Loblaw, a major grocery retailer, reported increased profits in the second quarter thanks to strong performance at its discount chains No Frills and Maxi, as well as robust sales growth in its pharmacy unit driven by the popularity of generic GLP-1 weight loss drugs.
The company, based in Brampton, Ontario, released its financial results for the quarter ending June 20, revealing revenues surpassing $15.3 billion, a four percent increase from the previous quarter. Profit available to common shareholders rose by five percent to $751 million.
Loblaw experienced a 1.6 percent rise in same-store sales for its core retail food business, while its drug retail unit, which includes Shoppers Drug Mart, saw a significant 4.6 percent increase in same-store sales, primarily fueled by a 7.5 percent surge in pharmacy and health-care services.
Chief financial officer Richard Dufresne highlighted the growth in specialty prescriptions, particularly with the introduction of generic GLP-1 drugs. The company anticipates higher revenues, gross profit dollars, and gross margin rates due to increased volumes despite lower generic drug pricing.
The GLP-1 drug category, encompassing brands like Ozemic and Wegovy, has seen a 40 percent sales increase year-to-date, with Health Canada approving the country’s first generic semaglutide injection in late April.
CEO Per Bank noted a trend of customers at No Frills and Maxi stores opting for frozen vegetables over fresh produce due to inflation, with frozen vegetable sales experiencing more than a five percentage point growth. Loblaw’s focus on value positioning has helped it navigate food price inflation successfully.
Despite overall inflation easing to 2.8 percent in June, grocery price increases moderated to 3.9 percent, down from 4.3 percent in May, according to Statistics Canada. Loblaw shares traded steadily on Thursday, showing a six percent gain year-to-date.