Loblaw ‘effectively managing’ through supply hurdles, higher costs, company says

Galen G. Weston, Loblaw chairman and president, said the company is "effectively managing through a challenging environment of supply chain constraints and higher costs."

Loblaw Companies Ltd. expects sales will benefit from the ongoing pandemic and higher industry-wide inflation in the first half of 2022, but cautions its grocery and drugstore revenue growth could taper towards the end of the year.

The parent company of Loblaws and Shoppers Drug Mart said Thursday its revenue gains could be dampened as restrictions ease and its earnings are compared against higher prices last year and its COVID-19 vaccination program.

“As economies reopen and the company starts to lap elevated 2021 inflationary prices and COVID-related pharmacy services, year-on-year revenue growth will be more challenged,” Loblaw said in an outlook as it reported its fourth-quarter and full-year earnings.

“However, the company cannot predict the precise impacts of COVID-19 and the current industry volatility on its 2022 financial results.”

Rising inflation, especially on food prices, is expected to be a critical issue in the coming months across Canada’s food industry.

Galen G. Weston, Loblaw chairman and president, said in a statement the company is “effectively managing through a challenging environment of supply chain constraints and higher costs.”

Yet efforts to rein in cost increases appear to have strained Loblaw’s relationship with at least one supplier.

Frito-Lay Canada, one of Canada’s biggest food manufacturers, has halted shipments to Loblaw stores after the grocer refused to accept a price hike. The situation has left the chip and snack food aisle of many Loblaw stores less full than usual or stocked with the retailer’s house brands, President’s Choice and No Name.