Canada NewsWire
BRAMPTON, ON, July 28, 2021
BRAMPTON, ON, July 28, 2021 /CNW/ - Loblaw Companies Limited (TSX: L) ("Loblaw" or the "Company") announced today its unaudited financial results for the second quarter ended June 19, 2021. The Company's 2021 Second Quarter Report to Shareholders will be available in the Investors section of the Company's website at loblaw.ca and will be filed on SEDAR and available at sedar.com.
"In the second quarter, Loblaw delivered strong financial performance while lapping the heightened sales and significant COVID-related costs experienced at the beginning of the pandemic," said Galen G. Weston, President and Chairman, Loblaw Companies Limited. "We maintained our focus on delivering value and quality to Canadians while providing a safe shopping experience, and are well-positioned to meet the evolving needs of customers as the pandemic restrictions begin to lift."
Grocery demand continued to benefit from elevated eat-at-home trends in the quarter. Across Loblaw's grocery stores, the Company continued to deliver superior value through its unmatched network of stores and online pick-up or delivery options. This was reflected as the Company recorded volume share gains in the second quarter, continuing its positive momentum in the grocery business. The drug store division continued to see variability in its prescription business and reduced consumer demand for high-value items like cosmetics in its front-store business due to lockdowns. The Company has experienced higher food and convenience sales during the pandemic, with muted acute-prescription and beauty sales. This trend is showing signs of rebalancing as economies re-open across Canada. With a heightened focus on its core retail businesses, including improved promotional effectiveness and cost control, Loblaw delivered another quarter of operational and financial improvements.
Loblaw continues to believe that through its everyday business decisions it has an opportunity and responsibility to have a positive effect in the communities in which it operates. That long-standing sense of responsibility has led the Company to be a corporate responsibility leader and drive change in areas that matter to Canadians. The publication of the Company's 14th annual Corporate Social Responsibility ("CSR") report in the second quarter marks a transition to begin reporting its corporate responsibility actions under an Environmental, Social and Governance ("ESG") framework. The 2020 CSR report contains new disclosures and targets that demonstrate the Company's commitment to ESG transparency, leadership and risk management.
2021 SECOND QUARTER HIGHLIGHTS
Unless otherwise indicated, the following highlights include the impact of COVID-19.
See "News Release Endnotes" at the end of this News Release. |
CONSOLIDATED RESULTS OF OPERATIONS
For the periods ended June 19, 2021 | 2021 | 2020(4) | 2021 | 2020 | |||||||||||||||||
and June 13, 2020 | |||||||||||||||||||||
(millions of Canadian dollars except | (12 weeks) | (12 weeks) | $ Change | % Change | (24 weeks) | (24 weeks) | $ Change | % Change | |||||||||||||
where otherwise indicated) | |||||||||||||||||||||
Revenue | $ | 12,491 | $ | 11,957 | $ | 534 | 4.5 | % | $ | 24,363 | $ | 23,757 | $ | 606 | 2.6 | % | |||||
Operating income | 752 | 404 | 348 | 86.1 | % | 1,369 | 945 | 424 | 44.9 | % | |||||||||||
Adjusted EBITDA(2) | 1,371 | 1,008 | 363 | 36.0 | % | 2,589 | 2,173 | 416 | 19.1 | % | |||||||||||
Adjusted EBITDA margin(2) | 11.0 | % | 8.4 | % | 10.6 | % | 9.1 | % | |||||||||||||
Net earnings attributable to | $ | 378 | $ | 172 | $ | 206 | 119.8 | % | $ | 694 | $ | 415 | $ | 279 | 67.2 | % | |||||
shareholders of the | |||||||||||||||||||||
Company | |||||||||||||||||||||
Net earnings available to | 375 | 169 | 206 | 121.9 | % | 688 | 409 | 279 | 68.2 | % | |||||||||||
common shareholders of | |||||||||||||||||||||
the Company(i) | |||||||||||||||||||||
Adjusted net earnings | |||||||||||||||||||||
available to common | |||||||||||||||||||||
shareholders of | |||||||||||||||||||||
the Company(2) | 464 | 260 | 204 | 78.5 | % | 856 | 609 | 247 | 40.6 | % | |||||||||||
Diluted net earnings per | |||||||||||||||||||||
common share ($) | $ | 1.09 | $ | 0.47 | $ | 0.62 | 131.9 | % | $ | 1.99 | $ | 1.14 | $ | 0.85 | 74.6 | % | |||||
Adjusted diluted net | |||||||||||||||||||||
earnings per common | |||||||||||||||||||||
share(2) ($) | $ | 1.35 | $ | 0.72 | $ | 0.63 | 87.5 | % | $ | 2.48 | $ | 1.69 | $ | 0.79 | 46.7 | % | |||||
Diluted weighted average | |||||||||||||||||||||
common shares | |||||||||||||||||||||
outstanding (in millions) | 342.9 | 359.5 | 345.3 | 360.3 | |||||||||||||||||
(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. |
REPORTABLE OPERATING SEGMENTS
The Company has two reportable operating segments with all material operations carried out in Canada:
2021 | 2020(4) | ||||||||||||||||||||||||||
(12 weeks) | (12 weeks) | ||||||||||||||||||||||||||
For the periods ended June 19, 2021 | Retail | Financial | Eliminations(i) | Total | Retail | Financial | Eliminations(i) | Total | |||||||||||||||||||
and June 13, 2020 | |||||||||||||||||||||||||||
(millions of Canadian dollars) | |||||||||||||||||||||||||||
Revenue | $ | 12,282 | $ | 272 | $ | (63) | $ | 12,491 | $ | 11,768 | $ | 233 | $ | (44) | $ | 11,957 | |||||||||||
Adjusted gross profit(2) | $ | 3,793 | $ | 231 | $ | (63) | $ | 3,961 | $ | 3,484 | $ | 211 | $ | (44) | $ | 3,651 | |||||||||||
Adjusted gross profit %(2) | 30.9 | % | N/A | — | % | 31.7 | % | 29.6 | % | N/A | — | % | 30.5 | % | |||||||||||||
Operating income | $ | 708 | $ | 44 | $ | — | $ | 752 | $ | 370 | $ | 34 | $ | — | $ | 404 | |||||||||||
Net interest expense and | |||||||||||||||||||||||||||
other financing charges | 145 | 16 | — | 161 | 154 | 22 | — | 176 | |||||||||||||||||||
Earnings before income | |||||||||||||||||||||||||||
taxes | $ | 563 | $ | 28 | $ | — | $ | 591 | $ | 216 | $ | 12 | $ | — | $ | 228 | |||||||||||
Depreciation and | |||||||||||||||||||||||||||
amortization | $ | 603 | $ | 11 | $ | — | $ | 614 | $ | 593 | $ | 5 | $ | — | $ | 598 | |||||||||||
Adjusted EBITDA(2) | 1,316 | 55 | — | 1,371 | 969 | 39 | — | 1,008 | |||||||||||||||||||
Adjusted EBITDA margin(2) | 10.7 | % | N/A | — | % | 11.0 | % | 8.2 | % | N/A | — | % | 8.4 | % | |||||||||||||
2021 | 2020(4) | ||||||||||||||||||||||||||
(24 weeks) | (24 weeks) | ||||||||||||||||||||||||||
For the periods ended June 19, 2021 | Retail | Financial | Eliminations(i) | Total | Retail | Financial | Eliminations(i) | Total | |||||||||||||||||||
and June 13, 2020 | |||||||||||||||||||||||||||
(millions of Canadian dollars) | |||||||||||||||||||||||||||
Revenue | $ | 23,952 | $ | 525 | $ | (114) | $ | 24,363 | $ | 23,352 | $ | 499 | $ | (94) | $ | 23,757 | |||||||||||
Adjusted gross profit(2) | $ | 7,326 | $ | 447 | $ | (114) | $ | 7,659 | $ | 6,934 | $ | 452 | $ | (94) | $ | 7,292 | |||||||||||
Adjusted gross profit %(2) | 30.6 | % | N/A | — | % | 31.4 | % | 29.7 | % | N/A | — | % | 30.7 | % | |||||||||||||
Operating income | $ | 1,261 | $ | 108 | $ | — | $ | 1,369 | $ | 908 | $ | 37 | $ | — | $ | 945 | |||||||||||
Net interest expense and | 289 | 32 | — | 321 | 304 | 44 | — | 348 | |||||||||||||||||||
other financing charges | |||||||||||||||||||||||||||
Earnings before income | |||||||||||||||||||||||||||
taxes | $ | 972 | $ | 76 | $ | — | $ | 1,048 | $ | 604 | $ | (7) | $ | — | $ | 597 | |||||||||||
Depreciation and | |||||||||||||||||||||||||||
amortization | $ | 1,204 | $ | 20 | $ | — | $ | 1,224 | $ | 1,182 | $ | 10 | $ | — | $ | 1,192 | |||||||||||
Adjusted EBITDA(2) | 2,461 | 128 | — | 2,589 | 2,126 | 47 | — | 2,173 | |||||||||||||||||||
Adjusted EBITDA margin(2) | 10.3 | % | N/A | — | % | 10.6 | % | 9.1 | % | N/A | — | % | 9.1 | % | |||||||||||||
(i) | Eliminations include the reclassification of revenue related to President's Choice Financial® Mastercard® loyalty awards in the Financial Services segment. |
RETAIL SEGMENT
FINANCIAL SERVICES SEGMENT
DECLARATION OF DIVIDENDS
Subsequent to the end of the second quarter of 2021, the Board of Directors declared a quarterly dividend on Common Shares and Second Preferred Shares, Series B.
Common Shares | $0.365 per common share, payable on October 1, 2021 to shareholders of record on September 15, 2021 |
Second Preferred Shares, Series B | $0.33125 per share, payable on September 30, 2021 to shareholders of record on September 15, 2021 |
OUTLOOK(3)
The Company cannot predict the precise impacts of COVID-19 on 2021 financial results. However, Loblaw anticipates that grocery sales will remain elevated due to the continued impact of the pandemic, including the impact of lockdown measures in many jurisdictions. As economies reopen, revenue growth will be challenged while lapping elevated 2020 sales. Costs are expected to improve, as the Company laps elevated COVID-19 related expenses, and as Process & Efficiencies and Data-Driven Insights programs continue to deliver benefits.
On a full year basis, the Company continues to expect:
Based on the Company's operating and financial performance in the first half of 2021, it now expects low to mid-twenties percentage growth in adjusted diluted net earnings per common share(2), excluding the impact of 53rd week in the fourth quarter of fiscal year 2020.
In the four weeks following the end of the second quarter of 2021, Food Retail same-store sales declined by 1.0% when compared to the same period last year.
During the second quarter, COVID-19 related costs were approximately $70 million, inclusive of approximately $25 million related to one-time bonuses and benefits for store and distribution centre colleagues. The COVID-19 costs incurred in the four weeks after the end of the second quarter of 2021 amounted to approximately $9 million.
NON-GAAP FINANCIAL MEASURES
The Company uses non-GAAP financial measures as it believes these measures provide useful information to both management and investors with regard to accurately assessing the Company's financial performance and financial condition.
Management uses these and other non-GAAP 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 excludes additional 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.
For reconciliation to, and description of, the Company's non-GAAP financial measures and financial metrics, please refer to Section 11 "Non-GAAP Financial Measures" of the Company's 2021 Second Quarter Report to Shareholders.
Non-GAAP Financial Measures Policy Change Effective First Quarter of 2021 In 2020, management undertook a review of historical adjusting items as part of an effort to reduce the number of items it excludes from its non-GAAP financial measures. Management concluded that, in order to present adjusting items in a manner more consistent with that of its Canadian and U.S. peers, the Company will no longer adjust for fixed asset and other related impairments (net of recoveries), certain restructuring and other related costs, pension settlement costs, statutory income tax rate changes or other items. For further details please refer to Section 11 "Non-GAAP Financial Measures" of the Company's 2021 Second Quarter Report to Shareholders.
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 Information Technology systems implementations. These specific forward-looking statements are contained throughout this News Release including, without limitation, in the "Consolidated 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 expectation of operating and financial performance in 2021 is based on certain assumptions including assumptions about the COVID-19 pandemic, healthcare reform impacts, anticipated cost savings and operating efficiencies and anticipated benefits from strategic initiatives. The Company's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events, including the COVID-19 pandemic 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 2020 Annual Report and Section 4 "Risks" of the Company's 2020 Annual Information Form for the year ended January 2, 2021, which include detailed risks and disclosure regarding COVID-19 and its impact on the Company.
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.
CORPORATE PROFILE
2020 Annual Report and 2021 Second Quarter Report to Shareholders
The Company's 2020 Annual Report and 2021 Second Quarter Report to Shareholders are available in the "Investors" section of the Company's website at loblaw.ca and on sedar.com.
Additional financial information has been filed electronically with various securities regulators in Canada through the System for Electronic Document Analysis and Retrieval (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 July 28, 2021 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: 465555#. 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.
News Release Endnotes | |
(1) | This News Release contains forward-looking information. See "Forward-Looking Statements" section of this News Release and the Company's 2021 Second 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 sedar.com and at loblaw.ca. |
(2) | See Section 11 "Non-GAAP Financial Measures" of the Company's 2021 Second Quarter Report to Shareholders, which includes the reconciliation of such non-GAAP 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 2021 Second Quarter Report to Shareholders. |
(4) | Certain figures have been restated due to the non-GAAP financial measures policy change. See section 11 "Non- GAAP Financial Measures" of the Company's 2021 Second Quarter Report to Shareholders. |
(5) | Compound Average Growth Rate ("CAGR") is the measure of annualized growth over a period longer than one year. CAGR as disclosed by the Company is the mean annual growth rate over a two year period, 2019 to 2021. |
SOURCE Loblaw Companies Limited
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