Yahoo Finance Loblaw earnings: Q1 profit, revenue increase as online sales surge 113%
Loblaw Companies Ltd. (L.TO) reported better than expected sales during the first quarter of 2021, as online sales surged 133 per cent with customers shopping from home through the COVID-19 pandemic.
Canada's largest grocery retailer saw sales in the 12-week period ending March 27 increase to $11.87 billion, up 0.6 per cent from $11.80 billion during the same time last year. Analysts expected sales of $11.72 billion, according to IBES data from Refinitiv. The company also reported a net profit available to shareholders of $313 million, or 90 cents per diluted share, up from $240 million, or 66 cents per share, last year.
However, Loblaw signalled that food retail sales will not be as strong in its upcoming quarter, as the company laps the period of the pandemic when sales skyrocketed amid pandemic stockpiling and panic buying. In the first four weeks of the second quarter, the company said food same-store sales – a key metric in the retail industry – have declined slightly. In 2020, food same-store sales jumped 10 per cent in the second quarter.
"As economies reopen, revenue growth will be challenged while lapping elevated 2020 sales,” the company said in its financial results.
Still, Loblaw expects sales will remain elevated due to the impact of lockdown measures still in place in many regions across the country. Costs related to the COVID-19 pandemic will also decrease. The company expects it will still exceed its full year earnings per share growth target, in part due to the strong momentum of the first quarter.
E-commerce sales in the first quarter grew 133 per cent compared to the same time last year, as customers continued to turn to shop online for groceries through the pandemic. Loblaw president Sarah Davis said on a conference call with analysts that the company focused on lowering costs and adding higher-margin offerings to its online service, which helped drive digital sales.
“As the business grew exponentially, we delivered our highest bill rates, lowest wait times and the best satisfaction scores of all time across the business,” Davis said.
“But I think it’s a reasonable expectation that it’s going to start to flatten out… we’re not going to see the high growth that we saw last year.”
With files from Reuters
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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