George Weston Limited saw profits grow to $25,283 million in the second quarter of 2021, when compared with the same period last year. Net earnings increased $363 million and looking ahead, the company says it expects adjusted net earnings to increase further due to the results from its operating segments: Loblaw Companies Limited, Choice Properties and Weston Foods.
“We are pleased with the performance of our businesses as they lapped the most difficult quarter of the pandemic, with each delivering operational and financial improvements." said Galen G. Weston, chairman and CEO, George Weston Limited. "As economies continue to reopen in the second half of the year, our businesses are well-positioned to execute on their plans."
Loblaw Companies Limited delivered strong financial performance in the second quarter of 2021. Revenue growth continued despite lapping the unprecedented demand in the previous year from stockpiling by consumers at the start of COVID-19. Consolidated gross margin improved significantly, reflecting a heightened focus on the core retail business, including promotional effectiveness and cost controls. Loblaw maintained its focus on delivering value and quality to its customers in a safe shopping environment and is well-positioned to meet the evolving needs of customers as pandemic restrictions lift and economies re-open.
Loblaw revenue in the second quarter of 2021 was $12,491 million, an increase of $534 million, or 4.5 per cent, compared to the same period in 2020, driven by an increase in retail sales and an improvement in financial services revenue.
Retail sales increased by $514 million, or 4.4 per cent, compared to the same period in 2020 and included food retail sales of $8,878 million (2020 – $8,747 million) and drug retail sales of $3,404 million (2020 – $3,021 million). The increase was primarily driven by three factors:
- food retail same-store sales declined by 0.1% for the quarter. The decline was mainly driven by lapping the strong surge in sales in the second quarter of 2020. Food retail basket size decreased, and traffic increased in the quarter, as compared to the second quarter of 2020;
- Loblaw's food retail average article price was higher by 1.4% (2020 – 4.6%), which reflected the year-over-year growth in food retail revenue over the average number of articles sold in Loblaw's stores in the quarter;
- drug retail same-store sales grew by 9.6 per cent for the quarter. Pharmacy same-store sales growth benefited from the lapping of government mandated 30-day supply restrictions in the second quarter of the prior year. Pharmacy same-store sales growth was 17.2 per cent and front store same-store sales increased by 3.6 per cent.
In the last 12 months, 20 food and drug stores were opened, and nine food and drug stores were closed, resulting in a net increase in retail square footage of 0.5 million square feet, or 0.7 per cent.
Weston Foods delivered much improved financial results in the second quarter of 2021 compared to the same quarter in 2020. Sales grew in foodservice and retail as government-mandated lockdowns were lifted in many regions of Canada and the United States. In addition to the increase in sales, lower pandemic-related costs and continued productivity improvements contributed to the year-over-year earnings growth.
In the second quarter, Weston Foods was faced with higher-than-expected input, labour and distribution costs. The higher costs, together with labour availability challenges, negatively impacted sales and earnings. These factors were primarily the result of a surge in global demand for consumer goods as economies began to reopen following the lifting of many lockdown restrictions. Weston Foods has taken steps, including pricing, to help mitigate the impact of cost inflation, and expects the labour availability challenges will ease over time. The business is well-positioned to meet the increasing demand from its customers and continue to offer superior products and services.
Choice Properties Real Estate Investment Trust generated solid results in the second quarter of 2021, collecting 98 per cent of contractual rents despite continued regional lockdowns across Canada.