Loblaw low­er­ing prices in more com­pet­i­tive mar­ket

Gro­cer re­sponds to in­tense dis­count­ing as it sees ri­vals add, ren­o­vate stores

The Peterborough Examiner - - BUSINESS - ALEK­SAN­DRA SA­GAN

BRAMP­TON, ONT.—Loblaw Com­pa­nies Ltd. saw traffic to its gro­cery stores drop in its most re­cent quar­ter, and the re­tailer low­ered prices and took other mea­sures to win over cus­tomers in an in­creas­ingly com­pet­i­tive industry.

The company no­ticed an uptick in com­pet­i­tive in­ten­sity dur­ing the third quar­ter, par­tic­u­larly in the dis­count di­vi­sion, said Loblaw pres­i­dent Sarah Davis dur­ing a con­fer­ence call with an­a­lysts Wed­nes­day.

It has seen ri­vals add stores, com­plete ren­o­va­tions and lower prices, she said.

Loblaw also took steps to lower food prices in the third quar­ter, which re­sulted in a sales lift.

The company’s in­ter­nal in­fla­tion mea­sure for the quar­ter ended Oct. 5 was about one to two per cent be­low Statis­tic Canada’s con­sumer price in­dex of 4.1 per cent, she said, with some cat­e­gories near­ing de­fla­tion.

“This has po­si­tioned us bet­ter with cus­tomers,” she said. “And in the quar­ter, our tra­jec­tory on traffic, bas­ket and ton­nage im­proved.”

Traffic, which is based on the key re­tail met­ric of same-stores sales, was still neg­a­tive for the quar­ter, but Loblaw is pleased with the progress it’s see­ing, she said.

Food same-store sales were up 0.1 per cent for the quar­ter, how­ever Loblaw says ex­clud­ing the un­favourable im­pact of the tim­ing of Thanks­giv­ing, food same-store sales were up one per cent.

The company said it will con­tinue to watch com­pet­i­tive in­ten­sity, mon­i­tor prices and take ac­tion as nec­es­sary.

Loblaw’s third-quar­ter profit of $331 mil­lion and a 2.3 per cent rev­enue lift was helped by higher sales at its Shop­pers

Drug Mart stores.

The profit amounted to 90 cents per share for the 16-week pe­riod.

That com­pared with a profit of $106 mil­lion or 28 cents per share in the same quar­ter last year.

Rev­enue to­talled $14.66 bil­lion, up from $14.32 bil­lion a year ago.

Drug­store same-store sales were up 4.1 per cent to mark its strong­est per­for­mance since the sec­ond quar­ter of 2016.

Shop­pers Drug Mart’s strong per­for­mance was boosted by the key phar­macy and beauty cat­e­gories, said Davis, adding the company is see­ing signs of a strong flu sea­son.

On an ad­justed ba­sis, Loblaw re­ported a profit from con­tin­u­ing oper­a­tions of $458 mil­lion or $1.25 per share.

That com­pared with an ad­justed profit from con­tin­u­ing oper­a­tions of $466 mil­lion or $1.24 per share in the same quar­ter last year when the company had more shares out­stand­ing.

An­a­lysts on av­er­age had ex­pected a profit of $1.24 share and $14.57 bil­lion in rev­enue, ac­cord­ing to fi­nan­cial mar­kets data firm Refini­tiv.

AARON VIN­CENT ELKAIM THE CANA­DIAN PRESS FILE PHOTO

The drug store and gro­cery re­tailer says the profit amounted to 90 cents per share for the 16-week pe­riod ended Oct. 5.

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