Loblaw Reports 2020 Third Quarter Results¹
BRAMPTON, ONTARIO November 12, 2020 Loblaw Companies Limited (TSX: L) (“Loblaw” or the “Company”) announced today its unaudited financial results for the third quarter ended October 3, 2020. The Company’s 2020 Third 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.
“Loblaw delivered strong operating performance in the quarter, while investing in providing exceptional value, safety and convenience,” said Galen Weston, Executive Chairman, Loblaw Companies Limited. “We continued to build for the future, expanding our digital network and leveraging our PC OptimumTM loyalty program to create even more value for Canadian families.”
The COVID-19 pandemic continued to impact the Company’s operations in the quarter, positively impacting sales in the Food Retail business, supported by significant investments to ensure the safety and security of customers and colleagues. Loblaw continued to make investments to enhance the overall value proposition for consumers, maintaining its promotional intensity through the pandemic to retain its share gains in conventional banners and further improve its positioning in discount banners.
Food Retail same-store sales continued at elevated levels, growing by 6.9% in the quarter, with the Company’s Market division delivering strong growth of 9.7% and the Discount division delivering 4.7% growth. Drug Retail same-store sales also experienced growth in the quarter, growing by 6.1%, with pharmacy delivering strong growth of 10.3% and front store sales growing by 2.4%. The Company invested approximately $85 million in COVID-19 related costs in the quarter primarily to ensure the safety and security of customers and colleagues.
The COVID-19 pandemic has accelerated certain longer-term trends, enabling the Company to advance its strategic growth areas of Everyday Digital, Connected Healthcare, and Payments and Rewards. The Company’s investments in its Everyday Digital platforms enable it to offer Canadians a choice of shopping in-store or online with either home delivery or convenient pickup locations. The Company’s ecommerce sales grew by 175% in the third quarter, across the Company's grocery, pharmacy, and apparel e-commerce platforms. The platform was expanded in the quarter to include front-store items from Shoppers Drug Mart and Pharmaprix pharmacies.
In September, the Company made two important announcements in its strategic growth areas of Payments and Rewards and Connected Health. The Company launched the PC MoneyTM Account, a simple no-fee way to do everyday banking, turning the act of paying bills and shopping into a way to receive PC Optimum rewards. As it continues to build out its Connected Health strategy, the Company also announced an investment in Maple Corporation and the launch of a PC Health app. Together, these two initiatives form part of the Company’s next generation digital health platform that will provide Canadians with a new, personalized healthcare experience by leveraging the power of Loblaw’s existing national healthcare network, extensive professional care services and world-class loyalty program to deliver a personalized healthcare solution for Canadians.
2020 THIRD QUARTER HIGHLIGHTS
Unless otherwise indicated, the following highlights include the impacts of the consolidation of franchises and COVID-19.
Revenue was $15,671 million. When compared to the third quarter of 2019, this represented an increase of $1,016 million, or 6.9%.
Retail segment sales were $15,464 million. When compared to the third quarter of 2019, this represented an increase of $1,044 million, or 7.2%.
Food retail (Loblaw) same-stores sales growth was 6.9%.
Drug retail (Shoppers Drug Mart) same-store sales growth was 6.1%, with pharmacy same-store sales growth of 10.3% and front store same-store sales growth of 2.4%.
The Company’s e-commerce initiative continued to contribute to Everyday Digital sales which have grown 175% on a quarter-to-date basis.
The Company incurred approximately $85 million in COVID-19 related costs to ensure the safety and security of customers and colleagues.
Operating income was $718 million. When compared to the third quarter of 2019, this represented an increase of $28 million, or 4.1%.
Adjusted EBITDA² was $1,524 million. When compared to the third quarter of 2019, this represented an increase of $32 million, or 2.1%.
Adjusted EBITDA) margin² was 9.7%. When compared to the third quarter of 2019, this represented a decrease of 50 bps.
Net earnings available to common shareholders of the Company were $342 million. When compared to the third quarter of 2019, this represented an increase of $11 million, or 3.3%. Diluted net earnings per common share were $0.96. When compared to the third quarter of 2019, this represented an increase of $0.06, or 6.7%.
Adjusted net earnings available to common shareholders of the Company² were $464 million. When compared to the third quarter of 2019, this represented an increase of $6 million, or 1.3%.
Adjusted diluted net earnings per common share² were $1.30. When compared to the third quarter of 2019, this represented an increase of $0.05, or 4.0%.
In the third quarter of 2020, the Company repurchased 5.0 million common shares at a cost of $350 million.
In October 2020, the Company extended the maturity on its existing $1 billion revolving credit facility to October 2023.
The Company invested $396 million in capital expenditures and generated $121 million of free cash flow².
The Company recorded approximately $12 million of restructuring and other related charges, primarily related to Process and Efficiency initiatives.
Quarterly common share dividend to be increased by 6.3% from $0.315 per common share to $0.335 per common share.
Note: This is an excerpt from the full release. To view the complete document, please download the full Q3 2020 news release.
¹ This News Release contains forward-looking information. See “Forward-Looking Statements” section of this News Release and the Company’s 2020 Third 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 and at loblaw.ca.
² See Section 11 “Non-GAAP Financial Measures” of the Company’s 2020 Third Quarter Report to Shareholders, which includes the reconciliation of such non-GAAP measures to the most directly comparable GAAP measures.
Have investor questions?
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