BRAMPTON, ON, May 1, 2024
/CNW/ - Loblaw Companies Limited (TSX: L) ("Loblaw" or the
"Company") announced today its unaudited financial results for the
first quarter ended March 23,
2024(1).
Loblaw began 2024 with another quarter of strong operational and
financial results. The focus on retail excellence continued across
the Company's businesses driving sales growth, reductions in
shrink, and earnings growth. The Company's market leading discount
banners, private label brands, and personalized PC Optimum™ offers
resonated with customers. This resulted in higher store traffic,
strong market share gains in Food Retail, and revenue growth that
stands out against lower internal inflation. An increase in Drug
Retail sales reflected continued strength in front store beauty and
cough and cold products. Canada's
Consumer Price Index ("CPI") for Food Purchased From Stores in
March was 1.9%, the lowest level recorded in more than two years
and was below the headline CPI in the first quarter of 2024. The
Company's internal food inflation remained below Canada's CPI for Food Purchased From Stores
again this quarter.
"We continued to deliver value, quality and service across our
various banners, which led to more customers choosing our stores,"
said Per Bank, President and Chief
Executive Officer, Loblaw Companies Limited. "Our dedicated
colleagues, strategic plan and unique assets position us well to
best serve the needs of Canadians today and in the future."
2024 FIRST QUARTER HIGHLIGHTS
- Revenue was $13,581 million, an
increase of $586 million, or
4.5%.
- Retail segment sales were $13,290
million, an increase of $555
million, or 4.4%.
- Food Retail (Loblaw) same-stores sales increased by 3.4%.
- Drug Retail (Shoppers Drug Mart) same-store sales increased by
4.0%, with front store same-store sales growth of 0.7% and pharmacy
and healthcare services same-store sales growth of 7.3%.
- E-commerce sales increased by 16.1%.
- Operating income was $861
million, an increase of $92
million, or 12.0%.
- Adjusted EBITDA(2) was $1,544
million, an increase of $96
million, or 6.6%.
- Retail segment gross profit percentage(2) was 31.6%,
an increase of 30 basis points, primarily driven by improvements in
Drug Retail gross margins, mainly due to sales mix, and lower
shrink.
- Net earnings available to common shareholders of the Company
were $459 million, an increase of
$41 million or 9.8%.
- Diluted net earnings per common share were $1.47, an increase of $0.18, or 14.0%.
- Adjusted net earnings available to common shareholders of the
Company(2) were $537
million, an increase of $32
million, or 6.3%.
- Adjusted diluted net earnings per common share(2)
were $1.72, an increase of
$0.17 or 11.0%.
- Net capital investments were $348
million, which reflects gross capital investments of
$387 million, net of proceeds from
property disposals of $39
million.
- Repurchased for cancellation 3.2 million common shares at a
cost of $470 million. Free cash
flow(2) used in the Retail segment was $359 million.
- Thirteenth consecutive annual increase to the quarterly common
share dividend from $0.446 per common
share to $0.513 per common share, an
increase of 15.0%.
See "News Release
Endnotes" at the end of this News Release.
|
CONSOLIDATED AND SEGMENT RESULTS OF OPERATIONS
The following table provides key performance metrics for the
Company by segment.
|
|
|
2024
|
|
|
2023
|
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
Retail
|
Financial
Services
|
Elimi-
nations
|
Total
|
|
|
Retail
|
Financial
Services
|
Elimi-
nations
|
Total
|
(millions of Canadian
dollars except where otherwise indicated)
|
|
|
Revenue
|
|
|
$
13,290
|
$
361
|
$
(70)
|
$
13,581
|
|
|
$ 12,735
|
$
326
|
$ (66)
|
$ 12,995
|
Gross
profit(2)
|
|
|
$
4,204
|
$
321
|
$
(70)
|
$
4,455
|
|
|
$
3,980
|
$
293
|
$ (66)
|
$
4,207
|
Gross profit
%(2)
|
|
|
31.6 %
|
N/A
|
— %
|
32.8 %
|
|
|
31.3 %
|
N/A
|
— %
|
32.4 %
|
Operating
income
|
|
|
$
782
|
$
79
|
$
—
|
$
861
|
|
|
$
726
|
$ 43
|
$
—
|
$
769
|
Adjusted operating
income(2)
|
|
|
889
|
79
|
—
|
968
|
|
|
844
|
43
|
—
|
887
|
Adjusted
EBITDA(2)
|
|
|
$
1,452
|
$ 92
|
$
—
|
$
1,544
|
|
|
$
1,390
|
$ 58
|
$
—
|
$
1,448
|
Adjusted EBITDA
margin(2)
|
|
|
10.9 %
|
N/A
|
— %
|
11.4 %
|
|
|
10.9 %
|
N/A
|
— %
|
11.1 %
|
Net interest expense
and other financing charges
|
|
|
$
159
|
$ 35
|
$
—
|
$
194
|
|
|
$
150
|
$
31
|
$
—
|
$
181
|
Earnings before
income taxes
|
|
|
$
623
|
$
44
|
$
—
|
$
667
|
|
|
$
576
|
$
12
|
$
—
|
$
588
|
Income taxes
|
|
|
|
|
|
$
178
|
|
|
|
|
|
$
151
|
Adjusted income
taxes(2)
|
|
|
|
|
|
207
|
|
|
|
|
|
182
|
Net earnings
attributable to non-controlling interests
|
|
|
|
|
|
$
27
|
|
|
|
|
|
$
16
|
Prescribed dividends on
preferred shares in share capital
|
|
|
|
|
|
3
|
|
|
|
|
|
3
|
Net earnings
available to common shareholders of the Company
|
|
|
|
|
|
$
459
|
|
|
|
|
|
$
418
|
Adjusted net earnings
available to common shareholders of the
Company(2)
|
|
|
|
|
|
537
|
|
|
|
|
|
505
|
Diluted net earnings
per common share ($)
|
|
|
|
|
|
$
1.47
|
|
|
|
|
|
$
1.29
|
Adjusted diluted net
earnings per common share(2) ($)
|
|
|
|
|
|
$
1.72
|
|
|
|
|
|
$
1.55
|
Diluted weighted
average common shares outstanding (in millions)
|
|
|
|
|
|
311.9
|
|
|
|
|
|
324.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a breakdown of the Company's total
and same-store sales for the Retail segment.
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
2024
|
|
|
2023
|
(millions of Canadian
dollars except where otherwise indicated)
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
|
|
|
Sales
|
Same-store
sales
|
|
|
Sales
|
Same-store
sales
|
Food retail
|
|
|
$
9,409
|
3.4 %
|
|
|
$
9,011
|
3.1 %
|
Drug retail
|
|
|
3,881
|
4.0 %
|
|
|
3,724
|
7.4 %
|
Pharmacy and
healthcare services
|
|
|
2,059
|
7.3 %
|
|
|
1,924
|
4.7 %
|
Front store
|
|
|
1,822
|
0.7 %
|
|
|
1,800
|
10.3 %
|
|
|
|
|
|
|
|
|
|
RETAIL SEGMENT
- Retail segment sales in the first quarter of 2024 were
$13,290 million, an increase of
$555 million, or 4.4%.
- Food Retail (Loblaw) sales were $9,409
million and same-store sales grew by 3.4% (2023 – 3.1%).
- The CPI for Food Purchased From Stores was 2.6% (2023 – 10.5%)
which was higher than the Company's internal food inflation;
and
- Food Retail traffic increased and basket size decreased.
- Drug Retail (Shoppers Drug Mart) sales were $3,881 million, and same-store sales grew by 4.0%
(2023 – 7.4%), with pharmacy and healthcare services same-store
sales growth of 7.3% (2023 – 4.7%) and front store same-store sales
growth of 0.7% (2023 – 10.3%).
- On a same-store basis, the number of prescriptions increased by
4.0% (2023 – decreased by 1.9%) and the average prescription value
increased by 2.0% (2023 – 6.0%).
- Operating income in the first quarter of 2024 was $782 million, an increase of $56 million, or 7.7%.
- Gross profit(2) in the first quarter of 2024 was
$4,204 million, an increase of
$224 million, or 5.6%. The gross
profit percentage(2) of 31.6% increased by 30 basis
points, primarily driven by improvements in Drug Retail gross
margins, mainly due to sales mix, and lower shrink.
- Adjusted EBITDA(2) in the first quarter of 2024 was
$1,452 million, an increase of
$62 million, or 4.5%. The increase
was driven by an increase in gross profit(2), partially
offset by an increase in selling, general and administrative
expenses ("SG&A"). SG&A as a percentage of sales was 20.7%,
an increase of 40 basis points, primarily driven by the
year-over-year impact of certain real estate activities and labour
costs, and costs related to network optimization.
- Depreciation and amortization in the first quarter of 2024 was
$677 million, an increase of
$17 million or 2.6%, primarily driven
by an increase in depreciation of leased assets and information
technology ("IT") assets, and an increase in depreciation of fixed
assets related to conversions of retail locations, partially offset
by the impact of prior year accelerated depreciation due to the
reassessment of the estimated useful life of certain IT assets.
Included in depreciation and amortization was the amortization of
intangible assets related to the acquisitions of Shoppers Drug Mart
Corporation ("Shoppers Drug Mart") and Lifemark Health Group
("Lifemark") of $114 million (2023 –
$114 million).
FINANCIAL SERVICES SEGMENT
- Revenue in the first quarter of 2024 was $361 million, an increase of $35 million or 10.7%. The increase was primarily
driven by higher interest income from growth in credit card
receivables, and higher sales attributable to The Mobile
Shop™.
- Earnings before income taxes in the first quarter of 2024 were
$44 million, an increase of
$32 million or 266.7%. The
improvement was mainly driven by higher revenue as described above,
and lower customer acquisition expenses and operating costs,
including the marketing support funding in connection with the
launch of PC Insiders World Elite Mastercard® and the benefits
associated with the renewal of a long-term agreement with
Mastercard. This increase was partially offset by higher
contractual charge-offs and funding costs due to the current
macro-economic environment, and the year-over-year unfavourable
impact of the expected credit loss provision.
OUTLOOK(3)
Loblaw will continue to execute on retail excellence while
advancing its growth initiatives with the goal of delivering
consistent operational and financial results in 2024. The Company's
businesses remain well positioned to meet the everyday needs of
Canadians.
For the full-year 2024, the Company continues to expect:
- its Retail business to grow earnings faster than sales;
- adjusted net earnings per common share(2) growth in
the high single-digits;
- to continue investing in our store network and distribution
centres by investing a net amount of $1.8
billion in capital expenditures, which reflects gross
capital investments of approximately $2.2
billion, net of approximately $400
million of proceeds from property disposals; and
- to return capital to shareholders by allocating a significant
portion of free cash flow to share repurchases.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG")
This quarter, the Company released its 2023 ESG Report. The
report highlights the Company's many 2023 achievements on its
journey to fight climate change and advance social equity.
Specifically, the Company reduced carbon emissions for its
enterprise operations by 11% compared to a 2020 baseline,
celebrated 100% of eligible stores actively donating food to food
recovery agencies, and contributed a record $180 million in community funds to support
research, charities and non-profits.
In the quarter, Loblaw collected and donated 7.2 million pounds
of food to local food banks in support of its Feed More Families™
pledge and commenced its 15th annual Spring Food Drive. Earlier
this year, Loblaw also published its first Early Release of
Priority ESG Disclosure Report for 2023 with the purpose of
demonstrating its commitment to future alignment with the
International Sustainability Standards Board (ISSB) and to provide
timely and relevant information for stakeholders on our ESG
performance.
NORMAL COURSE ISSUER BID PROGRAM ("NCIB")
From time to time, the Company participates in an automatic
share purchase plan ("ASPP") with a broker in order to facilitate
the repurchase of the Company's common shares under its NCIB.
During the effective period of the ASPP, the Company's broker may
purchase common shares at times when the Company would not be
active in the market.
FORWARD-LOOKING STATEMENTS
This News Release contains forward-looking statements about the
Company's objectives, plans, goals, aspirations, strategies,
financial condition, results of operations, cash flows,
performance, prospects, opportunities and legal and regulatory
matters. Specific forward-looking statements in this News Release
include, but are not limited to, statements with respect to the
Company's anticipated future results, events and plans, strategic
initiatives and restructuring, regulatory changes including further
healthcare reform, future liquidity, planned capital investments,
and the status and impact of IT systems implementations. These
specific forward-looking statements are contained throughout this
News Release including, without limitation, in the "Consolidated
and Segment Results of Operations" and "Outlook" section of this
News Release. Forward-looking statements are typically identified
by words such as "expect", "anticipate", "believe", "foresee",
"could", "estimate", "goal", "intend", "plan", "seek", "strive",
"will", "may", "should" and similar expressions, as they relate to
the Company and its management.
Forward-looking statements reflect the Company's estimates,
beliefs and assumptions, which are based on management's perception
of historical trends, current conditions and expected future
developments, as well as other factors it believes are appropriate
in the circumstances. The Company's estimates, beliefs and
assumptions are inherently subject to significant business,
economic, competitive and other uncertainties and contingencies
regarding future events and, as such, are subject to change. The
Company can give no assurance that such estimates, beliefs and
assumptions will prove to be correct.
Numerous risks and uncertainties could cause the Company's
actual results to differ materially from those expressed, implied
or projected in the forward-looking statements, including those
described in the Company's MD&A in the Company's 2023 Annual
Report and Section 4 "Risks" of the Company's 2023 Annual
Information Form for the year ended December
30, 2023.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect the Company's
expectations only as of the date of this News Release. Except as
required by law, the Company does not undertake to update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise.
DECLARATION OF DIVIDENDS
Subsequent to the end of the first quarter of 2024, the Board of
Directors declared a quarterly dividend on Common Shares and
Second Preferred Shares, Series B.
Common
Shares
|
$0.513
per common share, payable on July 1, 2024
to shareholders of record on June 15, 2024.
|
|
|
Second Preferred
Shares, Series B
|
$0.33125
per share, payable on June 30, 2024 to
shareholders of record on June 15, 2024.
|
EXCERPT OF NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses non-GAAP and other financial measures, as
reconciled and fully described in Appendix 1 "Non-GAAP and Other
Financial Measures" of this News Release.
These measures do not have a standardized meaning prescribed by
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS Accounting
Standards" or "GAAP"), and therefore they may not be comparable to
similarly titled measures presented by other publicly traded
companies and should not be construed as an alternative to other
financial measures determined in accordance with GAAP.
The following table provides a summary of the differences
between the Company's consolidated GAAP and Non-GAAP and other
financial measures, which are reconciled and fully described in
Appendix 1.
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
2024
|
|
|
2023
|
(millions of Canadian
dollars except where otherwise indicated)
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
|
|
|
GAAP
|
Adjusting
Items
|
Non-
GAAP(2)
|
|
|
GAAP
|
Adjusting
Items
|
Non-
GAAP(2)
|
EBITDA
|
|
|
$
1,551
|
$
(7)
|
$
1,544
|
|
|
$
1,444
|
$
4
|
$
1,448
|
Operating
income
|
|
|
$
861
|
$ 107
|
$
968
|
|
|
$
769
|
$
118
|
$
887
|
Net interest expense
and other financing charges
|
|
|
194
|
—
|
194
|
|
|
181
|
—
|
181
|
Earnings before
income taxes
|
|
|
$
667
|
$ 107
|
$ 774
|
|
|
$
588
|
$
118
|
$
706
|
Deduct the
following:
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
|
178
|
29
|
207
|
|
|
151
|
31
|
182
|
Non-controlling
interests
|
|
|
27
|
—
|
27
|
|
|
16
|
—
|
16
|
Prescribed dividends
on preferred shares
|
|
|
3
|
—
|
3
|
|
|
3
|
—
|
3
|
Net earnings
available to common shareholders of the Company(i)
|
|
|
$
459
|
$
78
|
$
537
|
|
|
$ 418
|
$
87
|
$
505
|
Diluted net earnings
per common share ($)
|
|
|
$
1.47
|
$
0.25
|
$
1.72
|
|
|
$ 1.29
|
$
0.26
|
$ 1.55
|
Diluted weighted
average common shares (millions)
|
|
|
311.9
|
—
|
311.9
|
|
|
324.8
|
—
|
324.8
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Net earnings available
to common shareholders of the Company are net earnings attributable
to shareholders of the Company net of dividends declared on the
Company's Second Preferred Shares, Series B.
|
The following table provides a summary of the Company's
adjusting items which are reconciled and fully described in
Appendix 1.
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
2024
|
|
|
2023
|
(millions of Canadian
dollars)
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
Operating
income
|
|
|
$
861
|
|
|
$
769
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with Shoppers Drug Mart and
Lifemark
|
|
|
$
114
|
|
|
$
114
|
Loss on sale of
non-operating properties
|
|
|
—
|
|
|
1
|
Fair value adjustment
on fuel and foreign currency contracts
|
|
|
(7)
|
|
|
3
|
Adjusting
items
|
|
|
$
107
|
|
|
$
118
|
Adjusted operating
income(2)
|
|
|
$
968
|
|
|
$
887
|
Net interest expense
and other financing charges
|
|
|
$
194
|
|
|
$
181
|
Income
taxes
|
|
|
$
178
|
|
|
$
151
|
Add the impact of the
following:
|
|
|
|
|
|
|
Tax impact of items
included in adjusted earnings before taxes
|
|
|
$
29
|
|
|
$
31
|
Adjusting
items
|
|
|
$
29
|
|
|
$
31
|
Adjusted income
taxes(2)
|
|
|
$
207
|
|
|
$
182
|
|
|
|
|
|
|
|
CORPORATE PROFILE
2023 Annual Report and 2024 First Quarter Report
to Shareholders
The Company's 2023 Annual Report and 2024 First Quarter Report
to Shareholders are available in the "Investors" section of the
Company's website at loblaw.ca and on sedarplus.ca.
Investor Relations
Additional financial information has been filed electronically
with various securities regulators in Canada through SEDAR+ and with the Office of
the Superintendent of Financial Institutions (OSFI) as the primary
regulator for the Company's subsidiary, President's Choice Bank.
The Company holds an analyst call shortly following the release of
its quarterly results. These calls are archived in the "Investors"
section of the Company's website at loblaw.ca.
Conference Call and Webcast
Loblaw Companies Limited will host a conference call as well as
an audio webcast on May 1, 2024 at
10:00 a.m. (ET).
To access via tele-conference, please dial (416) 764-8688 or
(888) 390-0546. The playback will be made available approximately
two hours after the event at (416) 764-8677 or (888) 390-0541,
access code: 725982#. To access via audio webcast, please go to the
"Investor" section of loblaw.ca. Pre-registration will be
available.
Full details about the conference call and webcast are available
on the Loblaw Companies Limited website at loblaw.ca.
Annual Meeting of Shareholders
The 2024 Annual Meeting of Shareholders of Loblaw Companies
Limited will be held on Thursday, May 2,
2024 at 11:00 a.m. (ET). This
year's meeting will be held as a virtual meeting, by way of a live
webcast. Shareholders will be able to listen, participate and vote
at the meeting in real time through a live webcast online at
https://web.lumiagm.com/210250392 (meeting password: loblaw2024).
See "How do I attend and participate
in the Meeting?" in the Management Proxy dated March 19, 2024, which can be viewed online at
www.loblaw.ca or under Loblaw's SEDAR+ profile at www.sedarplus.ca,
for detailed instructions on how to attend and vote at the
meeting.
Please refer to the "Events and Presentations" or "Shareholders
Services" page at loblaw.ca for additional details on the virtual
meeting.
News Release
Endnotes
|
(1)
|
This News Release
contains forward-looking information. See "Forward-Looking
Statements" section of this News Release and the Company's 2024
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 sedarplus.ca and at
loblaw.ca.
|
(2)
|
See "Non-GAAP and Other
Financial Measures" section in Appendix 1 of this News Release,
which includes the reconciliation of such non-GAAP and other
financial measures to the most directly comparable GAAP
measures.
|
(3)
|
To be read in
conjunction with the "Forward-Looking Statements" section of this
News Release and the Company's 2024 First Quarter Report to
Shareholders.
|
APPENDIX 1: NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses the following non-GAAP and other financial
measures and ratios: Retail segment gross profit; Retail segment
adjusted gross profit; Retail segment adjusted gross profit
percentage; adjusted earnings before income taxes, net interest
expense and other financing charges and depreciation and
amortization ("adjusted EBITDA"); adjusted EBITDA margin; adjusted
operating income; adjusted net interest expense and other
financing charges; adjusted income taxes; adjusted effective tax
rate; adjusted net earnings available to common shareholders;
adjusted diluted net earnings per common share, free cash flow, and
same-store sales. The Company believes these non-GAAP and other
financial measures and ratios provide useful information to both
management and investors in measuring the financial performance and
financial condition of the Company for the reasons outlined
below.
Management uses these and other non-GAAP and other financial
measures to exclude the impact of certain expenses and income that
must be recognized under GAAP when analyzing underlying
consolidated and segment operating performance, as the excluded
items are not necessarily reflective of the Company's underlying
operating performance and make comparisons of underlying financial
performance between periods difficult. The Company adjusts for
these items if it believes doing so would result in a more
effective analysis of underlying operating performance. The
exclusion of certain items does not imply that they are
non-recurring.
These measures do not have a standardized meaning prescribed by
GAAP and therefore they may not be comparable to similarly titled
measures presented by other publicly traded companies and should
not be construed as an alternative to other financial measures
determined in accordance with GAAP.
Retail Segment Gross Profit, Retail Segment Adjusted Gross
Profit and Retail Segment Adjusted Gross Profit
Percentage The following tables reconcile adjusted gross
profit by segment to gross profit by segment, which is reconciled
to revenue and cost of sales measures as reported in the
consolidated statements of earnings for the periods ended as
indicated. The Company believes that Retail segment gross profit
and Retail segment adjusted gross profit are useful in assessing
the Retail segment's underlying operating performance and in making
decisions regarding the ongoing operations of the
business.
Retail segment adjusted gross profit percentage is calculated as
Retail segment adjusted gross profit divided by Retail segment
revenue.
|
|
|
2024
|
|
|
2023
|
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
Retail
|
Financial
Services
|
Elimi-
nations
|
Total
|
|
|
Retail
|
Financial
Services
|
Elimi-
nations
|
Total
|
(millions of Canadian
dollars)
|
|
Revenue
|
|
|
$
13,290
|
$ 361
|
$
(70)
|
$
13,581
|
|
|
$
12,735
|
$
326
|
$
(66)
|
$ 12,995
|
Cost of
sales
|
|
|
9,086
|
40
|
—
|
9,126
|
|
|
8,755
|
33
|
—
|
8,788
|
Gross profit
|
|
|
$
4,204
|
$ 321
|
$
(70)
|
$
4,455
|
|
|
$
3,980
|
$
293
|
$
(66)
|
$
4,207
|
Adjusted gross
profit
|
|
|
$
4,204
|
$ 321
|
$
(70)
|
$
4,455
|
|
|
$
3,980
|
$
293
|
$
(66)
|
$
4,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income, Adjusted EBITDA and Adjusted
EBITDA Margin The following tables reconcile adjusted
operating income and adjusted EBITDA to operating income, which is
reconciled to net earnings attributable to shareholders of the
Company as reported in the consolidated statements of earnings for
the periods ended as indicated. The Company believes that adjusted
EBITDA is useful in assessing the performance of its ongoing
operations and its ability to generate cash flows to fund its cash
requirements, including the Company's capital investment
program.
Adjusted EBITDA margin is calculated as adjusted EBITDA divided
by revenue.
|
|
|
2024
|
|
|
2023
|
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
Retail
|
Financial
Services
|
Total
|
|
|
Retail
|
Financial
Services
|
Total
|
(millions of Canadian
dollars)
|
|
|
|
|
Net earnings
attributable to shareholders of the Company
|
|
|
|
|
$
462
|
|
|
|
|
$ 421
|
Add impact of the
following:
|
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
|
|
|
27
|
|
|
|
|
16
|
Net interest expense
and other financing charges
|
|
|
|
|
194
|
|
|
|
|
181
|
Income
taxes
|
|
|
|
|
178
|
|
|
|
|
151
|
Operating
income
|
|
|
$
782
|
$ 79
|
$
861
|
|
|
$
726
|
$ 43
|
$
769
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with Shoppers Drug Mart and
Lifemark
|
|
|
$
114
|
$
—
|
$ 114
|
|
|
$
114
|
$ —
|
$
114
|
Loss on sale of
non-operating properties
|
|
|
—
|
—
|
—
|
|
|
1
|
—
|
1
|
Fair value adjustment
on fuel and foreign currency contracts
|
|
|
(7)
|
—
|
(7)
|
|
|
3
|
—
|
3
|
Adjusting
items
|
|
|
$
107
|
$
—
|
$
107
|
|
|
$
118
|
$ —
|
$ 118
|
Adjusted operating
income
|
|
|
$
889
|
$
79
|
$
968
|
|
|
$
844
|
$
43
|
$
887
|
Depreciation and
amortization
|
|
|
677
|
13
|
690
|
|
|
660
|
15
|
675
|
Less: Amortization of
intangible assets acquired with Shoppers Drug Mart and
Lifemark
|
|
|
(114)
|
—
|
(114)
|
|
|
(114)
|
—
|
(114)
|
Adjusted
EBITDA
|
|
|
$
1,452
|
$ 92
|
$
1,544
|
|
|
$ 1,390
|
$
58
|
$
1,448
|
|
|
|
|
|
|
|
|
|
|
|
In addition to the items described in the Retail segment
adjusted gross profit section above, when applicable, adjusted
EBITDA was impacted by the following:
Amortization of intangible assets acquired with
Shoppers Drug Mart and Lifemark The
acquisition of Shoppers Drug Mart in 2014 included approximately
$6,050 million of definite life
intangible assets, which are being amortized over their estimated
useful lives. Annual amortization associated with the acquired
intangibles will be approximately $500 million until 2024 and
will decrease thereafter.
The acquisition of Lifemark in 2022 included approximately
$299 million of definite life
intangible assets, which are being amortized over their estimated
useful lives.
Loss on sale of non-operating properties In the
first quarter of 2024, the Company did not record any gain or loss
related to the sale of non-operating properties (2023 – loss of
$1 million).
Fair value adjustment on fuel and foreign currency
contracts The Company is exposed to commodity price
and U.S. dollar exchange rate fluctuations. In accordance with the
Company's commodity risk management policy, the Company enters into
exchange traded futures contracts and forward contracts to minimize
cost volatility relating to fuel prices and the U.S. dollar
exchange rate. These derivatives are not acquired for trading or
speculative purposes. Pursuant to the Company's derivative
instruments accounting policy, changes in the fair value of these
instruments, which include realized and unrealized gains and
losses, are recorded in operating income. Despite the impact of
accounting for these commodity and foreign currency derivatives on
the Company's reported results, the derivatives have the economic
impact of largely mitigating the associated risks arising from
price and exchange rate fluctuations in the underlying commodities
and U.S. dollar commitments.
Adjusted Net Interest Expense and Other Financing
Charges The following table reconciles adjusted net
interest expense and other financing charges to net interest
expense and other financing charges as reported in the consolidated
statements of earnings for the periods ended as indicated. The
Company believes that adjusted net interest expense and other
financing charges is useful in assessing the Company's underlying
financial performance and in making decisions regarding the
financial operations of the business.
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
2024
|
|
|
|
2023
|
(millions of Canadian
dollars)
|
|
|
(12
weeks)
|
|
|
|
(12 weeks)
|
Net interest expense
and other financing charges
|
|
|
$
194
|
|
|
|
$
181
|
Adjusted net interest
expense and other financing charges
|
|
|
$
194
|
|
|
|
$
181
|
|
|
|
|
|
|
|
|
Adjusted Income Taxes and Adjusted Effective Tax
Rate The following table reconciles adjusted income taxes
to income taxes as reported in the consolidated statements of
earnings for the periods ended as indicated. The Company believes
that adjusted income taxes is useful in assessing the Company's
underlying operating performance and in making decisions regarding
the ongoing operations of its business.
Adjusted effective tax rate is calculated as adjusted income
taxes divided by the sum of adjusted operating income less adjusted
net interest expense and other financing charges.
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
2024
|
|
|
2023
|
(millions of Canadian
dollars except where otherwise indicated)
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
Adjusted operating
income(i)
|
|
|
$
968
|
|
|
$
887
|
Adjusted net interest
expense and other financing charges(i)
|
|
|
194
|
|
|
181
|
Adjusted earnings
before taxes
|
|
|
$
774
|
|
|
$
706
|
Income taxes
|
|
|
$
178
|
|
|
$
151
|
Add impact of the
following:
|
|
|
|
|
|
|
Tax impact of items
included in adjusted earnings before
taxes(ii)
|
|
|
29
|
|
|
31
|
Adjusted income
taxes
|
|
|
$
207
|
|
|
$
182
|
Effective tax
rate
|
|
|
26.7 %
|
|
|
25.7 %
|
Adjusted effective tax
rate
|
|
|
26.7 %
|
|
|
25.8 %
|
|
|
|
|
|
|
|
(i)
|
See reconciliations of adjusted operating income
and adjusted net interest expense and other financing charges in
the tables above.
|
(ii)
|
See the adjusted
operating income, adjusted EBITDA and adjusted EBITDA margin table
and the adjusted net interest expense and other financing charges
table above for a complete list of items included in adjusted
earnings before taxes.
|
Adjusted Net Earnings Available to Common
Shareholders and Adjusted Diluted Net Earnings Per Common
Share The following table reconciles adjusted net earnings
available to common shareholders of the Company and adjusted net
earnings attributable to shareholders of the Company to net
earnings attributable to shareholders of the Company and then to
net earnings available to common shareholders of the Company for
the periods ended as indicated. The Company believes that adjusted
net earnings available to common shareholders and adjusted diluted
net earnings per common share are useful in assessing the Company's
underlying operating performance and in making decisions regarding
the ongoing operations of its business.
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
2024
|
|
|
2023
|
(millions of Canadian
dollars except where otherwise indicated)
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
Net earnings
attributable to shareholders of the Company
|
|
|
$
462
|
|
|
$
421
|
Prescribed dividends on
preferred shares in share capital
|
|
|
(3)
|
|
|
(3)
|
Net earnings available
to common shareholders of the Company
|
|
|
$
459
|
|
|
$
418
|
Net earnings
attributable to shareholders of the Company
|
|
|
$
462
|
|
|
$
421
|
Adjusting items (refer
to the following table)
|
|
|
78
|
|
|
87
|
Adjusted net earnings
attributable to shareholders of the Company
|
|
|
$
540
|
|
|
$
508
|
Prescribed dividends on
preferred shares in share capital
|
|
|
(3)
|
|
|
(3)
|
Adjusted net earnings
available to common shareholders of the Company
|
|
|
$
537
|
|
|
$
505
|
Diluted weighted
average common shares outstanding (millions)
|
|
|
311.9
|
|
|
324.8
|
|
|
|
|
|
|
|
The following table reconciles adjusted net earnings available
to common shareholders of the Company and adjusted diluted net
earnings per common share to net earnings available to common
shareholders of the Company and diluted net earnings per common
share for the periods ended as indicated.
|
|
2024
|
|
2023
|
|
|
(12
weeks)
|
|
(12 weeks)
|
For the periods ended
March 23, 2024 and March 25, 2023
(millions of Canadian dollars/Canadian dollars)
|
|
Net Earnings
Available to
Common
Shareholders
of the Company
|
Diluted
Net
Earnings
Per
Common
Share
|
|
Net Earnings
Available to
Common
Shareholders
of the
Company
|
Diluted
Net
Earnings
Per
Common
Share
|
As
reported
|
|
$ 459
|
$
1.47
|
|
$ 418
|
$
1.29
|
Add (deduct) impact of
the following:
|
|
|
|
|
|
|
Amortization of
intangible assets acquired with Shoppers Drug Mart and
Lifemark
|
|
$
84
|
$
0.27
|
|
$
84
|
$
0.26
|
Loss on sale of
non-operating properties
|
|
—
|
—
|
|
1
|
—
|
Fair value adjustment
on fuel and foreign currency contracts
|
|
(6)
|
(0.02)
|
|
2
|
—
|
Adjusting
items
|
|
$
78
|
$
0.25
|
|
$
87
|
$
0.26
|
Adjusted
|
|
$ 537
|
$
1.72
|
|
$ 505
|
$
1.55
|
|
|
|
|
|
|
|
Free Cash Flow The following table reconciles, by
reportable operating segments, free cash flow to cash flows from
operating activities. The Company believes that free cash flow is
the appropriate measure in assessing the Company's cash available
for additional financing and investing activities.
|
|
|
2024
|
|
|
2023
|
|
|
|
(12
weeks)
|
|
|
(12 weeks)
|
For the periods ended
March 23, 2024 and March 25, 2023
|
|
|
Retail
|
|
Financial
Services
|
|
Elimi-
nations(i)
|
|
Total
|
|
|
Retail
|
|
Financial
Services
|
|
Elimi-
nations(i)
|
|
Total
|
(millions of Canadian
dollars)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from (used
in) operating activities
|
|
|
$
462
|
|
$
371
|
|
$ 23
|
|
$
856
|
|
|
$
652
|
|
$
237
|
|
$ 26
|
|
$
915
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
investments(ii)
|
|
|
377
|
|
10
|
|
—
|
|
387
|
|
|
306
|
|
9
|
|
—
|
|
315
|
Interest
paid(i)
|
|
|
77
|
|
—
|
|
23
|
|
100
|
|
|
80
|
|
—
|
|
26
|
|
106
|
Lease payments,
net
|
|
|
367
|
|
—
|
|
—
|
|
367
|
|
|
347
|
|
—
|
|
—
|
|
347
|
Free cash
flow
|
|
|
$
(359)
|
|
$
361
|
|
$ —
|
|
$
2
|
|
|
$ (81)
|
|
$
228
|
|
$
—
|
|
$
147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Interest paid is
included in cash flows from operating activities under the
Financial Services segment.
|
(ii)
|
Capital investments are
the sum of fixed asset purchases and intangible asset additions as
presented in the Company's Condensed Consolidated Statements of
Cash Flows, and prepayments transferred to fixed assets in the
current period.
|
Same-Store Sales Same-store sales are retail segment
sales for stores in operation in both comparable periods, including
relocated, converted, expanded, contracted or renovated
stores. The Company believes this metric is useful in
assessing sales trends excluding the effect of the opening and
closure of stores.
SOURCE Loblaw Companies Limited