Loblaw rakes in profits as nation-wide boycott gets underway

As Canadians grow increasingly frustrated with the high cost of food, a look at Loblaw’s latest quarterly profits may upset some people.

The company says its last quarter, which ended on Mar. 23, wrapped up on a high note.

“Revenue was $13,581 million, an increase of $586 million, or 4.5 per cent. Retail segment sales were $13,290 million, an increase of $555 million, or 4.4 per cent. Food retail same-stores sales increased by 3.4 per cent. Drug Retail (Shoppers Drug Mart) same-stores sales increased by 4.0 per cent,” it says in a release.

It adds online sales jumped by just over 16 per cent, and revenue for the quarter totalled $13.58 billion, up from $13 billion a year earlier.

CityNews Business Editor Mike Eppel says, overall, it’s seeing strong sales and profits, but he adds some context.

“Yes, the earnings are up, however, $457 million in net profit on $13.7 billion in sales is a 3.5 per cent profit margin, which is very low when you consider Dollarama sees margins north of 20 per cent. Even taking into account the operating earnings at $800 million — it’s a margin of six per cent,” he explained.

The parent company of Loblaws and Shoppers Drug Mart says it will now pay a quarterly dividend of 51.3 cents per share, up from 44.6 cents per share, and Eppel says the timing of that isn’t great.

“More than anything, this is about the optics of raising the dividend at the same faced with a consumer backlash against prices and some calls in the political ranks for tax on excessive profits. The company’s margins were 3.5 per cent, and the biggest sales gains came from the discount end of the business,” he said.

This comes as a boycott of Loblaw-owned stores gets underway. The idea spread quickly on the Reddit page r/loblawsisoutofcontrol, which has more than 60,000 members. While it’s unclear how many people will take part in the movement, the thread is full of posts of people saying they’ll take their money elsewhere as of May 1.

This also comes less than a week after documents obtained through access to information legislation shed new light on Ottawa’s efforts to convince Loblaw and Walmart to sign the grocery code of conduct. The document is intended to set out agreed-upon rules for negotiations between industry players, including retailers and supplies and would also include a dispute resolution process.

“Loblaws has not taken an active role in the industry-led process to develop a grocery code of conduct and they have been reluctant to publicly confirm support for the code until the industry proposal is finalized,” reads a briefing note prepared in September for a meeting between federal Minister of Agriculture and Agri-Food in Canada Lawrence MacAulay and Quebec Agriculture and Food Minister André Lamontagne.

Joining the conduct is done on a voluntary basis.

-With files from the Canadian Press