Loblaw ‘cautiously optimistic’ about new grocery code of conduct as it posts $13.5B quarterly profit

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.

“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 first-quarter 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.

“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 sales up 0.7 per cent, and pharmacy and health-care services samestore sales up 7.3 per cent.