Loblaw Cos. closed out its 2020 fiscal 12 months on a excessive be aware as meals retail comparable gross sales rose almost 9% and e-commerce gross sales greater than doubled within the fourth quarter.
On the backside line, Canada’s largest meals and drug retailer edged atop analysts’ earnings projection for each the quarter and financial 12 months.
For the 13-week fourth quarter ended Jan. 2, retail gross sales have been $13.04 billion (Canadian), up 15.2% from $11.32 billion a 12 months earlier, Loblaw reported yesterday. Excluding the quarter’s further week versus final 12 months, retail gross sales rose 7.5% to $12.17 billion, the corporate mentioned.
Meals retail gross sales climbed 16.9% to $9.3 billion from $7.96 billion. Backing out the quarter’s thirteenth week, gross sales have been up 8.8% to $8.67 billion. Similar-store gross sales, evaluating 12-week quarters, elevated 8.6% 12 months over 12 months. Brampton, Ontario-based Loblaw famous that gross sales continued at elevated ranges because of the COVID-19 disaster, with comp gross sales rising 10.6% in its Market retail division and seven.4% in its Low cost retail division. Basket dimension grew within the quarter, whereas site visitors was down, reflecting a pattern throughout the meals retail business in the course of the pandemic.
Drug retail gross sales, protecting Loblaw’s Buyers Drug Mart division, superior 11.3% to $3.74 billion from $3.36 billion, with the achieve being 4.3% to $3.51 billion excluding the thirteenth week. Similar-store gross sales for the 12 weeks rose 3.7%, reflecting upticks of two.8% within the entrance finish and 5% within the pharmacy. Prescription depend elevated 9.3% total and by 1.9% on a comparable-pharmacy foundation. 12 months over 12 months, the typical prescription worth grew 2%, Loblaw mentioned.
“The fourth quarter represented a continued enchancment in our outcomes. Our fourth quarter included an additional week this 12 months. The 53rd [week] got here in just a little stronger than anticipated, contributing roughly 10 cents to our fourth-quarter earnings per share,” Chief Monetary Officer Darren Myers advised analysts yesterday in a convention name.
Meals retail gross sales continued to learn from robust demand for important meals classes, Myers famous. “Our meals retail basket dimension remained elevated, whereas site visitors continued to indicate a year-over-year decline within the fourth quarter,” he mentioned. Within the drug retail phase, the front-end combine noticed a robust efficiency in comfort classes — together with meals, family merchandise, and well being and sweetness aids — whereas the corporate “continued to expertise stress” cosmetics and over-the-counter well being product gross sales.
For the 53-week 2020 fiscal 12 months, retail gross sales totaled $51.86 billion, up 10.1% from $47.1 billion in 2019. The achieve was 9.3% excluding franchise consolidation, Loblaw mentioned. Retail gross sales rose 8.2% to $50.98 billion for the 52-week interval. The corporate didn’t report the 52-week gross sales breakdowns for meals and drug retail.
Meals retail gross sales for the 53 weeks elevated 11.3% to $37.6 billion from $33.76 billion, and same-store gross sales climbed 8.6%. Outcomes mirrored robust meals and pharmacy gross sales development for the interval, in addition to an even bigger basket dimension and decreased site visitors, based on Loblaw.
On the Buyers Drug Mart drug retail unit, fiscal 2020 gross sales for the 53 weeks have been $14.26 billion, up 6.9% from $13.34 billion a 12 months in the past. Comp-store gross sales rose 4.9%, together with will increase of 4.5% within the entrance finish and 5.3% within the pharmacy. The variety of prescriptions crammed rose 6% total and 4.2% on a same-store foundation. Common prescription worth gained 0.5%.
“2020 was difficult with many shifting dynamics, however we ended the 12 months having made regular and sequential enhancements and entered 2021 with confidence,” Loblaw Cos. President Sarah Ruth Davis (left) mentioned within the name. “Our core enterprise is wholesome. We’re managing COVID prices, working properly underneath modified circumstances and adapting to pandemic-related pressures on our combine. Most significantly, we’re holding onto standard drug and sweetness market share features earned over the past 12 months and bettering our trajectory in low cost. The fourth quarter was an illustration of our sequential enchancment. Demand for meals and drug held our income development excessive, our retail GP [gross profit] declined, however the pattern within the meals improved from the prior quarter and working expense charges improved 12 months over 12 months.”
Davis cited the rebound within the low cost meals retail division. “You will need to be aware that our meals divisional outcomes have been extra balanced in This autumn than they’ve been for the reason that starting of the pandemic. This means low cost clients are returning to low cost shops following a brief pandemic hiatus,” she mentioned.
In the meantime, Buyers Drug Mart skilled “some uncommon gross sales outcomes tied to pandemic circumstances,” based on Davis. “For instance, we’ve largely skipped the flu season, and sweetness continues to be affected by lockdowns. These are usually not long-term considerations. Additional, Buyers is seeing robust ends in comfort and meals and increasing its function as a well being and wellness vacation spot. Our pharmacy companies enterprise elevated by over 30% in 2020.”
Pushed by altering shopper conduct amid the pandemic, e-commerce gross sales remained robust within the fourth quarter, up 160% 12 months over 12 months. Loblaw completed fiscal 2002 with 178% gross sales development in e-commerce.
“For the 12 months, we hit $2.8 billion in on-line gross sales, in comparison with the $1 billion we celebrated a 12 months in the past. On-line grocery led our digital development greater than tripling to $2 billion, which was rounded out by robust pharmacy, entrance retailer, GM and Joe Contemporary e-commerce gross sales,” defined Davis.
“The rise of digital retail has been dramatic. Regardless of the place it settles, we’re well-positioned with a scalable nationwide e-commerce platform. We all know that is the place retail is headed, nevertheless it creates a problem. On-line grocery is a higher-cost channel. So we’re taking steps to handle margin impacts over the medium time period, whereas sustaining our management place.”
On the earnings aspect, fourth-quarter web earnings from persevering with operations (out there to widespread shareholders) was $354 million, or 98 cents per diluted share, in contrast with $254 million, or 70 cents per diluted share, a 12 months earlier. Adjusted web earnings from persevering with operations (widespread shareholders) got here in at $445 million, or $1.26 per diluted share, versus $395 million, or $70 per diluted share, within the prior-year interval.
Full-year 2020 web earnings from persevering with operations (widespread shareholders) totaled $1.1 billion, or $3.06 per diluted share, in contrast with $1.07 billion, or $2.90 per diluted share, in 2019. On an adjusted foundation, web earnings from persevering with operations (widespread shareholders) was $1.53 billion, or $4.26 per diluted share, versus $1.52 billion, or $4.12 per diluted share, a 12 months in the past.
Analysts, on common, had projected Loblaw’s fiscal 2020 adjusted EPS at $1.25 for the fourth quarter and $4.24 for the complete 12 months, based on Refinitiv. Estimates ranged from $1.20 to $1.34 for the quarter and $4.13 to $4.34 for the 12 months.
“Trying ahead, our outlook is stable,” Loblaw Cos. Chairman and CEO Galen Weston mentioned within the analyst name. “Within the close to time period, we are going to present the necessities, vaccinations and assist our clients want, no matter COVID could convey. Long term, as we emerge from this pandemic, Loblaw might be well-positioned with stronger shopper relationships, conviction in our core enterprise and momentum in development areas that match the lives of Canadians.”
Over the previous 12 months, Brampton, Ontario-based Loblaw opened 19 meals and drug shops and closed 9 places, leading to a web achieve in whole retail sq. footage of 0.3%. As of the 2020 fiscal year-end, the corporate’s retail community encompassed 2,439 shops, together with 550 corporate-owned supermarkets underneath a number of banners, 542 franchised grocery shops and 1,347 Buyers Drug Mart/Pharmaprix associate-owned drugstores.