Canada's Loblaw beats profit estimates as online sales surge

FILE PHOTO: A shopper leaves a Loblaw grocery store in Ottawa, Ontario, Canada, February 14, 2019. REUTERS/Chris Wattie

(Reuters) - Loblaw Cos Ltd L.TO beat quarterly revenue and profit estimates on Thursday, driven by a near four-fold jump in online sales, as stay-at-home Canadians used the retailer's pick-up and delivery services to stock up on bread, milk and eggs.

With consumers still limiting their trips outdoors due to the COVID-19 pandemic, the company said it would invest more to expand the pick-up and delivery operation while aiming to reduce costs.

The move is part of a larger trend among Canadian retailers. Earlier this week, Walmart Canada WMT.N said it plans to spend C$3.5 billion ($2.58 billion) over the next five years to strengthen its e-commerce business.

A 280% surge in e-commerce sales lifted Loblaw’s revenue about 7.4% to C$11.96 billion ($8.93 billion) in the second quarter ended June 13. That beat analysts’ estimates of C$11.87 billion, according to IBES data from Refinitiv .

Adjusted net earnings fell nearly 29% to C$266 million, or 74 Canadian cents per share, due to employee bonuses. Analysts had expected a profit of 71 Canadian cents per share.

The company’s food retail same-stores sales rose 10% in the quarter.

Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila