Loblaw Cos Ltd.'s quarterly profit topped analysts’ estimates on Wednesday, driven by higher food and drug same-store sales, according to the latest results from the company's second quarter, which ended June 16, 2018.
Adjusted earnings outpaced analyst estimates, but the company also recorded an 86.1 per cent decline in net profit due to a number of unfavourable items including an acquisition expense at its Choice Properties division.
The company said food retail same-store sales grew 0.8 per cent while drug retail same-store sales rose 1.7 per cent.
"Our base businesses continued to perform well in a very competitive marketplace despite significant cost pressures," stated Galen G. Weston, chairman and CEO, Loblaw Companies Ltd. "We are executing our strategy, improving processes, reducing cost and expanding our digital presence to deliver the best in food, health and beauty, for Canadians."
Overall revenue was $10.92 billion for the 12 weeks ended June 16, down $157 million or 1.4 per cent from the second quarter of 2017 — reflecting the sale of the company’s gas bar operations last year.
During a conference call with analysts, Weston stated that consumers will likely have to pay more for certain food items as grocers deal with the impact of new tariffs in the ongoing trade war with the US.
"We see a very strong possibility of an accelerating retail price inflation in the market."
The company pointed to new tariffs imposed by the Canadian federal government as of July 1 on $16.6 billion of US imports. The targets include a number of food products, such as yogurt, coffee, soya sauce and mayonnaise.
In a CBC news story, analyst Irene Nattel notes that the second quarter results are evidence that the company is "hyper-focused on ensuring its sector-leading market position while driving operating efficiency and productivity."