Loblaw bolsters evil reputation by reporting huge profits as grocery prices skyrocket
Executives at Loblaw Companies Ltd. are likely celebrating today as the Canadian retail giant reports an enormous, stock price-boosting, 30 per cent increase in profits over last year at this time.
Those who aren't shareholders of the Loblaw's and Shoppers Drug Mart parent company (read: the vast majority of Canadian consumers) are more like, "wtf? seriously?"
Your profits are up 30%. Galen Weston thinks Canadians are morons https://t.co/iNqIfqxVuG— Josh McLean (@RadioMcLean) November 16, 2022
It's been less than a month since the conglomerate's heir and CEO, Galen Weston Jr., sparked widespread ire with a tone-deaf email announcing a temporary price freeze on all No Name brand products.
Critics found it a bit ironic (if not enraging) that one of Canada's wealthiest people was acting like a martyr for lowering the prices of his already-inflated food products, and that his promotional email claimed the move was meant to "help make a meaningful difference to your grocery budget at a time when you may need it most."
It was Weston's assertion in that email that the fast-rising cost of groceries at Loblaw's was due to supplier costs and "maddeningly, out of our control." (Interestingly, a still-live version of that email blast has been retroactively amended to omit this line.)
Federal regulators have since begged to differ with the whole "out of our control" thing, launching an investigation into the high profits being reported by grocery store executives who keep arguing that consumer food prices are skyrocketing due to inflation.
If prices are rising faster than inflation, that explains why profits are up. Time to call them out.https://t.co/TYkAnekEY8— 🍁Canadian of Diverse Background🍁 (@CDMtlSportFan) August 30, 2022
Inflation has undoubtedly impacted grocery prices, but not as much as to justify the rate of price creep at Canada's largest supermarket chains (the same chains that intentionally fixed the price of bread for 15 years before getting caught in 2017.)
Not only do prices for specific items vary widely from store to store, even those under the same banner, the cost of these products have risen faster than actual inflation rates — some 9.7 per cent vs. 7.7 per cent as of this summer, per Statistics Canada.
"With inflation on the rise, Canadian consumers have seen their purchasing power decline. This is especially true when buying groceries. In fact, grocery prices in Canada are increasing at the fastest rate seen in 40 years," wrote the Competition Bureau of Canada when announcing a probe into grocery store profits last month.
"Many factors are thought to have impacted the price of food including extreme weather, higher input costs, Russia's invasion of Ukraine, and supply chain disruptions. Are competition factors also at work? To find out, the Bureau will study this issue from now until June 2023."
Are grocery magnates actually gouging consumers when food bank usage is at an all-time high? The bureau has yet to decide, but some analysts have argued that, yes, some items are being falsely marked up under the guise of inflation.
Loblaw's profit jump 23% as Metro reports higher sales from inflation pic.twitter.com/aXHGinZhH0— The Perfidious SH (@perfidiousSH) November 16, 2022
Whatever the case, Loblaw — which owns Loblaws, Shoppers Drug Mart, Real Canadian Superstore, No Frills, Joe Fresh, Zehrs and more — has really been raking it in.
In a financial release issued Wednesday, Loblaw Companies Ltd. reported that adjusted gross profits for retail had risen by 30.8 per cent in the third quarter of 2022, compared to Q3 2021.
"Loblaw's efforts to moderate cost increases and provide superior value to customers through its PC Optimum Program and promotions resulted in strong sales and stable gross margins in Food Retail," reads a release accompanying the earnings report.
"Sales were led by strong performance in Discount banners such as No Frills and Real Canadian Superstore, and a continued shift to private label brands including President's Choice and no name. In Drug Retail, revenues benefited from elevated sales of higher margin categories like beauty, cough and cold."
All in all, the corporation boosted its adjusted net earnings for common shareholders to $663 million, up $123 million year-over-year, representing an increase of 22.8 per cent.
Said Loblaw in a statement on Wednesday: "Today we provided clear evidence that we are not taking advantage of inflation to drive profit. While food costs and prices have increased, our mark up on food has remained flat over the past year."
The corporation can say what it wants about inflation and price gouging, but their evidence is anything but clear.
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