Loblaw to ramp up store network expansion in 2025 as it continues to focus on value

Loblaw Cos. Ltd.  said it plans to add even more new stores to its network next year as the company continues to innovate on its discount offerings.

Canada’s largest grocery retailer is on track to open 50 new stores by the end of this fiscal year as part of a plan announced in February, and Loblaw said it plans to beat that number in 2025.

“Our focus is on adding square footage. If we have the right business model that works and resonates with customers, we just replicate it with new stores and in the long term, we win,” chief financial officer Richard Dufresne told investors Wednesday (Nov. 13)

Dufresne’s comments come as Loblaw—under the new leadership of CEO Per Bank—introduces a number of value-driven offerings.

Those include the elimination of multi-buy pricing at No Frills and Loblaw’s pilot ultra-discount No Name stores. 

On the No Name stores, Bank said: “It's still too early to draw meaningful conclusions. We're still learning and refining our offer. If it works, we will build more. If not, we will pivot, take the learnings and apply them to our discount program.” 

Starting this week, the company is also lowering prices on some 400 items sold at Shoppers in a bid to boost food sales at the pharmacy retail chain.

Bank said while Loblaw's discount-driven strategy puts short-term pressure on sales, the grocer is experiencing its best tonnage growth in a decade. 

“Long term, it makes more customers come into our stores. Lowering prices, as we have done, will give more tonnage. Of course, it puts a little bit pressure on the overall top line,” Bank said. “But for us, it is really important to be in tune with our customers and give them what they want. And that's value at the moment.”

Bank said he expects that search for value will continue for the “next many years.”

“That’s also why we are building many of the new, small stores in our hard discount, because that resonates so well with our customers,” he said. “They're performing good and that's how we provide real value to Canadians, because those stores are much cheaper than the average store.” 

Loblaw opened 25 hard discount stores in Q3, including six small-format No Frills stores. It plans to open 20 new Maxi and No Frills stores in the fourth quarter.

Its new distribution centre is expected to come online in the first quarter of 2025.

Bank also discussed the rapid growth of Loblaw’s T&T banner. In the last three months, the Asian supermarket chain opened stores in Brossard, Que., Kanata, Ont. and London, Ont. 

T&T is set to open its flagship U.S. store in Bellevue, Washington this December.

 “Our T&T stores continue to outperform our existing network, and are generating consistent high, single-digital same-store sales growth,” Bank said. 

Loblaw reported net earnings of $777 million in its third quarter, up 25% year-over-year.

The reversal of a charge related to a previous President's Choice Bank commodity tax matter positively impacted net earnings by $125 million, Loblaw said. 

Revenue was $18.54 billion, up 1.5%. Retail segment sales came to $18.26 billion.

Food retail same-store sales rose by 0.5% compared to 4.5% last year. Loblaw attributed the decline to the timing of Thanksgiving. Excluding that, food retail same-store sales rose 1.3%.

E-commerce sales increased by 18.5%.