Loblaw sees prices mod­er­at­ing but fierce gro­cery wars

The Hamilton Spectator - - CANADA & WORLD - LINDA NGUYEN

TORONTO — Canada’s big­gest gro­cery and phar­macy owner says it an­tic­i­pates com­pe­ti­tion be­tween su­per­mar­ket chains will be fierce this year as food prices con­tinue to stay low.

Loblaw Com­pa­nies Ltd. said gro­cers have been grap­pling with de­clin­ing food prices, es­pe­cially for meat, fol­low­ing a shift from last year’s high in­fla­tion.

Al­though Loblaw CEO and chair Galen G. We­ston ex­pects prices will even­tu­ally mod­er­ate by the end of the year, he does not see the “in­tense com­pe­ti­tion” with ri­vals eas­ing off.

“The no­tion of a shift into a steady in­fla­tion­ary en­vi­ron­ment is go­ing to be off­set by what we see as a con­tin­ued level of com­pet­i­tive in­ten­sity,” We­ston said Wed­nes­day dur­ing a con­fer­ence call with fi­nan­cial an­a­lysts fol­low­ing the re­lease of the com­pany’s lat­est re­sults.

Food prices in March fell 1.9 per cent com­pared with a year ago as Sta­tis­tics Canada’s over­all con­sumer price index for the same month rose 1.6 per cent from a year ear­lier, fol­low­ing a 2.0 per cent gain in Fe­bru­ary.

Com­pared with a year ear­lier, the cost of fresh fruit dropped 12.4 per cent while fresh veg­etable prices fell 10.2 per cent.

We­ston said Loblaw, which owns gro­cery stores un­der var­i­ous ban­ners and the Shop­pers Drug Mart chain, plans on mak­ing up for the short­fall by using its loy­alty an­a­lyt­ics pro­grams to bring more cus­tomers into its stores and get them to spend more with each shop­ping trip.

It plans to do this by in­creas­ing its tar­geted offers and con­tin­u­ing to of­fer more sale pro­mo­tions.

The com­pany noted that it has also seen suc­cess with of­fer­ing food in its Shop­pers stores.

We­ston said this con­cept works best in ur­ban cen­tres such as Toronto, where cus­tomers are using the lo­ca­tions as a place to do their mid-week shop­ping on their way home from work.

Loblaw re­cently ex­panded the ini­tia­tive to one store in down­town Van­cou­ver. Ear­lier, the com­pany re­ported its first-quar­ter profit was up 19 per cent from a year ago.

Loblaw said it had $230 mil­lion in net earn­ings avail­able to common share­hold­ers or 57 cents per di­luted share for the quar­ter ended March 25. That was up from $193 mil­lion or 47 cents per di­luted share in the same quar­ter last year.

Rev­enue edged higher to $10.40 bil­lion from $10.38 bil­lion a year ago.

It also an­nounced that it was rais­ing its quar­terly div­i­dend by a penny to 27 cents per share.

Last month, the com­pany an­nounced it was sell­ing its 213 gas sta­tions to as­set man­ager Brook­field Busi­ness Part­ners for about $540 mil­lion.

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