chairman


Loblaw Companies Ltd.’s discount grocery stores. are starting to regain market share after consumers flocked to conventional supermarkets at the start of the pandemic, the company’s president said on Thursday.

Loblaw Companies Ltd.’s discount grocery stores. are starting to regain market share after consumers flocked to conventional supermarkets at the start of the pandemic, the company’s president said on Thursday.

Sarah Davis said COVID-19 restrictions prompted many consumers to switch to conventional grocery stores because they were looking for a “more complete store” while limiting the number of times they shop per week.

“When the pandemic started, we saw a flight to conventional, which had a significant impact on our discount business,” she told analysts on a conference call after Loblaw announced that its earnings and fourth quarter revenue were up from a year ago.

The trend had a positive impact on the sales of the company’s conventional grocery stores. But given that Loblaw’s food business split is roughly 60 percent discount stores and 40 percent conventional stores, Davis said the company “was working to regain that market share.”

The company’s fourth quarter results showed a “closing of the gap,” she said. “We are seeing an improvement in the trajectory.”

Loblaw said sales at its comparable food retail stores grew 8.6 percent, its conventional division by 10.6 percent and its discount division by 7.4 percent. This is up from the 4.7% growth in the discount division in the previous quarter.

Davis said the “food division’s results” were more balanced in the fourth quarter than they have been since the start of the pandemic, suggesting that customers are returning to discount stores after a “short hiatus from the pandemic “.

“We are seeing a small change in consumption patterns, maybe not just in one store,” she said. “We’re seeing a few more shoppers doing more than one store per week, maybe also shopping at a few different banners.”

Loblaw has conventional grocery stores like Loblaws, Zehrs, Your Independent Grocer, Real Atlantic Superstore and Provigo, as well as a discount division, which includes No Frills and Maxi.

Overall, the company said it achieved net income available to common shareholders of $ 345 million or 98 cents per diluted share for the 13-week period ended Jan. 2, boosted in part by an additional week during of the quarter.

The result is compared to earnings of $ 254 million or 70 cents per diluted share for the 12-week period ended December 28, 2019. Revenue totaled $ 13.29 billion, compared to $ 11.59 billion.

Loblaw’s online sales soared 160% in the quarter, as many provinces reinstated closures and stay-at-home orders.

Meanwhile, Davis said the company was “ready to play a key role in the nationwide vaccination effort.”

She said the retailer’s supply chain is able to deliver the vaccines and start giving the injections the day she receives them.

The company’s 1,300 Shoppers Drug Mart and Pharmaprix stores across the country are within 10 minutes of most Canadians, Davis added.

The company’s pharmacies have administered seasonal flu shots for years and are well positioned to do the same with COVID-19 vaccines, she said.

Still, Davis said Loblaw has yet to receive the all-province rollout strategy and timeline.

Company pharmacists in Alberta will begin offering the vaccine in select stores next week, she said.

Ontario, Manitoba and Saskatchewan have all indicated the company will be part of the vaccination process, but Loblaw has not received more details such as the exact timeline, Davis said.

In British Columbia and Quebec, she said it appears pharmacists could play a role at mass vaccination sites, but not in pharmacies themselves.

However, Davis said the vaccine will likely be available for a long time, and the scope of the pharmacy’s role in some provinces may expand over time.

This report by The Canadian Press was first published on February 25, 2021.

Companies in this story: (TSX: L)

Brett Bundale, The Canadian Press


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