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Loblaw Cos. Ltd. has continued to benefit from higher grocery sales during the COVID-19 pandemic, as restrictions on restaurant dining continue in many parts of the country, and people cook at home more often.

The Toronto-based retailer announced on Thursday that it will raise its quarterly dividend by two cents, to 33.5 cents a share. Loblaw reported that third-quarter revenue grew 6.9 per cent to $15.7-billion.

Food retail same-store sales – an important metric in retail that tracks sales growth not affected by new store openings – also grew by 6.9 per cent in the 16 weeks ended Oct. 3. In an industry where same-store growth is usually much lower, Canada’s major grocers have seen unusual levels of growth since the pandemic began affecting shopping behaviours this year.

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Although the fall holidays were muted by restrictions on gathering – and advice against trick-or-treating in some provinces – the retailer did not see a significant difference in sales performance for Thanksgiving and Halloween, Loblaw president Sarah Davis said on a conference call Thursday to discuss the company’s results.

“People are still getting together and celebrating, just in smaller groups,” Ms. Davis said, adding that Loblaw expects a similar pattern through the Christmas season. “…They likely won’t be going out to as many restaurants and parties. So it will be eating at home in small groups, that we are anticipating for the holiday season.”

The company owns supermarkets including Loblaws, Real Canadian Superstore, Provigo, Valu-mart, No Frills and others. Loblaw’s regular-priced store banners grew more than its discount ones in the quarter. Like other grocers, Loblaw has continued to see shoppers visiting stores less often, but buying more during each trip. The mix of products people buy is also pushing sales up, with the average article price sold in the grocery stores growing by 5.3 per cent in the quarter.

Drugstore sales were also up at the company’s Shoppers Drug Mart and Pharmaprix chains. Drug same-store sales grew 6.1 per cent in the third quarter, with pharmacy sales up 10.3 per cent and front-of-store sales up 2.4 per cent. Both the number of prescriptions dispensed at the drugstores, and their average value, grew in the quarter.

Loblaw’s e-commerce sales were up 175 per cent in the quarter. The pandemic has contributed to shoppers buying online more often: 31.3 per cent of Canadians have ordered groceries either for home delivery or curbside pickup in the past six months, according to a survey of 7,290 people released on Thursday by Dalhousie University’s Agri-Food Analytics Lab.

The survey found more people are regularly ordering food online now compared with before the pandemic, suggesting that shoppers could be forming longer-term habits that will continue even after concerns about the coronavirus have passed. In the survey, convenience was cited most often as the reason for buying food online, while COVID-19 concerns was the next most popular reason.

Loblaw also recently expanded its e-commerce presence through the Shoppers Drug Mart and Pharmaprix brands, offering a wider range of products online.

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The company reported roughly $85-million in costs related to COVID-19 in the third quarter, such as spending on safety measures. The company has been rolling out more self-checkout lanes especially in its Shoppers Drug Mart stores, which customers are choosing more often to limit contact with others. Even after a vaccine is available, there could continue to be some elevated costs as consumers have different expectations at stores, but costs will not remain at the current levels, chief financial officer Darren Myers said on the call.

Revenue in Loblaw’s financial services segment decreased as consumer spending fell, leading to lower credit card fees and interest.

The company reported net earnings available to common shareholders of $342-million or 96 cents a share in the quarter ended Oct. 3, compared to $331-million or 90 cents in the same period last year.

In October, Loblaw saw the pandemic continue to affect shoppers' behaviours, and food sales continued to trend upward. The growth in drugstore sales has slowed since the end of the third quarter.

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