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Loblaw sees uplift in sales for Canadian products ahead of U.S. tariffs

CEO says shoppers are buying more local goods
Jillian Morgan, female, digital editor for Canadian Grocer
loblaws
Loblaw reported its fourth quarter results on Feb. 20.

In the lead up to the U.S.-Canada tariff war, Canadians are looking to stick it to U.S. President Donald Trump by boycotting American goods at the grocery store.

The country’s largest food retailer, Loblaw Cos. Ltd., is already seeing changes in consumer behaviour a week out from Trump’s start date.

Per Bank, president and CEO, said he’s observed shoppers’ appetite for Canadian-made products first-hand. 

“When I'm out in stores, every single person I meet, they want help and guidance on how they can buy more Canadian products,” Bank told analysts Thursday (Feb. 20).

Loblaw recently introduced updates to its PC Optimum app that aim to make it easy for consumers to find Canadian products.

When users create a shopping list in the app, they'll find a new "swap" feature that, when selected, suggests locally made alternatives.

Bank said the company saw a 75% week-on-week increase in customers using the feature. In-store, he’s seen a 10% uplift in sales for Canadian products in recent weeks.

U.S. imports account for less than 10% of Loblaw’s costs, Bank said, and that’s mostly in the produce department. 

“Produce is probably the most difficult place—I think we can mitigate half of our suppliers. We see these tariffs as a tax on products that will hurt consumers on both sides of the border,” he said. 

Bank said if tariffs drive up the cost of produce—or other products—he expects shoppers will choose locally made alternatives

READ: Loblaw to ‘double down’ on Canadian-made products, buy from Mexico: CEO

“Household and cleaning, [that’s] one area where we have more than 30 vendors coming from the U.S. But we also have a very strong control brand portfolio in household and cleaning... If the tariffs will be applied on household and cleaning, then of course, [the American] products will not be competitive anymore, and all the sales will go to our control brands,” Bank said. “And they're all produced in Canada. So, that's good for Canada, it's good for customers and it's good for us.”

Loblaw reported net earnings of $462 million in the fourth quarter of fiscal 2024, a decrease of $79 million or 14.6%. 

The decrease was due to a one-time charge related to Loblaw’s PC Optimum loyalty program resulting from higher member participation and redemption rates.

Revenue was $14.95 billion, up 2.9%. 

Retail segment sales came to $14.58 billion, a year-over-year increase of 3%. 

Food retail same-store sales grew 1.5% excluding the timing of the Thanksgiving holiday last year. Drug retail same-store sales grew by 1.3% compared to 4.6% last year. E-commerce sales rose by 18.4%.

For the full year, revenue rose 2.5% to $61.01 billion. Net earnings were $2.16 billion, up 3.2%. 

Loblaw said it’s still seeing higher than normal price increases coming in from large global vendors, with many requesting double digit increases. Executives said the weakening Canadian dollar will create more inflationary pressure. 

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T&T washington
Exterior of T&T's Bellevue, Washington store. Photography courtesy T&T Supermarket

Growing market share

Loblaw ended fiscal 2024 with its best market share gain in a decade, executives said. 

On Wednesday, the grocer announced plans to spend a whopping $10 billion over the next five years to grow its store network and modernize its supply chain.

That investment includes $2.2 billion this year to open 80 new stores under the No Frills, Maxi, Shoppers Drug Mart, Pharmaprix and T&T banners. 

Loblaw said it plans to open 50 hard discount stores in 2025 and renovate more than 300 grocery and pharmacy locations, including 100 new Shoppers Drug Mart pharmacy care clinics. 

Bank said many of the new discount stores will be smaller formats—spanning between 8,000 and 10,000 square feet. 

READ: Another small-format No Frills opens in Ontario

On a call with analysts, the chief executive shared some insights on the grocer’s expansion strategy.

“It’s too early to say how many stores we will build in 2026, but we don't build stores on behalf of population growth. We find ‘white spots’ in the cities where we don't have a lot of sales and a lot of representation already,” he said.

“It sounds like a lot of stores—maybe because we haven't opened a lot of stores in the past—but if I compare to other countries, and the size of Canada, 80 stores is not a lot.”

Bank said T&T is Loblaw’s fastest growing format. The Asian grocery chain recently opened its flagship U.S. store in Bellevue, Washington, with plans to open a second in the state as well as a location in California. 

In just two months since its opening, the Bellevue store outperformed every store in Loblaw’s network, Bank said.

In fiscal 2024, Loblaw added 58 hard discount stores to its network through conversions and new builds and opened 26 conventional grocery stores. In Q4, the grocer concluded its network optimization initiative in Quebec, with 187 Maxi stores now operating in the province.

This month, the company will also begin shipping frozen products from its 1.2 million square-foot distribution centre in East Gwillimbury, Ont.

“This DC will deliver improved capacity and efficiency for the future. This year will demonstrate a carefully planned ramp up of volume in frozen, then fresh and, finally, ambient products,” Bank said. 

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