Loblaw 'surprised' at ability to weather high grocery prices

TORONTO -- Loblaw Companies Ltd. management is surprised at how well the company has been able to weather high food inflation.

See Full Article

Canadian food prices rose four per cent between January 2015 and last month, according to Statistics Canada's consumer price index, driven by a 12.9 per cent increase fresh fruit prices and an 18.2 per cent spike in the price of fresh vegetables.

"So far, the ability to pass through this inflation has surprised us," Galen Weston, Loblaw's president and executive chairman, told analysts Thursday after the company released its latest financial report.

Loblaw has about 900 market, discount and specialty grocery stores under various banners, but Weston said the company hasn't noticed any major changes in consumer behaviour.

There was a spike in the volume of potatoes sold when cauliflower prices soared, he said, but noted some shoppers typically opt for less expensive products when the cost of one item surges past a certain threshold.

In Alberta, where the economy is under the most pressure because of the collapse of oil and gas prices, Loblaw is seeing a "disproportionate momentum" at its No Frills discount stores, Weston said.

Edward Jones analyst Brittany Weissman said it helps Loblaw that all the major grocery chains seem to be increasing prices, rather than just one.

There's a demand for the products that have been most impacted by inflation -- such as fruits, vegetables and meats -- so people have been willing to pay the higher prices, Weissman said.

Still, Loblaw's fourth-quarter profit slipped more than one-third compared with the prior year -- primarily because of costs and accounting items associated with unusual items, rather than performance of its stores.

Overall retail sales were $10.86 billion. That was down from a year earlier when the quarter had an extra reporting week in 2014, but up $241 million or 2.3 per cent from $10.6 billion on a standard 12-week basis.

Loblaw's fourth-quarter net income for common shareholders fell to $128 million, or 31 cents per share.

That's down from $247 million or 60 cents per share reported a year earlier, when the comparable quarter had an extra week. Excluding the extra week, the year-earlier profit would have been $195 million or 47 cents per share.

Loblaw said the lower profit was largely because of special items including the write-down of drug retail assets that are being held for sale as well as costs for switching some grocery stores to more cost-effective labour agreements.

The writedown of drug retail assets shaved $112 million or 20 cents per common share from the earnings, the largest of the special items. The second-largest was $55 million, or 10 cents per share, related to the new labour agreements.

After adjustments, Loblaw earned $363 million -- up 5.5 per cent compared with the fourth quarter of 2014. The adjusted earnings per share were 88 cents in the latest quarter.


Latest Economic News

  • Experimental pot lab sprouting cannabis-infused drinks, new edibles

    Economic CTV News
    SMITHS FALLS, Ont. -- Nestled inside Canopy Growth Corp.'s sprawling marijuana facility outside Ottawa is a laboratory where technicians in white lab coats and hair nets bustle about, pipetting fluids into glassware as machinery hums and coloured, three-dimensional graphs flash on nearby screens. Source
  • Global vanilla prices squeeze margins for ice cream, cupcake makers

    Economic CTV News
    TORONTO -- Prepare to shell out a little more for the sweet treats of spring and summer as a global surge in the price of vanilla makes its impact at some small-batch ice cream shops and neighbourhood bakeries. Source
  • Companies experiment with killing the barcode on event tickets and in stores

    Economic CTV News
    TORONTO -- When fans score tickets for events at the Burton Cummings Theatre in Winnipeg in the future, they might notice the absence of a familiar feature: that ubiquitous zebra-styled inventory tracker bar that adorns almost every retail product imaginable. Source
  • Tickets without barcodes: Concert venues experiment with new systems

    Economic CBC News
    When fans score tickets for events at the Burton Cummings Theatre in Winnipeg in the future, they might notice the absence of a familiar feature: that ubiquitous zebra-styled inventory tracker bar that adorns almost every retail product imaginable. Source
  • Canadians see possible signal U.S. ready to accept NAFTA compromise

    Economic CTV News
    OTTAWA -- American trade officials are showing newfound interest in a Canadian proposal for revamping NAFTA's automotive provisions as the U.S. seeks to swiftly conclude renegotiations of the continental free trade pact. And that's being taken in some quarters as a sign that the U.S. Source
  • The dirty truth about makeup and the oil change debate: CBC's Marketplace consumer cheat sheet

    Economic CBC News
    Miss something this week? Don't panic. CBC's Marketplace rounds up the consumer and health news you need. Want this in your inbox? Get the Marketplace newsletter every Friday. Internet prices dialing up Your internet bill could get even more pricey. Source
  • After overcharging for bread, should Loblaws demand ID for a $25 gift card?

    Economic CBC News
    Jenn Iskiw says she'll be grocery shopping elsewhere after feeling betrayed by Loblaws — twice. First, for artificially inflating the price of bread for 14 years, and second, for demanding she send ID to get a $25 gift card offered as compensation for bread price fixing. Source
  • Facebook suspends data analytics firm that worked for Trump campaign

    Economic CBC News
    The Massachusetts attorney general said on Saturday her office was launching an investigation after reports that Cambridge Analytica had harvested private information from more than 50 million Facebook users in developing techniques to support U.S. President Donald Trump's 2016 election campaign. Source
  • Trump's goal of 'energy dominance' could change the global balance of power

    Economic CBC News
    Fuelled by technological breakthroughs and cuts to taxes and regulation, the United States is on target to become the world's biggest producer of crude oil in the next five years. Let that sink in. The U.S will be bigger than Russia and Saudi Arabia. Source
  • How to avoid spending money on unnecessary oil changes

    Economic CBC News
    Oil changes are by far the most common service performed on vehicles in Canada. Customers pay quick lube facilities, private garages and dealer maintenance centres well over a billion dollars a year for the service. But a CBC investigation finds many of us may be changing our oil far more often than automakers require. Source