Loblaw CEO ‘cautiously optimistic’ about grocery code of conduct
Loblaw Cos. Ltd.’s new chief executive said he’s “cautiously optimistic” that the company will be able to come to an agreement on the grocery code of conduct.
“Where it’s going to land, I’m of course not sure, but I’m more optimistic now than before that we can land an agreement on the code,” Per Bank told a conference call discussing Loblaw’s firstquarter earnings Wednesday.
The grocer has been one of two major holdouts on the code, which is intended to promote fair dealings in the industry. Loblaw and Walmart Canada previously said they couldn’t sign the code as drafted because they were concerned it would raise prices for consumers.
Bank told analysts on the call that the company has been working in recent weeks with the committee creating the code.
The code is meant to be industry-led and voluntary, but the federal government has indicated it’s open to making it law instead if the major players won’t all get on board.
It’s “well past time” that
Loblaw recognizes the benefits of the code, said Annie Cullinan, a spokeswoman for agri-food minister Lawrence MacAulay.
“We hope that their ‘cautious optimism’ translates into a prompt commitment to adopt and adhere to” the code, she said in an email.
“After years of work and support from the majority of industry partners, it’s well past time Loblaw recognize the benefits of bringing more fairness, transparency and stability to our grocery sector and supply chain.
Michael Graydon, CEO of the Food, Health & Consumer Products of Canada association and chairman of the interim board for the code, said in an email that he shares Bank’s optimism, and that discussions with the company have been “very productive.”
Bank’s comments came as the parent company of Loblaws and Shoppers Drug Mart raised its quarterly dividend by 15 per cent to 51.3 cents per share and reported its first-quarter profit and revenue rose compared with a year ago.
The retailer said its profit available to common shareholders increased almost 10 per cent year over year to $459 million, or $1.47 per diluted share, for the quarter ended March 23. Revenue totalled $13.58 billion, up from $13.00 billion a year earlier.
Food retail same-stores sales rose 3.4 per cent, while drug retail same-store sales increased 4.0 per cent, with front store samestore sales up 0.7 per cent and pharmacy and health-care services up 7.3 per cent.
“Our strong same-store sales combined with a lower internal inflation rate clearly highlights the strength of our discount banners, private label brands and PC Optimum offers,” chief financial officer Richard Dufresne said.
On an adjusted basis, Loblaw said it earned $1.72 per diluted share in its latest quarter, up from an adjusted profit of $1.55 per diluted share a year earlier.
Bank said the company’s discount stores continue to drive growth as customers are “voting with their feet.”
“I think the shift to discount will continue over the next many years,” he said, though it will likely do so at a slower pace.
The company plans to continue expanding its discount store footprint this year. Earlier this year it announced a $2-billion capital investment plan that it said would result in more than 40 new discount stores, among other relocations, renovations, and new pharmacy care clinics.