Though Galen Weston Jr. may have stepped back from his role as Loblaws CEO, to many, he still represents Canada’s runaway grocery prices and troublesome grocery oligopoly, given his position at Loblaw Companies Ltd.’s parent company, George Weston Ltd.
Now CEO and chairman of the supermarket giant named for his great-grandfather, the younger Weston has just announced the company’s latest fiscal results, which, surprisingly, don’t appear as rosy as those recently reported by Loblaws Companies Ltd. specifically or competitor Metro.
— blogTO (@blogTO) August 2, 2023
While profits for the 16-week period ending October 7, 2023 was up just over five per cent year-over-year — hitting a whopping $18.4 billion — net earnings available to shareholders were down a substantial 31 per cent, or $279 million versus the same time last year.
This drop was is not to do with a lack of grocery sales, though, but is instead being blamed on one-time value adjustments on the investment properties George Weston’s has through the Choice Properties Real Estate Investment Trust.
The figure would have been even worse if it weren’t for the performance of Loblaws stores, which Weston said “delivered another quarter of strong operational and financial results.”
As noted in a release on the results, earnings were largely focused in beauty product and prescriptions sales via Shoppers Drug Mart, as well as, of course, food sales at Weston’s various grocery arms.
While sales in these areas increased, so did costs, which were attributed to “targeted promotional investment” and also an increase in inventory lost to theft and by other means — which explains why Loblaw’s brands have been ramping up security measures.
I still don’t understand how Weston fraudulently rob the people and made off with as little as a slap on the wrist.
— Captain Kvetch (@CaptainKvetch_) July 29, 2023
As shoppers continue to stress about expenses during the cost of living crisis, Loblaw Companies Ltd.’s discount stores, such as No Frills, are seeing more business, prompting the conglomerate to continue to invest in more of these types of outlets.
While it is now common knowledge that grocery items have been seeing higher price escalations than headline inflation, Weston execs were sure to deflect any accusations of price-gouging by stating that “increased investments to lower food prices were reflected in Loblaw’s internal food inflation, which was lower than Canada’s food CPI.”
Still, even with the net earnings on the decline (that is, net earnings available to common shareholders after taxes and payments of dividends to preferred shareholders), the release states that “higher sales and ongoing cost control initiatives drove adjusted net earnings growth in the quarter,” with a $13 million increase (2.8 per cent) in this figure from October 2022.