Loblaw Companies Limited beat market expectations for its 2021 first quarter with growth in revenue, retail segment and e-commerce sales.
Revenue increased $72 million, 0.6 per cent when compared to the first quarter of 2020. Retail segment sales grew 0.6 per cent over the same quarter last year, reaching $11,872 million. Specifically, food retail same-store sales growth was 0.1 per cent while drug retail same-store sales declined by 1.7 per cent. Pharmacy same-store sales grew 3.5 per cent and front same-store sales in the drug retail segment decreased 6.4 per cent.
Not surprising, the company's e-commerce sales soared, increasing 133 per cent when compared to the same quarter in 2020.
“A year into the pandemic, our stores, supply chain and digital assets have demonstrated resilience and innovation and are better prepared than ever to serve the needs of Canadians,” says Galen G. Weston, executive chairman, Loblaw Companies Limited. “Our strong financial results reflect continued momentum and positive consumer response to the value and services in our stores and our expanding online solutions.”
Loblaw says it incurred approximately $48 million (2020 - $32 million) in COVID-19 related costs to ensure the safety and security of customers and colleagues.
It also invested $230 million in capital expenditures and generated $288 million of free cash flow.
Food retail sales were $8, 479 million and food retail same-store sales was 0.1 per cent. During the first quarter of 2021, food retail experienced continued strong same-store sales growth before declining the late first quarter of 2020 stock-up from the initial onset of the pandemic. Average article price was 3.9 per cent higher than 2020 (1.5 per cent) and the company notes that the average article price was due to the sales mix and the increase in food retail basket size and decrease in traffic as compared to the first quarter of 2020.
The drug retail same-store sales decline of 1.7 per cent reflects the initial demand for grocery and pharmacy products late in the first quarter of 2020 following the onset of the pandemic in Canada.
Loblaw says it anticipates that grocery sales will remain elevated due to continued impact of the pandemic, including the impact of lockdown measures in many jurisdictions. As economies reopen, revenue growth will be challenged while lapping elevated 2020 sales. Costs are expected to improve, as the company laps elevated COVID-19 related expenses, and as process and efficiencies and data-driven Insights programs continue to deliver benefits. Moderate levels of regulatory reform are anticipated.