Loblaw’s chief executive officer said Wednesday that the company is planning to introduce more than 50 new stores in 2025, beating this year’s expansion target, as inflation-weary consumers continue to shop around for discounts and deals.
“Customers, they are continuing to look for value — and that will be the theme not only for the next year, but, I think, for the next many years,” Per Bank, president and CEO of Loblaw, said in a call with analysts after the company announced quarterly financial results on Wednesday.
Canada’s largest grocery retailer has been betting heavily on hard-discount stores, opening 25 last quarter alone, given sustained strength in its Maxi and No Frills brands compared with its full-service stores. It expects to launch another 20 locations next quarter, most of which will be new-builds.
For the full 2024 year, chief financial officer Richard Dufresne said Loblaw will have opened 50 new discount stores and converted another 42 locations.
Last quarter, Loblaw also launched two stores operating under a new concept of “ultra-discount” in Ontario, selling “No Name” brand products with prices up to 20 per cent cheaper than comparable products at nearby stores.
“The intent of these stores is to take out all unnecessary costs and give those savings back to our customers,” Bank said. “We’ve received great customer feedback from those stores but it’s still very early days.”
“We’re still learning and refining our offer,” he added. “If it works, we will (add) more, and if not, we will pivot, take the learnings and apply them to our discount program.”
Canadians are clearly still feeling the pinch from rapidly rising prices since 2022. According to Loblaw’s own credit card data, spending on groceries has gone up from the same time last year at the expense of restaurant dining.
Loblaw reported higher revenue and sales in the third quarter, though the pace of demand for both food and drug retail segments slowed compared with last year.
For the quarter ended Oct. 5, total revenue missed analysts’ expectations at $18.54 billion, according to Bloomberg, rising 1.5 per cent.
Its retail segment sales were $18.26 billion, up $277 million, or 1.5 per cent.
Despite increased customer visits to its stores, basket size, or the number of products sold in a single purchase, decreased in the quarter, possibly explained by cash-strapped consumers struggling to manage higher daily expenses.
Food retail sales rose by 0.5 per cent compared with 4.5 per cent last year. The company highlighted that, excluding the “unfavourable impact of the timing of Thanksgiving,” which occurred on Oct. 14 this year, food retail growth was still around 1.3 per cent.
Shoppers Drug Mart sales increased by 2.9 per cent compared with 4.6 per cent last year, driven by pharmacy and health-care services and offset by a decline in front-store sales, including food and household goods. The company also exited some electronics categories due to low margins.
