Loblaw, a leading grocery retailer based in Brampton, Ontario, reported a significant increase in profits for the second quarter, driven by strong performance in its discount chains such as No Frills and Maxi. The company disclosed that its pharmacy unit experienced robust sales growth, attributed to the popularity of generic GLP-1 weight loss medications.
In the financial results released for the quarter ending June 20, Loblaw announced a revenue surpassing $15.3 billion, marking a four percent increase from the previous quarter. Profit available to common shareholders also rose by approximately five percent, reaching $751 million.
The company highlighted a 1.6 percent rise in same-store sales for its core retail food business, while its drug retail unit, which includes Shoppers Drug Mart, reported a 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 sales.
During a conference call with stock market analysts, Loblaw’s chief financial officer, Richard Dufresne, emphasized the positive impact of the transition of GLP-1 drugs to generic versions. Dufresne noted that the shift to lower-priced generic drugs was being offset by increased volumes, leading to anticipated growth in revenue, gross profit dollars, and gross margin rate.
The GLP-1 drug category, encompassing brands like Ozemic and Wegovy, has seen a significant uptick in sales, with a 40 percent increase year-to-date, according to Loblaw executives. This trend was first observed in the preceding quarter reported in May following Health Canada’s approval of the country’s first generic semaglutide injection in late April.
CEO Per Bank mentioned that cost-conscious consumers are increasingly opting for frozen vegetables over fresh produce due to rising inflation, with fresh tomatoes experiencing a notable 45.2 percent year-over-year price hike. Bank highlighted a substantial growth of over five percentage points in frozen vegetable sales at No Frills and Maxi stores as shoppers seek to manage inflationary pressures.
Dufresne emphasized Loblaw’s strong positioning in the market, particularly in its discount stores, as customers continue to prioritize value amid persistent food price inflation. He noted that the company remains competitive in the hard discount sector and is outperforming peers in conventional retail. Additionally, Loblaw’s internal food inflation metric remains lower than the national grocery consumer price index.
Statistics Canada reported that Canada’s inflation rate eased to 2.8 percent in June, with grocery price increases moderating to 3.9 percent, down from 4.3 percent in May. Loblaw’s Toronto-listed shares traded relatively unchanged on Thursday, reflecting a year-to-date gain of approximately six percent.
