Loblaw Companies’ (TSX: L) unveiled its first-quarter financial results showcasing a remarkable surge in earnings and revenue, accompanied by an impressive dividend increase. The company, parent to popular brands like Loblaws and Shoppers Drug Mart, announced a substantial 15% boost in its quarterly dividend, elevating it to 51.3 cents per share from 44.6 cents per share previously.
For the quarter ending March 23, 2024, Loblaw reported net earnings available to common shareholders of $459 million, marking a substantial 9.8% increase from $418 million in the corresponding period last year. On an adjusted basis, the figure came down to $537 million, a 6.3% jump from last year.
This notable growth was reflected in the company’s revenue, which climbed to $13.58 billion compared to $13.00 billion in the prior year’s quarter. Operating income saw a notable rise of 12.0%, reaching $861 million.
Diluted earnings per share rose to $1.47 from $1.29 a year earlier, a 14.0% increase. On an adjusted basis, earnings per diluted share also demonstrated an 11.0% increase, reaching $1.72 compared to $1.55 in the same quarter last year.
Driving this robust performance were increases across various segments. Food retail same-store sales experienced a commendable uptick of 3.4%, while drug retail same-store sales saw even more impressive growth of 4.0%. Particularly noteworthy was the substantial growth in pharmacy and healthcare services same-store sales, which surged by 7.3%.
“Below Canada’s CPI”
An interesting observation highlighted by Loblaw was the discrepancy between external and internal food inflation rates. While the Consumer Price Index (CPI) for Food Purchased From Stores was reported at 2.6%, Loblaw noted that this was “higher than the company’s internal food inflation.” Nevertheless, the company reported an increase in food retail traffic despite a decrease in basket size.
The firm even boasted that “the company’s internal food inflation remained below Canada’s CPI for Food Purchased From Stores again this quarter,” which the company noted to be 1.9% in March, “the lowest level recorded in more than two years.”
Loblaw also declared an increase to the quarterly dividend, the firm’s thirteenth consecutive annual increase. Shareholders can expect a dividend of $0.513 per common share, payable on July 1, 2024, to shareholders of record on June 15, 2024 – a 15.0% increase.
For its outlook, Loblaw said it “will continue to execute on retail excellence” and it is “well positioned to meet the everyday needs of Canadians.”
With a net capital expenditure of $1.8 billion earmarked for the year, Loblaw aims to fortify its infrastructure and operational capabilities. This substantial investment, comprising gross capital investments of approximately $2.2 billion offset by $400 million from property disposals, underscores Loblaw’s commitment to driving long-term growth and operational efficiency.
The earnings release follows the recent emergence of leaked documents on Reddit, purportedly an invoice from Loblaws to a No Frills store, that have unveiled startling insights into the pricing practices of the retail giant.
Highlighted in these documents are significant markups on everyday essentials, including butter, cheese, and spreads, raising concerns about fairness and transparency in retail pricing. One standout example from the leaked documents is the President’s Choice Unsalted Butter Alternative, which reportedly boasts a staggering GPM of 53.75%.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
