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Industry NewsLoblaw Companies Limited announces network optimization plan

Loblaw Companies Limited announces network optimization plan


As part of its 2021 third-quarter reporting, Loblaw Companies Limited announced it has finalized its “network optimization plans” that will result in banner conversions and “right-sizing” of approximately 20 unprofitable locations.

Most will be banner conversions and three will be closures within food retail. Loblaw says it expects to record charges of approximately $25 million to $35 million and to realize approximately $25 million in annualized EBITDA run-rate savings. The store optimization project will be largely complete by the end of next year and reports there may be additional charges of this nature in the fourth quarter of 2021 and into 2022.

The company’s third-quarter results reflect how shopping patterns are changing as pandemic measures ease and consumers feel more comfortable shopping in-store.

Revenue increased 2.4 per cent from the third quarter of 2020 to $16,050 million. Retail segment sales grew 2.4 per cent to $15,831 million. Within the retail segment, drug retail led the growth with same-store sales increasing 4.4 per cent; pharmacy same-store sales climbed 4.8 per cent and front same-store sales grew 4.1 per cent. Food retail same-store sales increased by 0.2 per cent.

E-commerce sales decreased 0.4 per cent (2020 saw a 175 per cent growth) due to “the lapping of high e-commerce sales in the third quarter of 2020.” However, Loblaw says online sales remain above pre-pandemic levels and are on track to exceed $3 billion in 2021, improving on last year’s performance.

Galen G. Weston, president and chairman of Loblaw Companies Limited, said the company’s focus on core retail execution and positive consumer response drove “another quarter of strong financial results.”

Loblaw experienced strong demand in stores and online, as economies re-opened and eat-at-home trends remained elevated. Seasonal shopping for back-to-school and Thanksgiving was robust, demonstrating an enthusiastic return to certain pre-pandemic routines. This was also evident in our Pharmacy businesses. Beauty sales climbed with the gradual return to social and work activities. In addition, drug sales grew, supported by demand for pharmacy services, including patient health consultations, vaccination administration and testing.

Loblaw’s focus on its core retail business drove another strong quarter of operational and financial improvement – characterized by increases in customer traffic and market share in Loblaw’s Food and Drug businesses. Weston says customers have responded positively to its data-driven mass and personalized promotions, enabling the company to deliver value where consumers and their families need it most. Online sales remain above pre-pandemic levels and are on track to exceed $3 billion in 2021, improving on last year’s performance.


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