Critics accuse Leblaeus of profiting from inflation as profits soar 40%

Critics accuse Leblaeus of profiting from inflation as profits soar 40%

Canada’s largest food retailer had an impressive quarter and critics say it’s another example of a company profiting from inflation.

Lublow Ltd. said Wednesday that its first-quarter profit rose nearly 40 percent compared to the same period last year. Taking into account the tax ruling that went in her favor as well as other adjustments, her net profit rose 17.1 percent to $459 million.

Most of the retail profit growth came from drugstore retailers (they own Shoppers Drug Mart and Pharmaprix), Loplow said, due to higher sales of prescription drugs, over-the-counter cold and cough medicines and cosmetics, which got a boost as the easing of pandemic restrictions.

The company’s drugstore sales rose 5.4 percent to $3.4 billion overall.

However, food sales revenue also increased 2.4% to $8.7 billion, and adjusted gross profit for the retail division as a whole increased 5.9% to $3.7 billion.

DT Cochrane, an economist and researcher who works with Canadians for Tax Justice, said Leblau’s quarterly earnings “are nothing but additional evidence to suggest that one of the main drivers of inflation is companies raising prices.

“These companies are doing what companies will do … they are profit-driven,” Cochrane said. We cannot look to companies to do what is right. We need the government to do what’s right.”

He’s calling for regulations on grocery prices as well as new taxes on what he says are excess profits, a measure also supported by the Canadian Center for Policy Alternatives (CCPA).

“The increase in food prices is not shrinking Loplow’s profits,” said Sheila Block, chief economist at the CCPA.

Block said the increase in profits at Lublow shows that next year will see a continuation of a trend in which companies raise prices higher than they should and take advantage of inflation.

A recent report from the CCPA concluded that the current rate of inflation in Canada would be at least a quarter lower were it not for the gains in prices by companies in all sectors.

During a conference call with investors, a financial analyst asked Luplow executives how much inflation-related costs the company is passing on to consumers.

Richard Dufresne, chief financial officer at Leblau, said the company bases its pricing on competition, not inflation.

“We don’t try to run our business according to the inflation figure,” he said, adding that the company is instead focusing on how its prices compare to its grocery sector peers. “We’re trying to manage our business in terms of setting our prices against our competitors.”

With prices rising, LeBlow said, shoppers were spending less on average each time they visited her stores, and consumers were turning to discount stores, including No Frills and Maxi, which now account for 60 percent of grocery sales.

Loblaw Chairman and President Galen G.

Lublow itself is dealing with higher prices in its food business and Weston cited “supply chain challenges and increased costs across the board, including fuel, shipping, ingredients and packaging.”

The company said its internal measure of food inflation was slightly higher than the Consumer Price Index from Statistics Canada for store-bought food, which increased 7.5 percent in the quarter.

LeBlow did not release detailed figures on the matter, but his spokeswoman Catherine Thomas said in an email, “It is inaccurate to say that our food prices are outpacing inflation.”

“The company’s increased earnings this quarter was primarily driven by higher-margin sales, such as cosmetics,” Thomas said.

“Grocery is a very low-margin business where in the last quarter we earned less than 4 cents for every $1 we sold,” Thomas said. “We are working hard to keep our costs and prices low. This has been an industry-wide challenge due to several unusual inflationary forces.

The Empire Co Ltd and Metro Inc. grocery competitions were also registered. earnings growth in the last quarters of their lives.

Metro net profit rose 5.3 percent to $198 million in the 12 weeks ended March 12, and Empire announced a 15.4 percent increase in net profit to $203.4 million for the 13 week ended January 29.

Loblaw’s total revenue for the first quarter of 2022 was $12.26 billion, up from $11.87 billion in the same quarter last year.

Loblaw reported that its earnings available to common shareholders were $437 million, or $1.30 per diluted share for the 12-week period, compared to $313 million, or 90 cents per diluted share, in the prior year.

The company said it will pay a quarterly dividend of 40.5 cents per share, up from 36.5 cents per share.

On an adjusted basis, Loblau said it earned $1.36 per diluted share, up from an adjusted profit of $1.13 per diluted share a year ago.

Files from the Canadian Press

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2022-05-05 12:18:22

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