Supplier talks pay off in better results for Loblaw and Metro

TORONTO Canadian grocers’ efforts to get price reductions from their suppliers are paying off in improved results.

Loblaw Cos. and Metro Inc. reported Wednesday higher sales and profit amid a period of flatto-declining food price inflation, and executives at both companies mentioned past and pending discussions with food suppliers that are allowing them to pass on more “competitive” prices to customers.

“Customers responded well to our lowered prices, and we continued to drive the top line,” Loblaw chief executive Galen Weston told a conference call with analysts.

Canada’s traditional supermarket retailers have been stoking a slow-burn price battle with strategic price cuts on products for several months in an effort to thwart Costco and Walmart, both of which have siphoned market share from the food retailers. Loblaw asked its largest suppliers to cut costs by 1.45 per cent by September in response to what it called “unjustified cost increases” that the retailer had been in part passing on to consumers.

At Loblaw, revenue rose 1.4 per cent in the third quarter ended Oct. 8 to $14.14 billion, up from $13.95 billion a year ago.

Loblaw reported profit attributable to common shareholders of $419 million, or $1.03 per share, compared with a profit of $166 million in the same quarter last year. Montreal-based Metro reported a 10 per cent earnings jump in the period ended Sept. 24 to $145 million compared with profit of $131.7 million a year ago.