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Loblaw, Metro blame suppliers for meals inflation Categorical Instances

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Loblaw chairman — ‘Grocers usually are not the explanation for larger meals costs’

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Meals gross sales are up at two of Canada’s largest grocery chains, Loblaw Cos. Ltd. and Metro Inc. informed buyers following their fourth-quarter earnings releases on Nov. 15. The Monetary Put up’s Marisa Coulton breaks down the outcomes and what they must say concerning the lingering results of meals inflation.

Grocers’ earnings

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In its fiscal fourth quarter, Metro recorded a rise in meals gross sales of 6.8 per cent. Web earnings amounted to $222 million, bringing internet earnings for the yr as much as $1.02 billion. Loblaw recorded gross sales will increase too. Meals gross sales have been up 4.5 per cent, bringing internet earnings for the yr to $1.07 billion.

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The features have been arduous gained, mentioned Eric la Flèche, president and chief government of Metro, in a Nov. 15 press launch. “We’re happy with our fourth quarter outcomes, which have been achieved in a difficult working atmosphere that included a five-week strike at 27 Metro shops in Ontario,” he mentioned.  “For the primary time in our historical past, gross sales for the yr exceeded $20 billion and internet earnings reached $1 billion.”

Loblaw additionally touted its outcomes. “Our shops are delivering extra worth, together with deeper reductions on necessities, and prospects are responding positively,” mentioned Galen Weston, chairman of Loblaw, in a Nov. 15 press launch. “We stay targeted on doing what we are able to to battle inflation and ship decrease costs for Canadians, whereas persevering with to speculate for the long run.”

Loblaw and Metro have undergone important structural adjustments in current months. For one, Weston has stepped out of the function of chief government of Loblaw, and into the function of chairman, with Per Financial institution taking on his function as CEO.

Inflation nonetheless a significant component

The outcomes come at a time when grocery costs have improved, however are nonetheless larger than the Canadian client is snug with.

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Whereas grocery costs have been moderating, posting a 5.8 per cent year-over-year achieve in September, properly off the 11.4 per cent peak of a yr earlier, they do stay properly above the Financial institution of Canada’s goal vary.

Earlier this yr, the parliamentary agricultural committee speculated as as to if Canada’s 5 largest retailers, who management 80 per cent of the grocery market, have been engaged in “value gouging.”

In March, the chief executives of Loblaw, Metro and Empire Co. Ltd. appeared earlier than the committee and testified below oath that they weren’t profiteering off of upper grocery costs.

Grocers say inflation is suppliers’ fault

Loblaw is working arduous to stabilize meals costs for patrons, mentioned Richard Dufresne, the corporate’s CFO, on a Nov. 15 name with buyers. It’s suppliers which are the issue, he mentioned.

“As we proceed to do our half to battle inflation, we stay involved concerning the degree of dedication to this trigger from a few of our suppliers,” Dufresne mentioned. “With decrease provider prices, we are able to decrease costs on the shelf for patrons. Sadly, a number of giant international suppliers are nonetheless coming with higher-than-expected value will increase for subsequent yr.”

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Associated Tales

Resolving inflation will not be a one-person job, Weston added. “It’s necessary to reiterate that grocers usually are not the explanation for larger meals costs. So we’re unable to resolve inflationary pressures on our personal,” he mentioned.

On the convention name, La Fleche mentioned Metro, too, remains to be receiving value enhance requests from massive suppliers, which it can “negotiate as a lot as attainable.” He mentioned the grocery store’s meals basket inflation measurement in the course of the quarter was round 5.5 per cent, decrease than meals inflation throughout the nation and decrease than its third quarter.

— With extra reporting from the Canadian Press

• E mail: mcoulton@postmedia.com

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