Loblaw Companies Limited

Second quarter revenue, including PC Financial, was $15 billion, up 4.1% year over year. Adjusted EBITDA increased 5.1% to $1.9 billion, with adjusted EBITDA margin up 10 basis points. Adjusted diluted EPS was $0.66, up 11.9%; GAAP diluted EPS was $0.64, up 8.5%. Food retail sales rose 3.3% and same-store sales were up 1.6%; drug retail sales rose 6.1% and same-store sales were up 4.6%. Retail gross margins were stable, up 10 basis points, and retail SG&A was flat at 20% of sales. On guidance, management said it still expects retail earnings to grow faster than sales and adjusted net earnings per share growth in the high single digits, despite only recognizing one month of EQB earnings in Q3 because the PC Financial transaction closed partway through the quarter. The company also raised its expected share repurchase total to $2.1 billion for the year, up $200 million, and said it expects to open about 75 stores in 2026.

Per Bank emphasized disciplined execution, value, and customer relevance across the chain, saying consumers remain focused on promotions, PC Optimum, and trade-down behavior. He highlighted strong momentum in hard discount, continued gains in market share, and the strategic importance of Canadian sourcing, saying more than 70% of the food Loblaw buys is sourced from or prepared in Canada. His tone was confident and upbeat, especially around store expansion, T&T, pharmacy growth, and the company’s ability to keep delivering value while investing for growth.

Richard Dufresne said the quarter featured solid revenue growth, stable gross margin, a flat SG&A rate, and strong adjusted EPS growth, while the company kept investing in new stores, pharmacies, and distribution. He noted $552 million of share repurchases in the quarter and $1.2 billion year to date, and said Loblaw now expects $2.1 billion in buybacks this year. He also said PC Financial’s sale brought in $625 million in cash, the company owns about 19.9% of EQB now and expects to reach about 25% over time, and that the timing mismatch means only one month of EQB earnings will be recognized in Q3. On margins, he said gross margin should get a positive tailwind from GLP-1 drugs going generic and that the company feels good about gross margin for the next while.

Analysts focused on consumer health, conventional food comp dynamics, fuel costs, GLP-1 economics, store growth, and ecommerce pressure. Management said consumer behavior is broadly unchanged, with more value-seeking and some shift toward discount, while conventional remains healthy once adjusted for easier prior-year comparisons and other timing items. They also said fuel-driven inflation is still below 3% but could pressure costs if it persists, GLP-1 sales dollars are expected to grow double digit next year with gross profit dollars and rate growing even faster, and ecommerce growth is not hurting store operations. On square footage, management said new-store growth is expected to remain stable and that current cannibalization is better than internal plans.