Canada’s largest grocer is continuing to see elevated sales, as shoppers spend more money on cooking at home during the COVID-19 pandemic. But as with other grocery retailers, the financial results at Loblaw Cos. Ltd. are beginning to face tougher comparisons to surging food purchases last year.
On Wednesday, Loblaw reported first-quarter revenue of $11.9-billion, up slightly from $11.8-billion in the same period last year, when the effects of the pandemic began reshaping Canadians’ grocery-buying habits. In the first quarter last year, as concerns over COVID-19 grew, Canadians stockpiling groceries boosted Loblaw’s sales by $751-million just in the first few weeks of March, 2020.
Loblaw’s sales were roughly flat compared to last year. Same-store sales – an important metric that tracks sales growth not affected by store openings or closings – grew by 0.1 per cent at Loblaw’s grocery stores in the first quarter, and 1.7 per cent at its Shoppers Drug Mart drugstore chain.
After a year of unprecedented sales growth, Loblaw and other grocers are beginning to compare their financial results to periods in 2020 when COVID-19 affected buying habits. In the four weeks following the end of the quarter on March 27, Loblaw’s grocery same-store sales have fallen slightly, while same-store sales at its drugstores were up.
Loblaw’s profits grew in the first quarter: The company reported net earnings available to common shareholders of $313-million, up 30.4 per cent compared to the same period last year. The company reported diluted net earnings of 90 cents per common share, up from 66 cents per share in the first quarter last year.
E-commerce demand continued to grow, even compared to the surge in online buying last year: In the 12 weeks ended March 27, online sales grew 133 per cent compared to the same period in 2020.
E-commerce sales should begin to “flatten out” on comparisons with last year, outgoing Loblaw president Sarah Davis said on a conference call on Wednesday. But the company has been working to improve customer service for online orders, and to cut costs of filling those orders – by improving the efficiency of how orders are fulfilled in stores, for example.
Currently, most of Loblaw’s online orders are for its “click and collect” store pickup service, but the company is also working on building its home-delivery service – both through a partnership with delivery company Instacart, as well as its own service operating in Toronto, Calgary and most of Quebec. That service uses Loblaw’s order-picking staff and partners with a company for delivery, and there are plans to expand it. Competitors such as Sobeys, Metro and Walmart have also been investing heavily in grocery home delivery.
“Predominantly it is still click-and-collect that we see in our business, but we do think that delivery is important in some parts of the country,” Ms. Davis said on the call. “ … We do believe that both matter.”
Loblaw, which will hold its annual general meeting on Thursday, is in the midst of a leadership change. As previously announced, Loblaw president Sarah Davis and its chief financial officer Darren Myers are leaving the company on Thursday. Galen G. Weston will return to running the retailer as chairman and president, in addition to his current role as chairman and chief executive officer of Loblaw’s controlling shareholder, George Weston Ltd . George Weston president and CFO Richard Dufresne will also expand his role to include CFO at Loblaw.
In most provinces, Loblaw is also part of the COVID-19 vaccine rollout efforts. So far, the company’s pharmacies have administered roughly 700,000 shots at about 1,100 stores, Ms. Davis said. But she pointed out that pharmacies are not operating anywhere close to their capacity to vaccinate the population.
“We could play a bigger role,” Ms. Davis said. “We have the capacity to provide one million [shots] a week, in terms of vaccines.”
Loblaw has been investing heavily in health services as part of an overall goal to broaden the role it plays in customers’ health care management. Ms. Davis said that the company would like to provide more care for minor ailments in all provinces, as it already does in Alberta and could soon do in Ontario, providing an alternative to doctors’ offices or emergency visits.
Like other grocers, Loblaw is facing pressure to reinstate regular pay premiums for its front-line employees during the pandemic. Last Friday, the company announced a one-time “appreciation” bonus for employees to be paid in June. But Canada’s largest private-sector union, Unifor, has called on Loblaw and other major grocers to do more.
On Wednesday, the company declared a dividend of 33.5 cents per common share.
Loblaw reported $48-million in costs related to COVID-19 in the first quarter.
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