Boycott had little impact on sales, Loblaw execs say
Loblaw Cos. Ltd. executives said the May boycott of the company’s stores had little impact on sales.
The parent company of Loblaws, Shoppers Drug Mart, No Frills and other food and pharmacy retail banners reported softer same-stores sales in its most recent quarter—up by 0.2% compared to 6.1% last year.
“We did notice a bit of an impact in certain stores and specific markets, but that said, at the end of the quarter, things had returned to normal,” said chief financial officer Richard Dufresne.
The nationwide boycott, organized by a Reddit group, called on Canadians to steer clear of Loblaw-owned stores for the month of May.
Consumers were encouraged to boycott the “Big 5” grocers—Loblaws, Sobeys, Metro, Walmart and Costco—in favour of local businesses.
One of the organizers met with CEO Per Bank in May.
READ: Galen Weston pushes back on 'misguided criticism' of Loblaw as boycott begins
Bank said Loblaw is listening and responding to customer feedback.
On the company’s second quarter earnings call Thursday (July 25), he pointed to the grocer’s decision to eliminate multi-buy promotions across its No Frills stores as one example.
“Every single customer is important to us, and one customer loss is one too many. I have spent a lot of time speaking to customers and different stakeholders, and I do listen to them, because their feedback is really helpful, and we welcome it. It makes us better,” Bank told analysts. “Multi-buy is just one of the pieces of feedback that I have gotten since I came to Canada… We continue to work hard every day to win the trust and loyalty of our customers. Our stores are in great shape, our promotions are better than ever and our prices are really competitive at the moment. So I'm pleased that the customers are recognizing that more and more week by week.”
Dufresne said the company expects the removal of multi-buy pricing will create a slight headwind, but that sales will recover.
“We're seeing a trend among our customers—they only have $30, $40, $50 to spend, and we want them to be able to spend it on the product that they want to buy. It seems like a little thing, but it's actually a really good thing for our customers in our discount division,” Bank said.
The grocer reported net earnings of $457 million for its second quarter, down $51 million or 10% year-over-year. Adjusted net earnings were $664 million, up 6.1%.
Loblaw said the decrease in net earnings was due to charges related to the settlement of the class-action lawsuits regarding its involvement in a bread price-fixing scheme.
Details of the settlement were announced Thursday. The company said it was hit with $121 million in charges in the second quarter as a result.
Revenue was $13.95 billion, up 1.5%. Retail segment sales increased 1.4% to $13.66 billion.
E-commerce sales increased by 14.2%.
“In 2024 we are seeing the normalization of our retail business, the pandemic and the subsequent period of high global food inflation are now behind us,” Dufresne told analysts.
“The consumer shift to discount continues with our hard discount banners outperforming our conventional stores, delivering strong results with solid tonnage growth and higher traffic”
Loblaw said it plans to open 20 new discount stores in the third quarter, and another 17 in Q4.
The grocer recently opened two small-format No Frills stores in downtown Toronto.
“We are giving more Canadians access to lower prices, and we're doing it by getting into sites that we wouldn't have considered before, because we're going down to 8,000-12,000-square feet. We managed to get 5,000-7,000 products into those stores, so customers can do a full shopping trip… This is exactly what we want to hone down on and double down on and do more of over the next year and in the next quarter.”
