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Loblaw sees sales gains in Q2

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BRAMPTON, Ontario — Loblaw Cos. posted strong sales gains for its fiscal second quarter, as COVID-19 boosted consumer demand. But spending on safety measures related to the pandemic hurt earnings, the company said Thursday.

“Loblaw delivered strong operational performance, as both our base business and strategic growth pillars performed well amidst the extraordinary conditions brought on by COVID-19,” Loblaw executive chairman Galen Weston said in a statement. “Significant investments in the safety and well being of everyone in our stores delivered against customer expectations, despite negatively impacting earnings. At the same time, the Company considerably strengthened its position in e-commerce as online grocery sales surged 280%.”

Loblaw experienced unprecedented consumer demand and stockpiling relating to COVID-19 during the final two weeks of the quarter ended June 13, the company said. Same-store sales grew by 18.8% in the company’s Market division and by 4.9% in the Discount division. Same store sales in the Drug division declined by 1.1%, as sales gains in essential categories in the front of the store were more than offset by a decline in pharmacy sales due to COVID-19.

Profit declined year over year in the quarter as the strong growth in sales was insufficient to overcome substantial COVID-19 related costs in the quarter. The company said it invested $282 million to protect and benefit colleagues and customers, with about $180 million of that related to temporary pay premium costs which included a one-time bonus of $25 million for store and distribution center workers.

Loblaw said the COVID-19 pandemic has accelerated certain longer-term trends at the company, which is moving ahead with strategic growth plans. The company’s investments in its Everyday Digital platforms have allowed it to offer Canadians a choice of shopping in-store, or online with either home delivery or convenient pickup locations, for example. Loblaw’s e-commerce sales grew sharply in the quarter, increasing by 280%. That faster growth rate resulted in increased costs and investments in the quarter, the company said, adding that it will continue to invest in its digital capabilities to facilitate further growth.


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