George Weston Limited 2020 fourth quarter delivered positive results in all of its companies, including Loblaw Companies Limited, Weston Foods and Choice Properties Real Estate Investment Trust.
"George Weston performed well during the fourth quarter," said Galen G. Weston, chairman and chief executive officer of George Weston Limited. "Our businesses showed resilience in the face of challenging circumstances as they delivered improved results across the board. Looking forward, as COVID-19 impacts continue to add short-term uncertainty, we remain confident in the long-term value creation opportunities for each of them."
Loblaw Companies Limited delivered positive results with strong same-store and e-commerce sales growth in a quarter heavily impacted by COVID-19. Costs remained elevated to ensure the safety and security of customers and colleagues. Loblaw continued to deliver value in categories that mean the most to its customers and focused on accelerating its three strategic growth areas of Everyday Digital Retail, Payments and Rewards and Connected Healthcare Network.
Loblaw revenue in the fourth quarter of 2020 was $13,286 million, an increase of $1,696 million, or 14.6 per cent, compared to the fourth quarter of 2019. The increase was primarily driven by retail sales, partially offset by a decrease in financial services revenue.
Retail sales increased by $1,722 million or 15.2 per cent, compared to the fourth quarter of 2019, which included the impact of the 53rd week of $878 million. Food retail sales were $9,302 million (2019 – $7,960 million) and drug retail sales were $3,741 million (2019 – $3,361 million).
Excluding the consolidation of franchises, retail sales increased by $1,601 million or 14.6 per cent, which included the impact of the 53rd week of $845 million, primarily driven by the following factors:
- food retail same-store sales growth was 8.6 per cent for the quarter. Food retail same-store sales growth was positively impacted by COVID-19. On a comparable week basis food retail basket size increased and traffic decreased in the quarter;
- Loblaw's food retail average article price was higher by 3.9 per cent (2019 – 0.8. per cent), which reflects the year-over-year growth in food retail revenue over the average number of articles sold in Loblaw's stores in the quarter. The increase in average article price was due to sales mix; and
- drug retail same-store sales growth was 3.7 per cent for the quarter. Pharmacy same-store sales growth was 5.0 per cent and front store same-store sales growth was 2.8 per cent.
Weston Foods' sales and earnings improved in the fourth quarter compared to the third quarter despite the negative impact of COVID-19. The reintroduction of government-mandated closures of non-essential businesses, stay-at-home orders and mandatory social distancing restrictions in several regions led to lower volumes, with the negative impact being more significant in the second half of the quarter. These pressures were offset in part by the on-going cost savings and productivity improvements and the benefits realized from Weston Foods' transformation program, as well as better sales performance in certain retail categories and foodservice channels. As a result, Weston Foods remains well-positioned to achieve long-term growth through its strategic framework while delivering superior products and services to its customers and consumers.
Weston Foods sales in the fourth quarter of 2020 were $523 million, an increase of $1 million, or 0.2 per cent, compared to the fourth quarter of 2019. Sales included the positive impact of the 53rd week of approximately 5.6 per cent, and the negative impact of foreign exchange of approximately 0.8 per cent. Excluding the favourable impact of the 53rd week and the negative impact of foreign currency translation, sales decreased by 4.6 per cent. Sales were impacted by a decrease in volumes in certain retail categories and foodservice channels as a result of the COVID-19 pandemic, the unfavourable impact of product rationalization and the combined negative impact of pricing and changes in sales mix.
Choice Properties Real Estate Investment Trust ("Choice Properties") generated solid results in the fourth quarter, reflecting stable earnings as it collected 98 per cent of contractual rents. This strong performance was underpinned by improvements to the overall quality of the portfolio through effective capital recycling. In the fourth quarter, Choice Properties completed approximately $550 million of transactions, including four acquisitions and five dispositions, and remained disciplined in its capital spending on development initiatives. Choice Properties remains confident that this deliberate approach to financial and asset management will enable it to continue to manage the risks and uncertainties associated with the COVID-19 pandemic and position it for long-term growth.
Revenue in the fourth quarter of 2020 for Choice Properties was $322 million, an increase of $4 million, or 1.3 per cent, compared to the fourth quarter of 2019, and included $180 million (2019 – $178 million) generated from tenants within Loblaw retail. The increase in revenue was primarily driven by development transfers and acquisitions, partially offset by the foregone revenue from sold properties.