The COVID-19 be beneficial to Loblaw… for now

La COVID-19 profitable à Loblaw... pour l’instant

La COVID-19 profitable à Loblaw... pour l’instant

Loblaw has reported that “the rush of the retail trade” when measures to combat the pandemic of the coronavirus have been announced, she explained, noting that the number of customers and basket size had quadrupled, and that the traffic of its online business had tripled.

29 April 2020 17h47

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The COVID-19 be beneficial to Loblaw… for now

Aleksandra Sagan

The Canadian Press

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The largest grocer in Canada is expected to undergo “financial pressures” in the future, as the purchasing habits of customers change over time and that the costs will increase during the pandemic COVID-19.

Loblaw Companies have recently recorded an increase in their sales, like other large grocers in Canada — Metro and Empire — as the customers have made provision of food in preparation for their confinement to the home and to the end of their restaurant outings.

The first quarter of the company “was the story of 14 days,” said the president, Sarah Davis, during a conference call with analysts on Wednesday after Loblaw, which owns the grocery stores, Loblaw and Shoppers Drug Mart (chains, Provigo and Pharmaprix in Québec), has released its most recent quarterly results.

Loblaw has reported that “the rush of the retail trade” when measures to combat the pandemic of the coronavirus have been announced, she explained, noting that the number of customers and basket size had quadrupled, and that the traffic of its online business had tripled.

The chief financial officer, Darren Myers, has stated that during the two weeks that ended march 21, Loblaw had seen sales of its grocery stores to increase by about 44 %. Sales of pharmaceutical products increased by 26 %, while those of other products sold in pharmacies have jumped by 42 %.

Loblaw calculates that the pandemic has generated additional revenue of $ 751 million during the quarter, ” he said.

Future difficult to predict

The positives were partially offset by increased operating costs related to the coronavirus, which started to increase towards the end of the first quarter.

“It is very difficult to predict how the sales will evolve,” said Mr. Myers, noting that the company is expecting, for example, to a possible decrease in categories of discretionary spending.

“Since the beginning of the second quarter, we experienced a marked shift in the trajectory of our sales.”

During the first five weeks of the second quarter, sales of food products increased by approximately 10 %, he said, but sales of medicine have declined by about 6 %.

“It is incredibly difficult for us to predict the future after all this. ”


Darren Myers, chief financial officer

The company is also experiencing declines in its categories of clothing, general merchandise, and beauty, which are “all of the parties to margin relatively high percentage of our business”, said Ms Davis.

Sales of general merchandise and clothing showed a decline compared to last year during the last two weeks of the first quarter, she stated, and continue to be during most of the weeks of the second quarter until now. Sales of clothing are experiencing a larger decline.

These setbacks arise as the costs associated with the COVID continue.

Loblaw spends approximately $ 90 million every four weeks for its efforts to ensure the safety of stores for customers and employees, for salary increases to temporary and other measures, explained Mr. Myers.

“It is incredibly difficult for us to predict the future after all this,” he said when asked how many of these cleanups, overtime and other costs Loblaw was expecting to have to integrate permanently its activities.

“I would say that these are costs temporary at this point that we expect to continue through the pandemic, but it is too difficult for any of us to predict what will happen in the future.” Loblaw expects that these costs fall more heavily in the second quarter.

Three times more online orders

A positive point for the business was the tripling of demand for its online services, which include both options for in-store pickup and home delivery. Sales of clothing, beauty and pharmacy online of the company are all on the rise, said Ms. Davis.

Loblaw does not expect this level of demand before two or three years, she said.

The company has worked to increase its capacity to respond to many commands by improving its technology, and increasing hours of work, other things.

Customers have experienced delays because of the increased demand, she said, particularly in the larger centres. The average waiting time is now six days, she said, but a plan is in place for a return to a period of time daily.

“We added capacity as quickly as possible to [get back to that level].”

Although it is “difficult to anticipate precisely how our company will evolve in any new standard emerging,” the executive chairman Galen Weston said the company believed that “online grocery shopping will keep a significant portion of the penetration current sales.”

He also noted that a greater number of clients were responding to the strategies of digital promotion, and adopting, health services, digital, and trends of potential customers are expected to accelerate significantly compared to the period prior to the pandemic, believed to Loblaw.

Profits and revenues up

The company has achieved a profit attributable to its common shareholders of $ 240 million, or 66 cents per share, for the period of 12 weeks ended on march 21.

In comparison, earnings were $ 198 million, or 53 cents per share, during the same quarter last year.

Revenues totaled $ 11.8 billion $, then they had been to $ 10.7 billion in the first quarter of 2019.

Sales at food and beverage stores, open for at least a year rose 9.6 %, while those of pharmacies that are open for at least a year have advanced by 10.7 %.

On an adjusted basis, Loblaw has made a profit of $ 352-million, or 97 cents per share, compared to a profit of $ 290 million, or 78 cents per share, a year earlier.

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