Loblaw, a major grocery retailer, saw an increase in profits during the second quarter, driven by strong performance in its discount chains No Frills and Maxi. The company also experienced robust sales growth in its pharmacy division, attributed to the growing popularity of generic GLP-1 weight loss medications.
Based in Brampton, Ontario, Loblaw released its financial results for the quarter ending June 20, reporting revenue exceeding $15.3 billion, a four percent increase from the previous quarter. Net profit available to common shareholders surged by five percent to $751 million.
Loblaw noted a 1.6 percent rise in same-store sales for its core retail food business, while its drug retail segment, including Shoppers Drug Mart, recorded a 4.6 percent increase in same-store sales, primarily fueled by a 7.5 percent boost in pharmacy and health-care services.
Chief Financial Officer Richard Dufresne highlighted the positive impact of generic GLP-1 drugs on the company’s pharmacy performance, anticipating higher revenues, gross profit dollars, and gross margin rates due to lower generic drug prices offset by increased volumes.
The GLP-1 category, which includes brands like Ozemic and Wegovy, has seen a 40 percent year-to-date growth in drug sales, following the approval of Canada’s first generic semaglutide injection by Health Canada in April.
CEO Per Bank mentioned a shift in consumer behavior towards purchasing more frozen vegetables over fresh produce due to inflationary pressures. Loblaw’s discount banners, No Frills and Maxi, have observed a notable increase in frozen vegetable sales as customers seek ways to manage rising costs.
Despite food price inflation, Loblaw remains competitive, with its hard discount and conventional stores gaining market share. The company’s internal food inflation metric continues to outperform Canada’s grocery CPI.
Recent data from Statistics Canada showed a decline in the headline inflation rate to 2.8 percent in June, with grocery price hikes moderating to 3.9 percent from 4.3 percent in May. Loblaw’s Toronto-listed shares remained stable on Thursday, reflecting a six percent year-to-date increase.
