Loblaw Companies Q2 Earnings Call Highlights

Loblaw Companies TSE: L reported second-quarter revenue growth and double-digit adjusted earnings-per-share growth as its discount grocery banners, pharmacy operations and e-commerce business continued to gain momentum. Chief Financial Officer Richard Dufresne said revenue including PC Financial rose 4.1% to C$15.3 billion in the quarter, while adjusted EBITDA increased 5.1% to C$1.9 billion. Adjusted EBITDA margin improved by 10 basis points, and adjusted diluted earnings per share rose 11.9% to C$0.66. On a GAAP basis, revenue was C$15 billion, up 4.1%, while diluted earnings per share increased 8.5% to C$0.64.

Dufresne said the results reflected solid sales growth, stable gross margin and a flat selling, general and administrative expense rate, even as the company invested in store openings, pharmacies and distribution-network upgrades.

Food retail sales increased 3.3%, supported by new locations, while same-store sales rose 1.6%. The comparable-sales result included a 20-basis-point drag that Dufresne referred to as “the right-hand side.”

Loblaw’s hard-discount banners recorded comparable sales growth of nearly 4%, with Maxi and No Frills benefiting from consumers’ continued focus on value. Dufresne said recently opened locations that have entered the comparable-store base are producing double-digit same-store sales growth.

President and Chief Executive Officer Per Bank said customers remain promotional-focused, are increasingly purchasing private-label products and are making changes across their baskets to manage household budgets. He cited frozen vegetables as one example, saying the category has posted more than 500 basis points of growth at the company’s hard-discount banners. “Customers, they stay conscious. They stay focused on value,” Bank said, adding that consumer behavior was broadly consistent with the prior quarter.

The company opened 11 food stores during the quarter, including seven Maxi and No Frills stores, one T&T location in Canada and one T&T store in the United States. It also opened three Shoppers Drug Mart locations. The additions produced a net increase in grocery square footage of about 1.5% and pharmacy square footage of 2.6%. Loblaw remains on track to open about 75 stores this year and expects a similar pace next year, according to Dufresne. The company said it is seeing better-than-expected performance relative to internal assumptions for sales erosion from new store openings.

Bank highlighted T&T’s expansion into the U.S., saying its first California store, which opened in San Jose in June, produced the highest first-week sales of any Loblaw store opening. The company plans to open two additional California T&T stores in 2026. Management said conventional-banner performance remains healthy despite a difficult year-over-year comparison. Dufresne noted that conven...