Loblaw hikes dividend as profit rises almost 10% (2024)

Loblaw Cos. Ltd. reported an increase in profit and revenue in the first quarter amid increased traffic to its stores.

The grocery and drugstore retailer on Wednesday also raised its quarterly dividend by 15 per cent to 51.3 cents per share, up from 44.6 cents.

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Loblaw’s stock price rose to $152.18 by early afternoon Wednesday, nearing its record high of $154.70 recorded in March.

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Revenue at the parent company of Loblaws and Shoppers Drug Mart jumped to $13.58 billion in the quarter ended March 23, an increase of $586 million compared to the previous year.

“Keeping costs low and providing superior value, quality and service to Canadians contributed to another quarter of consistent operational and financial performance,” chief executive Per Bank said during Wednesday’s earnings call. “This was especially evident in the strength of our core business.”

Net earnings were up 9.8 per cent to $459 million, while earnings per diluted common share rose 14 per cent to $1.47.

The company said customer traffic increased as prices at its stores rose less than the general level of food inflation tracked by the Consumer Price Index.

“Our internal inflation rate was lower than food CPI again this quarter,” Richard Dufresne, chief financial officer, said during the call. “This helped bring CPI grocery inflation below the headline total inflation rate in Canada for the first time in two years.”

Retail sales were up by 4.4 per cent to $13.29 billion, with all segments seeing an increase.

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Same-store sales at food stores were up 3.4 per cent to $9.4 billion, beating analyst expectations of two per cent growth. This supported a revenue beat of one per cent.

Meanwhile, same-store sales at drug stores increased by four per cent to $3.88 billion.

Loblaw maintained its guidance for full-year 2024, and expects its retail business will grow earnings faster than sales. Adjusted net earnings per common share are expected to increase in the high single-digits.

Mark Petrie, an analyst at CIBC Capital Markets, said Loblaw’s dividend increase was better than his estimate of $0.49 per quarterly share.

In a note to clients, Royal Bank of Canada analyst Irene Nattel said the earnings results reinforces “Loblaw’s strong positioning and favourable momentum, particularly against the backdrop of elevated food prices and cash-squeezed consumers.”

The earnings come as some grocery shoppers plan a boycott of the company for the month of May.

The boycott targeting the retailer has gained momentum online, with thousands of shoppers vowing to take their money elsewhere.

• Email: dpaglinawan@postmedia.com

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