Loblaw sees strong annual profit on steady demand for essentials

(Reuters) – Loblaw Cos Ltd on Thursday forecast annual earnings above analysts’ expectations, after the Canadian retailer’s fourth-quarter results beat estimates, helped by strength in its pharmacy business and as demand held up for groceries.

Retailers are leaning on sales of food and medicines as rising prices are forcing consumers to prioritize spending on essentials and trade down to cheaper private-label alternatives from higher-priced brands.

Loblaw posted a 9.7% rise in retail segment sales, reflecting strong growth in its food and drug businesses, with steady demand for cough and cold medicines, high-margin beauty and cosmetics products.

Retail bellwether Walmart (NYSE:) Inc, however, forecast its full-year earnings below estimates on Tuesday, and warned that tight spending by consumers could pressure profit margins.

Loblaw, on the other hand, expects its full-year 2023 adjusted earnings per common share to grow in the low double-digits compared with the average analyst estimate of 9.64%, according to Refinitiv IBES data.

The company’s fourth-quarter revenue rose about 10% to C$14.01 billion ($10.35 billion), topping estimates of C$13.75 billion.

On an adjusted basis, Loblaw earned C$1.76 per share, beating analysts’ expectations of C$1.71 per share.

($1 = 1.3533 Canadian dollars)