Food, as it relates to the store floor and the courtroom, left Loblaw with soft numbers for the second quarter of 2024.
Traffic was up at Loblaws stores over the last few months, but basket size was down. Loblaw also settled on a bread fixed-pricing lawsuit for $500 million (CAN), which impacted net earnings by $121 million.
Revenue for the second quarter came in at almost $14 billion, which is a 1.4% increase year over year at $187 million. However, revenue missed analysts’ average estimate of $14.17 billion.
Food retail same-store sales were up just 0.2% year over year. Last year, food same-store sales registered a 6.1% yearly increase. Loblaw’s discount arms of Maxi and No Frills helped boost performance in the second quarter.
There was also a call for a boycott of Loblaws stores starting in the month of May, but officials have said the protest has had little effect on the bottom line.
Drug retail same-store sales did a little better, rising 1.5% compared to Q2 2023. However, the year-over-year increase last year was 5.7%. Pharmacy and healthcare services were at the center of the 2024 second-quarter growth, with a same-store sales increase of 5.4%.
Gross profit for Loblaw’s retail segment for the second quarter was almost $4.4 billion, an increase of $178 million, or 4.2%.
E-commerce for Loblaw was up 14.2% year over year.
Adjusted EBITDA came in at just over $1.7 billion, a 4.5% boost ($73 million) compared to last year.
For all of 2024, Loblaw is standing by its initial projects and continues to expect its retail business to grow earnings faster than sales and adjusted net earnings per common share growth in the high single digits.
Loblaw reached a settlement on Thursday in the company’s involvement in class action lawsuits regarding an industry-wide packaged bread price-fixing arrangement between 2001 and 2015. Loblaw will pay a total of $500 million, with George Weston paying $247.5 million in cash and Loblaw owing $252.5 million in cash and $96 million in credit.
“Canadians count on Loblaw to provide great value and we seek to meet their needs and earn their trust whenever and wherever they choose to shop with us,” said Per Bank, president and CEO of Loblaw. “We will continue to work hard to deliver on that commitment.”
Companies like Loblaw have taken several actions to prevent another price-fixing scheme in the future, including overhauling how pricing is managed and enhancing compliance programs. A Compliance Office has also been established and reports to the Loblaw Board of Directors.