Loblaw Reports 2020 First Quarter Results¹
BRAMPTON, ON, April 29, 2020 /CNW/ - Loblaw Companies Limited (TSX: L) ("Loblaw" or the "Company") announced today its unaudited financial results for the first quarter ended March 21, 2020. The Company's 2020 First Quarter Report to Shareholders will be available in the Investors section of the Company's website at loblaw.ca and will be filed on SEDAR and available at sedar.com(Open in a new tab).
Late in the quarter the Company experienced unprecedented consumer demand and stockpiling relating to COVID-19, with sales surging in the final two weeks of March. The result was both a sharp increase in revenue and profit followed by ramp-up in spending to protect and benefit colleagues and customers.
The Company continues to invest in its strategic business initiatives and has accelerated some in response to the changing demands of customers. The Company's COVID related investments fall into four areas:
Enhancing customer convenience with increased store staff, expanded PC Express e-commerce services and eliminating fees and reducing prices associated with these online services;
Supporting colleagues in stores and distribution centres with temporary pay premiums and pay protection safeguards;
Securing operations by increasing store cleaning, hiring security and ambassadors to manage social distancing, introducing new customer protocols, and installing equipment like plexiglass barriers at checkouts and counters; and,
Providing financial support to communities across the country through large-scale donations to food and wellness programs, and to President's Choice Financial Mastercard® customers through new financial hardship programs.
Following the initial surge in March, demand has moderated, with continued strength in essential food categories and pressure on sales in pharmacy and some discretionary areas of the business. The Company's response and costs related to COVID-19 have accelerated following the end of the quarter, putting pressure on the business. Uncertainty over the duration and severity of the pandemic make reliable estimates of the second quarter and full-year COVID-19 related impacts on the financial results and operations of the Company impossible.
"These are unprecedented times and I am incredibly proud of how our colleagues have risen to the challenge of ensuring that Canadians have access to the food and health essentials they need. And we will continue to make significant investments to keep our colleagues and customers safe through the pandemic" said Galen G. Weston, Executive Chairman, Loblaw Companies Limited. "As we remain focused on long term value creation, and we see signs of fundamental change in consumer behaviour, our conviction around the strategic importance of our leading positions in loyalty, digital retail, and connected healthcare is stronger than ever."
2020 FIRST QUARTER HIGHLIGHTS
Unless otherwise indicated, the following highlights include the impacts of the consolidation of franchises and COVID-19.
Revenue was $11,800 million. When compared to the first quarter of 2019, this represented an increase of $1,141 million, or 10.7%.
Retail segment sales were $11,584 million. When compared to the first quarter of 2019, this represented an increase of $1,132 million, or 10.8%.
- Food retail (Loblaw) same-stores sales growth was 9.6%.
- Drug retail (Shoppers Drug Mart) same-store sales growth was 10.7%, with pharmacy same-store sales growth of 10.6% and front store same-store sales growth of 10.7%.
Operating income was $541 million. When compared to the first quarter of 2019, this represented an increase of $90 million, or 20.0%.
Adjusted EBITDA² was $1,169 million. When compared to the first quarter of 2019, this represented an increase of $129 million, or 12.4%.
Net earnings available to common shareholders of the Company were $240 million. When compared to the first quarter of 2019, this represented an increase of $42 million, or 21.2%. Diluted net earnings per common share were $0.66. When compared to the first quarter of 2019, this represented an increase of $0.13, or 24.5%.
Adjusted net earnings available to common shareholders of the Company² were $352 million. When compared to the first quarter of 2019, this represented an increase of $62 million, or 21.4%.
Adjusted diluted net earnings per common share² were $0.97. When compared to the first quarter of 2019, this represented an increase of $0.19, or 24.4%.
First quarter financial results reflect an estimated increase in sales of approximately $751 million and diluted net earnings per common share of $0.14 related to the significant increase in initial demand for grocery and pharmacy products in March following the onset of the COVID-19 pandemic in Canada.
In the first quarter of 2020, the Company repurchased 2.8 million common shares for cancellation at a cost of $188 million.
In the first quarter of 2020, the Company invested $211 million in capital expenditures and generated $1,186 million of free cash flow²
In the first quarter of 2020, the Company recorded approximately $19 million of restructuring and other related charges, primarily related to Process and Efficiency initiatives. Included in the restructuring charges is $15 million related to the closure of the two distribution centres in Laval and Ottawa, that were previously announced in the first quarter of 2020. The Company is investing to build a modern and efficient expansion to its Cornwall distribution centre to serve its food and drug retail businesses in Ontario and Quebec. Over the next two years, the distribution centres in Laval and Ottawa will be transferring their volumes to Cornwall. The Company expects to incur additional restructuring costs in 2020 and 2021 related to these closures.
Note: This is an excerpt from the full release. To view the complete document, please download the full Q1 2020 news release(Open in a new tab).
¹This News Release contains forward-looking information. See "Forward-Looking Statements" section of this News Release and the Company's 2020 First Quarter Report to Shareholders for a discussion of material factors that could cause actual results to differ materially from the forecasts and projections herein and of the material factors and assumptions that were used when making these statements. This News Release should be read in conjunction with Loblaw Companies Limited's filings with securities regulators made from time to time, all of which can be found at sedar.com(Open in a new tab) and at loblaw.ca.
²See Section 10 "Non-GAAP Financial Measures" of the Company's 2020 First Quarter Report to Shareholders, which includes the reconciliation of such non-GAAP measures to the most directly comparable GAAP measures.
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