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Loblaw's new CEO talks hard discount strategy

Chief executive Per Bank said the retailer's customers continue to search for value
Jillian Morgan, female, digital editor for Canadian Grocer
Loblaw, which operates discount grocery banner No Frills, reported net earnings of $541 million in the fourth quarter of fiscal 2023.

Loblaw Cos. Ltd. is strengthening its discount strategy as European retail veteran Per Bank takes the reins of the grocery giant. 

Bank recently shuffled the company’s discount executives in one of his first moves as CEO, tapping Melanie Singh and Frank Gambioli to lead the hard discount and market divisions, respectively.

“I thought it was absolutely essential to carve out our hard discount in a separate division” Bank told investors Thursday (Feb. 22). “I want to really operate the hard discounters as hard discounters.”

He said the decision made sense as Canadians continue to search for value by shopping promotions and private label brands, and moving to the company’s budget-friendly No Frills and Maxi banners.

READ: Canadians' grocery shopping habits increasingly driven by discounts and deals

“When I look at the [market division] now… we have the Real Atlantic Superstores combined with the Real Canadian Superstores, so now we have a Superstore banner coast to coast – we didn't have that before – meaning that we can utilize the strength of negotiating with suppliers and giving great promotions and great offers to customers across across the country,” Bank said.

The statements come after Loblaw announced Tuesday it would be expanding its store network this year as part of a record $2.2 billion capital investment plan. That will include the introduction of 40 new discount stores.

“I think that we have the strongest hard discount format in both Maxi and No Frills in Canada,” Bank said. “Hopefully I can pivot a little bit with my experience.”

Before joining Loblaw, Bank served as CEO of Denmark grocery retailer Salling Group A/S. In his first analyst call, the executive said he has spent several months traveling the country to learn about the business and Canadian consumers.

“Two things have really struck me during my travels. First, at Loblaw we have a unique and very special relationship with our customers – in fact, with most Canadians. This means that they have higher expectations of us,” he said. “Customers are increasingly rewarding us with their business, but they're also not shy about letting us know when we can do things better. Secondly, Loblaw has tremendous strength in the commitment, diversity and experience of our team coast to coast.”

READ: Loblaw 50% off stickers to return after public anger over discount reduction

Loblaw – which operates the retail banners LoblawsShoppers Drug MartT&T Supermarkets and more – reported net earnings of $541 million in the fourth quarter of fiscal 2023, up 2.3%.

Revenue was $14.53 billion, an increase of 3.7%. Retail segment sales were up 3.4% to $14.15 billion.

Food retail same-store sales increased by 2% and drug retail same-store sales rose by 46%.

E-commerce sales increased by 14.6%.

Revenue for the year totalled $59.53 billion, up 5.4%. Food retail same-store sales increased by 3.9% and drug retail same-store sales increased by 5.4%.

Net earnings for fiscal 2023 were $2.09 billion. 

Chief financial officer Richard Dufresne told analysts that inflation appears to be stabilizing, with Loblaw’s average item price increase in Q4 at its lowest in more than two years. 

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