Loblaw is ‘not taking advantage’ of food inflation to drive profits, CFO says – National
Canada’s largest grocer insists grocery inflation isn’t boosting profits, pointing instead to strong demand for pharmacies and cosmetics.
Loblaw Companies Ltd. reported solid fourth-quarter results Thursday morning, with both earnings and earnings beating analyst expectations.
Grocery prices of Candians continue to soar, resulting in strong earnings. Overall inflation he slowed to 5.9% last month, but price increases for store-bought food he accelerated to 11.4%.
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In recent weeks, Loblaw has defended itself against accusations from Canadians that it is using grocery inflation to boost profits, with a social media post accusing it of a $100 grocery bill. claims to make only $4 in profit.
Chief financial officer and president Richard Dufresne told analysts on Thursday morning’s earnings call that margins on food were solid and the company was only raising prices by increasing costs from suppliers. Told.
“Retail prices are not growing faster than costs. Companies are not using inflation to generate profits,” he said.
Loblaw CEO Galen Weston Jr. said in a phone call that strong business performance on the Shoppers Drug Mart side helped drive earnings last quarter.
Higher demand for over-the-counter medicines during flu season and higher sales of cosmetics and other pharmacies were key drivers of growth, he said.
Weston also said more states are turning to pharmacists to provide primary care, boosting demand for Shoppers Drug Mart.
Loblaw doesn’t expect inflationary pressures to abate significantly in the coming months.
Weston said prices “started to stabilize and then reverse” in some areas of the business, but said suppliers continued to demand “significant cost increases” from grocers.
“We expect inflation to continue in the first half[of 2023],” Dufresne said Thursday. “Your guess is the same as mine for the second half.”
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The company’s fourth-quarter revenue increased nearly 10% to $14.01 billion, beating an estimated $13.75 billion.
Loblaw’s earnings were $1.76 per share on an adjusted basis, beating analysts’ expectations of $1.71 per share.
Roblox expects low-double-digit growth for the full year 2023 compared to the average analyst estimate of 9.64% adjusted earnings per common share, according to data from Refinitiv IBES.
But retail pioneer Walmart forecast lower-than-expected full-year profits on Tuesday and warned that tight consumer spending could weigh on profit margins.
— Using files from Reuters
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