Shoppers Drug Mart leads Loblaw Companies second quarter revenue growth
Loblaw's is on a multi-year plan to improve efficiency across its infrastructure networks. The company booked $16 million in restructuring charges in Q2
BRAMPTON, Ont. – The Loblaw grocery and pharmacy business said Wednesday that revenue increased three per cent from a year earlier, driven largely by sales growth at its Shoppers Drug Mart stores.
Loblaw Companies Ltd., based in Brampton, Ont., reported a second-quarter profit of $286 million, or 77 cents per share, from continuing operations, down $7 million from $293 million in last year’s second quarter.
However, last year’s overall second quarter profit was only $50 million or 13 cents per share after including a $243-million loss from its investment in Choice Properties, which the company spun off last November.
Loblaw revenue for the 12 weeks ended June 15 was $11.1 billion, up from $10.8 billion in the second quarter of 2018. Same-store sales from food retail was up 0.6% while same-store sales from drug retail grew four per cent from last year.
“We delivered on our financial plan in the quarter,” said executive chairman Galen G. Weston.
“We have a long-term approach to investing and to building customer loyalty, and we remain committed to our strategy.”
Loblaw has been focused on a multi-year plan to improve efficiency across its infrastructure networks in order to reduce the complexity and costs of doing business. The company booked $16 million in restructuring and related charges in the second quarter, largely due to their process and efficiency initiatives.
Adjusted diluted net earnings from continuing operations was $1.01 per share, up from 93 cents per share last year. Discontinued operations didn’t contribute to this year’s second-quarter adjusted earnings, but added 13 cents last year.
The results were in line with analyst estimates of $1.01 per share of adjusted earnings and revenue of $11.15 billion, according to financial markets data firm Refinitiv.
Still, BMO Capital Markets analyst Peter Sklar pointed out that investors will be focused on the low same-store-sales growth, at 0.6%, at Loblaw’s grocery stores and negative “tonnage”, or unit sales, as the company focused on improving margins at the expense of tonnage.
“Meanwhile, Metro and Sobeys have been gaining tonnage with less focus on margin,” he noted.
In recent years, the company has boosted its technological offerings, adding self-service checkouts and electronic shelf labels in stores, as well as growing its ecommerce business.
