The North West Company has reported its unaudited financial results for the third quarter ended October 31, 2022. It also announced that the board of directors has declared a dividend of $0.38 per share o shareholders of record on December 30, 2022, to be paid on January 16, 2023.
“We are pleased with our results in the quarter considering the negative impact of high inflation this year and the comparison to COVID-19-related sales and earnings last year” commented president and CEO Dan McConnell. “We have been able to hold our
ground at the top-line, particularly as our customers shifted their discretionary spending towards essential items. We are working with our suppliers and carriers to help mitigate the inflationary pressures, including our Price-Drop and Price-Lock promotions on
everyday items. We remain focused on being in-stock on essential products and providing the best value to our customers within this high inflation environment.”
- Third quarter consolidated sales increased 6.0% to $586.7 million as a result of higher inflation in Canadian and International Operations and the impact of foreign exchange on the translation of International Operations sales.
- An increase in other sales in Canadian Operations, which includes airline revenue, financial services, fuel and pharmacy, and the impact of new stores were also factors. Excluding the foreign exchange impact, consolidated sales increased 3.2 per cent, with food sales increasing 3.6 per cent and general merchandise sales decreasing 11.2 per cent compared to last year.
- The impact of higher merchandise and freight cost inflation continued to result in changes in product sales blend as consumers allocated more of their spending to food and reduced purchases of general merchandise. On a same store basis (excluding the impact of foreign exchange) sales decreased 0.7 per cent compared to the third quarter last year, as a 1.5 per cent increase in food same store sales was more than offset by a 13.2 per cent decrease in general merchandise same store sales.
- The decrease in total same store sales is primarily due to the impact of COVID-19-related factors including government income support payments and higher in-community spending which contributed to sales gains in 2021. Although same store sales this year have decreased compared to strong COVID-19-related sales gains over the past two years, they were up 16.0 per cent compared to pre-COVID-19 levels in 2019 with food same store sales up 16.5 per cent and general merchandise same store sales up 12.7 per cent.
- Gross profit increased 3.3 per cent due to sales gains partially offset by an 84 basis point decrease in gross profit rate compared to last year. The decrease in gross profit rate was mainly due to changes in sales blend, the impact of higher freight and merchandise cost inflation that was not fully passed through in retail prices and an increase in markdowns.