The boycott of Loblaw stores in May had only a “minor” financial impact on Canada’s largest grocers, according to the company’s CEO.
Loblaw Co. Ltd. reported second-quarter earnings on Thursday, including the month of May, which saw the grocer targeted in a grassroots boycott campaign venting frustrations over rising grocery prices.
Loblaw CEO Per Bank was asked about the impact of the movement during an earnings call accompanying the earnings. He said “the overall financial impact was minor.”
Chief financial officer Richard Dufresne acknowledged that the boycott had “a bit of an impact in certain stores in specific markets.”
“That said, at the end of the quarter, things had returned to normal,” he said.
The company missed analysts’ revenue expectations for the quarter, with same-store food sales up just 0.2 per cent.
Dufresne attributed the softer-than-expected sales in part to the company lapping a much stronger growth quarter a year ago, when same-store food sales rose 6.2 per cent.
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He also said the “extremely hot” temperatures in May 2023 fuelled a boom in the company’s outdoor and gardening segments, while a comparatively cold and rainy season this spring dampened sales here this past quarter.
Loblaw said the decline in front-store same-store sales was primarily driven by lower sales of food and household items and the decision to exit certain low-margin electronics categories.
Canadian consumers have been trimming expenses even on essential items as high housing costs and interest rates continue to eat into their income.
The country’s retail sales fell in May mainly due to a drop in sales at supermarkets and grocery retailers, according to Statistics Canada.
Meanwhile, overall revenues rose but Loblaw took a hit to its profits in the quarter, primarily thanks to a payout related to a settlement in the alleged bread price-fixing scandal.
Loblaw said it earned a profit available to common shareholders of $457 million or $1.48 per diluted share for the quarter ended June 15.
The result was down from $508 million or $1.58 per diluted share in the same quarter last year, which Loblaw attributed primarily to charges related to the settlement of class-action lawsuits.
On Thursday, the grocer announced it and parent company George Weston Ltd. have agreed to pay $500 million to settle a pair of class-action lawsuits regarding their involvement in an alleged bread price-fixing scheme.
Revenue for the quarter totalled $13.95 billion, up from $13.74 billion a year earlier.
Shares of Loblaw were trading roughly 1.5 per cent lower on the Toronto Stock Exchange an hour after markets opened on Thursday.
More to come…
— with files from The Canadian Press and Reuters
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