Loblaw says an increase in traffic aided by new store openings and continued consumer focus on value helped spur it to a 5.2% increase in year-over-year revenue in the second quarter.
The retailer said in Thursday’s quarterly earnings report that strong performance from its Real Canadian Superstore and hard-discount banners helped boost profit to $14.6 billion, a $725 million jump over the same period a year ago.
Loblaw reported net earnings available to common shareholders of $714 million for the quarter ended June 14, a year-over-year increase of $257 million. The 56.2% jump was largely attributable to the full amortization of certain intangible assets related to its 2014 acquisition of Shoppers Drug Mart, according to the company.
Same-stores sales increased by 3.5% in food retail and by 4.1% in drug retail, while e-commerce sales were up 17.5%.
“Canadians are seeking value, quality and service and are increasingly rewarding us for delivering on their needs, resulting in sales and market share growth,” Per Bank, CEO of Loblaw Cos. Ltd., said in Thursday’s report. “We are bringing our value focus to more and more communities across Canada through our new store openings, with 61 new stores opened since last year.”
In the second quarter, Loblaw opened 10 new stores and 12 pharmacy clinics as part of its full-year plan to launch 80 new stores and 100 new clinics. In the first quarter, five hard-discount stores, a T&T Supermarket and four pharmacies were launched. The company said it plans to invest $1.9 billion in capital expenditures to support its store network and infrastructure over the course of the year.
Loblaw’s list of subsidiaries includes stores such as Zehrs, Provigo, T&T Supermarket, Joe Fresh and President’s Choice Financial.
The company also reported that its internal food inflation was below the national average of 3.3% for food purchased from stores, as measured by the Consumer Price Index.
Inflation update
In its June inflation report released last week, Loblaw said a rise in food prices of 2.8% last month was eased by a 3.1% drop in the cost of fresh produce as lettuces, celery and field came into season.
The retailer said the cost of products such as coffee beans, cocoa fell last month owing to weather and global supply related factors but that beef prices continued to rise because of reductions in cattle stock and stronger demand heading into barbecue season.
