Loblaws, Canada's largest grocer, grew e-commerce sales by 175 per cent in Q3
Loblaw Cos. Ltd., the largest supermarket and pharmacy chain in Canada, is raising its shareholder dividends after making big gains in sales and online grocery orders during its third quarter.
The company’s grocery sales have soared throughout the pandemic, as work-from-home orders and restrictions on restaurants pushed more people to cook for themselves. Loblaw’s food sales this year are up by roughly $2.5 billion, or 9.7 per cent, compared to last year, according to its quarterly report released on Thursday.
In the third quarter, ending Oct. 3, Loblaw’s same-store sales growth — a key performance indicator in the retail world — rose 6.9 per cent for its food business.
A message from Galen Weston about COVID-19 and the changes we're making in our stores to help keep everyone safe. https://t.co/gbFFZGyQ2l
— Loblaws (@LoblawsON) March 19, 2020
Anxieties about contracting COVID-19 have also dramatically sped up e-commerce sales growth for the grocers, all of which have ramped up their online ordering and home delivery operations.
Loblaw’s e-commerce sales grew by 175 per cent in the third quarter, compared to the same period last year. The company also said it spent $85 million during the quarter “to ensure the safety and security of customers and colleagues” during the pandemic.
“Loblaws delivered better results, in a complex quarter,” executive chairman Galen Weston said on a conference call.
The company’s net earnings were $342 million, up 3.3 per cent over last year. Loblaw said it will raise its dividend per share by two cents, or 6.3 per cent. It also spent $350 million during the third quarter to repurchase five million common shares.
RBC analyst Irene Nattel called Loblaw’s results “solid and in line with our forecasts,” in a note to investors on Thursday.
But the success has not been without angst. Loblaw is in the midst of a fight with food manufacturers after the grocer increased the fees it charges suppliers in an attempt to help cover the costs of its $6-billion upgrade to e-commerce and store infrastructure.
The strategy followed Walmart Canada, which shocked and angered the manufacturing sector this summer by charging suppliers new fees to pay for its $3.5-billion modernization plan. At the time, Food, Health and Consumer Products of Canada (FHCP), the main trade association for suppliers, said Walmart had set a dangerous new precedent in the industry. It has since ramped up pressure on provincial and federal governments to impose an industry code of conduct.
“It continues to be absurd that they would be taxing manufacturers to support their capital investments while they’re making such phenomenal profits,” FHCP chief executive Michael Graydon said on Thursday.
Loblaw, however, has said the new fees are necessary, in part, to help keep food prices low because suppliers keep pushing to raise what they charge grocers.