Loblaw, a prominent grocery retailer, reported an increase in profits during the second quarter as it continued to attract cost-conscious shoppers to its discount chains, No Frills and Maxi. The company highlighted significant sales growth in its pharmacy unit, attributing it to the popularity of generic GLP-1 weight loss medications.
Based in Brampton, Ont., Loblaw disclosed its financial performance for the quarter ending June 20, revealing a revenue surpassing $15.3 billion, a four percent increase compared to the previous quarter. The profit available to common shareholders rose by approximately five percent to $751 million.
The company noted a 1.6 percent rise in same-store sales for its core retail food business and a robust 4.6 percent increase in the drug retail unit, driven by a 7.5 percent surge in pharmacy and health-care services.
During a conference call with stock market analysts, Loblaw’s chief financial officer, Richard Dufresne, emphasized the leading role of specialty prescriptions in the pharmacy segment. He highlighted the positive impact of the introduction of generic GLP-1 drugs, foreseeing higher revenues and profits due to increased volumes despite lower drug prices.
GLP-1 medications such as Ozemic and Wegovy have seen a surge in sales, with Loblaw executives reporting a 40 percent growth year-to-date. The approval of Canada’s first generic semaglutide injection by Health Canada in late April has further fueled this trend.
Chief executive Per Bank informed analysts that consumers are increasingly opting for frozen vegetables over fresh produce due to inflation, with a notable preference for frozen vegetables in No Frills and Maxi stores. Dufresne reiterated the company’s strong positioning in the market, catering to value-seeking customers amidst rising food prices.
Despite fluctuations in inflation rates, Loblaw remains optimistic about its performance, highlighting its consistent growth in the hard discount segment and outperformance in conventional retail compared to industry peers. The company’s internal food inflation metric continues to show lower levels than the national grocery CPI.
Statistics Canada reported a decline in the inflation rate 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 steadily on Thursday, maintaining a year-to-date increase of around six percent.