Loblaw sees demand moderating as profit beats on virus-led spike

(Reuters) - Canada's Loblaw Cos Ltd L.TO on Wednesday beat analyst estimates for quarterly profit, driven by robust sales at its namesake and Shoppers Drug Mart stores, but the retailer said demand has moderated after virus-led lockdown prompted consumers to stockpile essentials.

Loblaw, which sells everything from beauty products to mobile connections, has eliminated pickup fees and lowered delivery fee as it looks to keep its grocery and drugs sales up at a time when consumers avoid venturing amid the coronavirus crisis.

The Brampton-based company said the spike in demand seen in the last two weeks of March has since moderated. It faces pressure on sales in pharmacy and some discretionary areas of the business even as essential food categories remain strong.

Loblaw’s revenue rose about 11% to C$11.80 billion ($8.46 billion) in the first quarter ended March 21.

Excluding one-time items, the company earned 97 Canadian cents per share, beating the average analyst estimate of 94 Canadian cents per share.

Same-store sales in Loblaw’s food unit grew 9.6% and that in the drugs unit rose 10.7%, driven by higher traffic and increase in the number of prescriptions dispensed.

Earlier this month, Loblaw, in which Canadian retail group George Weston WN.TO holds a controlling interest, withdrew its outlook for 2020 while it had earlier called for positive same-store sales and adjusted profit growth.

Reporting by Praveen Paramasivam in Bengaluru; Editing by Shailesh Kuber