Loblaw Companies’ sales growth is slowing as inflation continues to weigh on the economy and alter consumer buying habits, the company’s chairman of the board said Wednesday.
Updated yesterday at 4:10 p.m.
The nation’s largest grocery and drugstore chain sees “a bit of a downturn” with its Joe Fresh clothing brand in the coming months, but it’s mostly in “general merchandise,” or sales not food excluding clothing, which she observed “a significant decline” during the last quarter, said Galen Weston.
“It certainly had an impact on our overall sales results [comparables] he told analysts on a conference call to discuss the company’s second quarter results.
Several major U.S. retailers have warned of unsold inventory in recent months as shoppers cut spending amid rising prices. Companies like Walmart and Target have suggested their profits could take a hit as they are forced to liquidate excess inventory.
“The key, in this circumstance, lies in the stocks. The question is how do you feel about the inventory and whether you need to use dynamic markdowns to drive that inventory away,” Weston said.
“The answer is that we feel good with the stocks, and we don’t see any significant margin risk associated with liquidating what’s left. »
The company reported higher profits and sales in the second quarter as drugstore sales boosted overall margin expansion.
Sales at pharmacies that have been open for at least a year increased 5.6%, while those at pharmaceutical and health care services rose 6.1%.
“Currently, sales [de produits pour] cough and cold […] are similar to mid-winter,” Loblaw Chief Financial Officer Richard Dufresne said on the conference call.
Mr. Weston added: “There is enormous strength in fragrances. We kind of wonder what people do with all these scents. »
Pharmacist clinics
Meanwhile, Shoppers Drug Mart — operating as Pharmaprix in Quebec — opened its first walk-in clinics in Canada, staffed exclusively by pharmacists, during the quarter, he added.
“We have four consultation rooms, we have four pharmacists and we see patients very, very frequently,” Weston explained.
“As provinces become more comfortable with the idea of expanding the scope of practice for pharmacists, we see an opportunity to have select locations that can provide a service like that of health clinics, provided by pharmacists. »
Pharmacists treat minor ailments, prescribe medication for cold sores and offer treatments for strep throat and urinary tract infections, he continued.
On the other hand, the retailer’s discount grocery division continues to show strong growth.
Loblaw noted that its “big discount” No Frills and Maxi banners as well as its No Name and President’s Choice house brands continue to be popular with shoppers looking for bargains.
Still, there are signs that inflation has peaked or will peak soon, and some expect inflation to moderate in the second half of the year, Dufresne said.
“Commodity prices are falling, some freight costs are falling and supply chain issues are normalizing – with the exception of fuel costs, which remain high, but down from their highs of last March,” he specified.
The company behind Loblaws and Provigo grocery stores reported net income attributable to common shareholders of $387 million, or $1.16 per share, a 3.2% increase from $375 million, or $1. $09 per share, a year ago.
Adjusted earnings were $566 million, or $1.69 per share, from $464 million, or $1.35 per share, in the second quarter of 2021.
Revenues were $12.85 billion, an increase of $356 million, or 2.9%, from revenue of $12.49 billion in the same quarter last year.