Loblaw reports Q3 growth in discount stores, private-label

Loblaw Co. Ltd. said store openings and discount brands outpaced same-store sales and drove the majority of its absolute growth in its third-quarter. 

"With [Loblaw's] broad footprint, we know many Canadians are looking for opportunities to get the most out of their budgets in this challenging economic environment and we believe it is our responsibility to deliver the quality, value, service and convenience across every corner of our business," said Per Bank, president and CEO, Loblaw Companies Limited, during a conference call on Nov. 12.

The company reported its retail segment sales for the quarter were $19,395 million, an increase of $857 million. 

Food retail 

Food retail sales saw an increase of 4.8% in the third-quarter and same-store sales increased by 2.0%. 

Loblaw’s private-label brand No Name is growing ahead overall, notably due to consumer behaviours reflecting a preference for discount brands overall. 

The company opened 19 Maxi and NoFrills stores in the quarter, bringing discount options to more communities across the country. 

“Momentum continues to build across the hard discount stores added to the Loblaw network through conversions and new builds, proving that our strategy is resonating with Canadians,” said Richard Dufresne, CFO, Loblaw Companies Limited, during the conference call. “[Loblaw] is also pleased with the momentum in its conventional stores, which improved market share within their conventional sector.” 

READ: Discount shift sticking around for the long term: Loblaw CEO

Dufresne noted during the call that the company’s internal food inflation was lower than the Consumer Price Index for Food Purchased from Stores of 3.6%. Food retail traffic and basket size increased.

“Cost increase requests from large global vendors continue to trend well above historical levels. In response, [Loblaw] is pushing back harder than ever to ensure any increases we accept are justified,” said Dufresne.

Consumer behaviour 

In terms of customer behaviour, Loblaw reports “seeing a lot of the same.” 

“To digest store sales results in Q3, we need to go back to 2024 Q4. We saw some bumps here and have been playing catch-up. We are compensating for last year,” said Dufresne. “If you look at the total sales growth and internal inflation, we are on track to deliver our best market share.” 

Market prices are increasing so consumers are purchasing more discount items. As a result, discount channels like No Frills saw increased growth. Conventional channels did not grow at the same rate as other channels but are still growing.