Loblaw, a major grocery retailer, reported an increase in profits during the second quarter, driven by strong performance in its discount chains No Frills and Maxi, as well as its pharmacy unit. The company, headquartered in Brampton, Ontario, disclosed its financial results for the quarter ending June 20, revealing a revenue exceeding $15.3 billion, marking a four percent increase from the previous quarter. Profit available to common shareholders also saw a rise of about five percent to $751 million.
Loblaw noted a 1.6 percent growth in same-store sales for its core retail food business, while its drug retail unit, which includes Shoppers Drug Mart, experienced a significant 4.6 percent increase in same-store sales. This growth was primarily fueled by a 7.5 percent surge in pharmacy and health-care services, attributed to the rising popularity of generic GLP-1 weight loss drugs.
During a conference call with analysts, Chief Financial Officer Richard Dufresne highlighted the positive impact of generic GLP-1 drugs on the company’s pharmacy performance, citing lower generic drug pricing being offset by higher volumes. Loblaw executives reported a 40 percent year-to-date increase in GLP-1 drug sales, a trend that has been ongoing since the previous quarter.
CEO Per Bank mentioned that consumers, seeking to combat inflation, are increasingly turning to frozen vegetables over fresh produce, particularly at No Frills and Maxi stores. The company continues to attract value-focused customers amidst food price inflation, with frozen vegetable sales showing significant growth in their discount banners.
Despite inflation concerns, Loblaw remains competitive in the market, gaining share in hard discount and outperforming conventional retailers. The company’s internal food inflation metric remains lower than the national grocery Consumer Price Index (CPI). Statistics Canada reported a decrease in the headline inflation rate to 2.8 percent in June, with grocery price increases moderating to 3.9 percent from 4.3 percent in May.
On Thursday, Loblaw’s Toronto-listed shares traded relatively unchanged, reflecting a year-to-date gain of approximately six percent.