Loblaw Companies hiked its dividend after reporting a 10% growth in profits in its first quarter.

The company, which recently named a replacement for president and CEO Galen Weston, announced it would boost its quarterly dividend to 44.6 cents a share, up from 40.5 cents.

The parent company of Loblaw and Shoppers Drug Mart is reporting revenue of nearly $13 billion, up 6% year-over-year.

Same-stores sales in grocery increased by 3.1%. Discount channels continued to outperform, benefiting from the heightened consumer focus on price. In Quebec, Loblaw converted one Provigo location to the discount Maxi banner, with eight additional ones set for conversion in Q2.

Drug same-store sales increased by 7.4%, with front of store sales growth of 10.3% and pharmacy same-store sales growth of 4.7%.

In this morning’s earnings call, Loblaw CFO Richard Dufresne said there is continued demand in cosmetics. OTC was “off its peak,” but strong, and the company is encouraged by the pace of growth in pharmacy services.

As consumers continue to express frustration with retailers for food price increases amid rising profits, the company was clear to point out that food prices in Q1 were in line with the consumer price index. Loblaw is seeing outsized cost increases from large global CPG suppliers, Dufresne noted, especially as small and mid-sized manufacturers in Canada are catching up to the inflationary costs. Private label brands grew sales at twice the rate of national brands, with No Name having double-digit sales growth.

Weston said the company is “laser-focused” on food value, noting that food inflation has “moderated in recent months.” Engagement in PC Optimum also “rose substantially” due to value-seeking behaviours among customers.

Ecommerce sales decreased by 1.1% as they lapped elevated online sales due to pandemic lockdowns last year.

Loblaw also had a slight increase in SG&A expenses, but SG&A as a percentage of sales was 20.3%, a “favourable decrease” of 10 basis points, according to Dufresne, adding that the company is looking to “limit the growth” of SG&A expenses and is working on a plan, though would not provide further details.

The company also said it saw robust strength in the fresh-prepared meals category, particularly in market division stores, as customers are trading out of a restaurant meal for one that provides good value.