Briefing

Loblaw triples its profit in its third quarter, despite lower grocery traffic

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The company’s net profits for the quarter ended October 5 were $353 million, up from $117 million for the same quarter in 2018. The jump was due in part to a tax-court ruling that resulted in a one-time charge of $367 million in last year’s third quarter. Revenues rose 2.3 per cent, from $14.3 billion to $14.7 billion. However, same-store sales, a key retail metric, increased just 0.1 per cent in its grocery stores. In its Shoppers Drug Marts, same-store sales grew 4.1 per cent, mainly driven by prescription sales. (The Logic)

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Talking point: Customers placed fewer, but bigger, orders, consistent with how retail is increasingly moving online. Loblaw has invested in technology to compete with the likes of Amazon, partnering with grocery-delivery app Instacart and offering same-day pickup for members of its new Amazon Prime-style PC Insiders program. The company cited investments in its digital strategy among reasons for its $7-million dip in earnings before income taxes. It’s banking on those investments eventually paying off, noting the potential “failure to execute the Company’s e-commerce initiatives” as a key risk to its financial results going forward.