Inflation in Canada: Walmart CEO on profits

Ottawa –

Walmart Canada is not trying to profit from food inflation, president and CEO Gonzalo Guevara told a congressional committee considering the issue Monday night.

Gebara told the MP that gross margins at Walmart Canada’s food business fell last year, and the company’s total operating profit in dollars also fell. However, Walmart Canada declined to provide specific figures for the private sector, saying it provided relevant financial information to the Competition Bureau.

MPs put pressure on Guevara over the fees and penalties grocers charge suppliers. These charges are one of the topics he is discussing as part of efforts to create a grocery code of conduct.

Walmart Canada recently received a draft code of conduct and is reviewing it, Gebara said.

“We support any initiative that brings better terms and the ability to increase transparency across the chain,” he said.

Guevara’s comments before the commission followed a much-anticipated appearance by leaders of Canada’s three largest grocery chains on March 8.

CEOs and presidents of Loblaw Cos. Ltd., Metro Inc. and Empire Co. Ltd. told the commission that food inflation was not driven by profit taking, margins on food remain low I claimed.

With food price inflation significantly outpacing overall inflation, federal politicians have called on the grocery industry to be more transparent.

Walmart Canada is trying to maintain a price differential between its own products and those sold by competitors, Gebara said, citing other grocery giants.

He said Walmart is known for its “everyday low prices” strategy, saying, “This is not a stunt or a response to the difficult times we live in.”

Retailers are doing everything they can to combat inflation, Guevara said, taking steps to contain operating costs, identifying improvements in supply chains and keeping prices on private-label products in check. I am working hard to

“The past two years have seen a storm of external factors pushing up food prices,” he said. “These inflationary pressures are passed along the entire supply chain.”

Grocery prices were up 10.6% in February compared to a year ago, with overall inflation at 5.2%.

Over the past year, the Bank of Canada has repeatedly raised interest rates to quell runaway inflation.

Loblaw chairman and president and billionaire Galen Weston told the MP earlier this month that it was “impossible” that grocery stores were causing grocery inflation, saying that the company is selling apparel and pharmacies. It said it is making more profit from non-food parts, such as.

The latest report from Dalhousie University’s Agri-Food Analytics Lab found that all three major grocery companies posted higher earnings in the first half of 2022 compared to their average earnings over the past five years. I was.

At the March 8 meeting, NDP leader Jagmeet Singh repeatedly asked Weston, “How much profit is too much?”

Weston argued that “reasonable profitability is a key factor in running a successful business,” and former Empire president and CEO Michael Medline followed a similar line, stating that “unprofitable food “It’s silly to suggest that the product business is somehow better and better for the customer.” for the shelf price. ”

At the March 8 meeting, both Metro and Empire heads questioned why the MP appeared to be excluding American retail giants such as Walmart and Costco from its investigation of food inflation. The committee unanimously agreed that he would invite the leaders of the two retailers’ Canadian divisions to speak.

— Using files from The Associated Press

This report by the Canadian Press was first published on March 27, 2023.

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