Loblaw, a leading grocery retailer, reported increased profits in the second quarter, driven by strong sales performance at its discount chains No Frills and Maxi. The company highlighted robust growth in its pharmacy unit, attributing it to the popularity of generic GLP-1 weight loss medications.
Based in Brampton, Ontario, Loblaw disclosed its financial results for the quarter ending June 20, revealing a revenue of over $15.3 billion, marking a four percent uptick from the previous quarter. The company’s profit available to common shareholders also saw a five percent increase, reaching $751 million.
Loblaw noted a 1.6 percent rise in same-store sales for its core retail food business and a notable 4.6 percent growth in its drug retail unit, particularly driven by a 7.5 percent surge in pharmacy and health-care services sales. The company’s CFO, Richard Dufresne, mentioned that the introduction of generic GLP-1 drugs was positively impacting the pharmacy segment, leading to expectations of increased revenue and gross profit.
The popularity of GLP-1 drugs such as Ozemic and Wegovy has been on the rise, with Loblaw executives reporting a 40 percent year-to-date sales increase in this category. Additionally, CEO Per Bank highlighted a trend of consumers opting for frozen vegetables over fresh produce due to inflation concerns, particularly at No Frills and Maxi stores where sales of frozen veggies have grown significantly.
Despite food price inflation concerns, Loblaw remains optimistic about its position in the market, emphasizing its success in the hard discount segment and outperforming peers in conventional retail. The company’s internal food inflation metric continues to be lower than the national grocery inflation rate.
Inflation in Canada eased to 2.8 percent in June, with grocery price hikes moderating to 3.9 percent from 4.3 percent in May, as reported by Statistics Canada. Loblaw’s Toronto-listed shares saw minimal movement on Thursday, maintaining a year-to-date gain of approximately six percent.