Loblaw has announced plans to cut prices as tough conditions in the Canadian grocery market saw it report only modest gains for its fiscal first quarter.
For the quarter, revenue was up 3.3% to C$10.4bn, with adjusted EBITDA up 5.1% to $829m. Net profit, however, jumped up 32.2% to C$193m.
At its Shoppers Drug Mart banner, overall like-for-like sales were up 6.3%, with LFL pharmacy sales growing by 4.2% and front-end sales up 8.2%. However, its Grocery division disappointed, with LFL sales up just 2.6%.
Loblaw said it was seeing a stronger shift by shoppers towards discount formats, and said it will take a “measured” approach to lowering prices rather than slashing them. Executive Chairman Galen Weston noted: “Our view is that that intensity is going to continue to increase. We see inflation slowing down as the Canadian dollar continues to increase. We see consumer prices coming down in certain markets and in certain categories.”
Weston added that the group will continue to try to find the right level of discounts to entice more customers, while not hurting its own bottom line.