Canadian retailer Loblaw sees first-quarter profit rise as online demand grows

Canadian retailer Loblaw sees first-quarter profit rise as online demand grows

Canadian retailer Loblaw Inc reported first-quarter results that beat market expectations for quarterly revenue and profit as online sales more than doubled amid soaring demand for groceries and other necessities among online shoppers during the COVID-19 pandemic.

Loblaw is Canada's largest food retailer, with 22 regional and segment-based corporate and franchise supermarkets, as well as drugstores, banks and clothing stores. It operates a private label program that includes groceries and home goods, apparel, baby products, pharmacy, mobile phones, general merchandise and financial services.

The company said profit rose 30% to $313 million in the first quarter of 2021, compared with the same period last year . Revenue for the three months to March 27 totaled $11.87 billion, up from $11.8 billion previously.

The company's strong results were helped by improvements in its financial services business and better-than-expected gross margins on food and drug sales. However, Loblaw said future revenue growth will be challenging as the economy begins to reopen.

In Canada, lockdowns and other virus-related restrictions during the first three months of the year, including reduced store capacity, forced consumers to stock up on groceries and other essential items.

However, the company warned that its food retail division, which saw a surge last year when inventories were at their peak, would be less strong in the current quarter. The company said same-store food sales fell slightly in the first month of the current quarter.

For the second quarter, the company expects to incur approximately $65 million to $75 million in pandemic -related costs, compared with $282 million in the same period last year .

Meanwhile, Loblaw 's e - commerce sales grew 133% from the first quarter of 2020. The company's strong financial performance in the first quarter, and the momentum continued into the first four weeks of the second quarter, puts it on track to exceed its full-year earnings per share growth outlook. However, given the continued uncertainty and volatility brought on by the COVID-19 pandemic at the beginning of the year, the company will not be updating its full-year outlook at this time.

The epidemic is an important factor in promoting online sales, but there are instability and fluctuations. How businesses can seize opportunities to achieve better development is the long-term solution.

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