Loblaw Boycott Had ‘Minor’ Impact as Company Says Lawsuit Settlement Hit Profits
Loblaw has reported a slight profit decline in Q2, primarily due to a settlement over an alleged bread price-fixing scheme as apposed to a recent boycott earlier this year. The company’s president and CEO, Per Bank, stated that the overall financial impact of the boycott was minor and stressed that every customer is important to the company. He empahasized that Loblaw’s profit decline of 10% year-over-year to $457 million, was primarily due to the settlement of a pair of class-action lawsuits between it and parent company George Weston Ltd.
Food retail same-store sales were almost flat, rising just 0.2% over last year, compared with 3.4% in the first quarter of the year. This is partly due to the company’s strong performance a year earlier. However, it is difficult to isolate one specific factor for the softness. Richard Dufresne, the company’s chief financial officer, reiterated last year’s strong quarter and said that the sales trend so far in 2024 is “pretty much the same.”
An untold number of shoppers boycotted Loblaw-owned stores in May, with some calling for the action to continue indefinitely to protest high food prices. Loblaw chairman Galen Weston previously pushed back on what they called “misguided criticism” of the company. The company noted that traffic in food retail increased during the quarter, while the average basket size went down. Drug retail same-store sales increased 1.5%, with front store same-store sales down 2.4% and pharmacy and health-care services same-store sales up 5.4%.
Dufresne said the company’s strategies, including promotions like Hit of the Month, seem to be working heading into the third quarter. He said 2024 is bringing normalization to Loblaw’s retail business, with discount stores like No Frills and Maxi continuing to outperform conventional stores. Loblaw opened 14 new discount stores during the quarter and has 20 more planned for the third quarter.
For details regarding the settlement, please see the Company’s news release here.
Source: The Star
Source: CTV News
Source: Loblaw
Canadian Tire’s Second-Quarter Profit up Even as Consumers ‘Tightened Their Belts Considerably’
Canadian Tire Corp. Ltd.’s president and CEO, Greg Hicks, has said that indebted shoppers are cutting back on spending even more due to the high cost of living. He believes that consumers are focused on essentials and where they can get value, but consumption patterns are less dependent on income level and more dependent on household indebtedness. Consumers with less debt have more stable spending patterns when it comes to discretionary goods and have even increased their essential purchases.
The overall pullback in spending has posed a challenge for Canadian Tire and its SportChek, Mark’s, Pro Hockey Life, and Helly Hansen brands for the bulk of this year and some of last. The company weathered the situation well enough to report a profit attributable to shareholders of $198.8-million or $3.56 per diluted share in its most recent quarter, up from $99.4-million or $1.76 per diluted share a year earlier.
Revenue for the second quarter, which ended June 29, totalled $4.13-billion, down from $4.26-billion in the same quarter last year. However, consolidated comparable sales were down 4.6%. Comparable sales at the Canadian Tire banner fell 5.6% compared with a year ago, while SportChek stores saw comparable sales edge down 0.9%. Mark’s comparable sales fell 0.8%. “Although Q2 was not what we wanted in terms of sales, we understand and sympathize with Canadian consumer caution,” Hicks said. As a result, Canadian Tire will be “managing down” its inventory, said TJ Flood, the president of Canadian Tire’s retail division.
Weather can be both a benefit and detriment to Canadian Tire. If Mother Nature co-operates with the company’s predictions and product mix for each season, it can power the business to recording a good quarter. However, when temperatures, rainfall, and snow levels buck what was anticipated, unexpected demand may crop up for products that are not well-stocked or people might delay purchases altogether. To cope with the shifts, Hicks said, “we controlled what we could.” That meant turning to the brand’s Triangle rewards program to spur loyalty and recurring revenue. Irene Nattel, an analyst with RBC Capital Markets, took such moves as a sign that Canadian Tire has “strong hands at the wheel.”
Source: Globe and Mail
Source: The Star
Source: Financial Post
Source: Canadian Tire
Amazon Shares Slide on Revenue Miss, Disappointing Guidance for Third Quarter
Amazon reported weaker-than-expected revenue for the second quarter and issued a disappointing forecast for the current period. The company’s revenue forecast for the current quarter is between $154 billion and $158.5 billion, representing growth of 8% to 11% year over year. The mid-point of that range, $156.25 billion, trailed the average analyst estimate of $158.24 billion. Amazon faces sluggish growth in its core retail business as competition heats up, largely from discount sites like Temu and Shein, which allow Chinese merchants to sell cheap items to U.S. consumers.
Sales in its online stores segment grew just 5% year over year, while revenue from third-party seller services, including commissions, fulfillment, and shipping fees, accelerated faster, expanding 12% during the quarter. Amazon’s finance chief, Brian Olsavsky, said the revenue miss was driven by consumers choosing to buy cheaper products, leading to lower average selling price (ASP).
Amazon plans to launch a discount store featuring mostly unbranded items priced below $20 at an event with Chinese sellers in June. Operating income for the third quarter is expected to be in the range of $11.5 billion to $15 billion, compared with $11.2 billion in the year-ago period. AWS beat estimates in cloud growth, but the unit is expanding at a slower rate than rivals Microsoft and Google.
Amazon’s advertising revenue jumped 20% to $12.77 billion during the quarter, falling just shy of estimates. The company has added newer offerings and grown its market share in the digital ad segment, where it competes with Meta and Alphabet. Meta had the strongest quarter, reporting revenue growth of 22%. Google’s ad business grew just 11% in the quarter. Net income at Amazon doubled from a year earlier to $13.5 billion, or $1.26 a share, reflecting mass cost-cutting efforts across the company.
Costco Wholesale Corporation Reports July Sales Results
Costco Wholesale Corporation has demonstrated its strength with another successful month of sales in July, showcasing its effective business strategy. The warehouse operator excels through strategic growth initiatives, smart pricing, and strong membership trends, contributing to its impressive performance. For the four weeks ended Aug 4, 2024, comparable sales in the United States grew by 5.3%, while Canada and Other International markets saw increases of 6.3% and 3.7%, respectively. The total company comparable sales rose by 5.2%, following consecutive increases of 5.3% and 6.4% in June and May, respectively.
When adjusting for the effects of gasoline prices and foreign exchange rates, Costco’s comparable sales increased by 6.3% in July, while Canada and Other International markets posted gains of 10.2% and 8.9%, respectively. The company’s total comparable sales, excluding these external factors, increased by 7.2%.
One standout aspect of Costco’s July performance was its 20.2% increase in e-commerce comparable sales, which was even more pronounced when excluding the impacts of gasoline prices and foreign exchange. This surge in online sales underscores the company’s effective digital strategy and ability to cater to the evolving shopping preferences of consumers.
Another new unfolding at Costco is the introduction of membership scanning devices at warehouse entrances. Members will need to scan their physical or digital cards before entering using the barcode or QR code, ensuring an improved member shopping experience and weeding out non-members.
Costco’s favourable product mix, membership growth, pricing power, and strong liquidity should benefit the company, as shares have advanced 19.7% in the past six months compared to the Retail – Discount Stores industry’s rise of 8.7%.
Home Depot Expects Sales to Weaken as Consumers Grow More Cautious
Home Depot has surpassed quarterly expectations but expects sales to be weaker than expected in the back half of the year due to high interest rates and consumer uncertainty. The retailer now expects full-year comparable sales to decline by 3% to 4% compared to the prior fiscal year.
The company’s total annual sales will be boosted by its acquisition of SRS Distribution, which sells supplies to professionals in landscaping, roofing, or pool businesses. Total sales are expected to increase between 2.5% and 3.5%, including a 53rd week in the fiscal year and approximately $6.4 billion in sales from SRS. However, excluding sales from SRS, the new full-year forecast would have amounted to a revenue cut. Home Depot has been dealing with consumers who have a “deferral mindset” since mid-2023 due to high interest rates and consumer uncertainty.
Home Depot has warned of a decline in annual profit and a bigger drop in its annual comparable sales due to weak discretionary spending and expectations of a recovery in consumer sentiment this year. Customers have delayed big projects such as flooring, kitchen cabinets, and bath due to higher borrowing costs and steep inflation, even as higher mortgage rates and home prices hurt new home sales. Home Depot expects annual comparable sales to drop between 3% and 4%, while diluted profit per share is expected to drop 2% to 4%.
“The underlying long-term fundamentals supporting home improvement demand are strong,” said Ted Decker, chair, president and CEO. “During the quarter, higher interest rates and greater macro-economic uncertainty pressured consumer demand more broadly, resulting in weaker spend across home improvement projects. However, the team continued to navigate this unique environment while executing at a high level. I would like to thank our associates for their hard work and dedication to serving our customers and communities.”
Source: CNBC
Source: Globe and Mail
Source: Home Depot
