Q2 2025 Loblaw Companies Ltd Earnings Call
We conduct a question and answer session.
Roy MacDonald: If at any time during this call you required immediate assistance. Please press star zero for the operator. This call is being recorded on Thursday July 24, 2025, I would now like to turn the conference over to Roy Macdonald Vice President Investor Relations. Please go ahead.
Speaker Change: Great. Thank you very much joelle and good morning, everybody welcome to the level of company's limited second quarter 2025 results call.
Roy MacDonald: As usual I'm joined here. This morning by peer bank, our President and Chief Executive Officer, and by Richard Dufresne, Our Chief Financial Officer.
Roy MacDonald: And before I begin the call I will remind you that today's discussion will include forward looking statements, which may include but are not limited to statements with respect to lob less anticipated future results.
Roy MacDonald: These statements are based on assumptions and reflect management's current expectations and as such are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from our expectations. These risks and uncertainties are discussed in the company's materials filed with the Canadian Securities.
Per Bank: But at least we are we are doing much better than than the industry So so we are we feel we feel very good on on the buy Canadian sentiment One thing I want to add Tamy, like if you if you remember, last year in Q2, we had some weakness in same store sale, particularly in our conventional business. So we're, we're obviously comping that. And so that's that is helping our comp in conventional, but despite that, our absolute performance has been better than than plastic. Okay, got it. And my follow up is, are you seeing any change or any slight uptick in promotional intensity in the industry?
Roy MacDonald: Regulator.
Roy MacDonald: Any forward looking statements speak only as of the date. They are made the company disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise.
Roy MacDonald: What's required by law also certain non-GAAP financial measures may be discussed or referred to today. So please refer to our annual report and other materials filed with the Canadian Securities regulators for a reconciliation of each of these measures to the most directly comparable GAAP.
Richard Dufresne: And with that I'll turn the call over to Richard.
Per Bank: I think we have recently seen a bit more price rollbacks by competitors. So just wondering if that's them trying to regain some some lost tonnage during this whole buy Canadian aspect. The promo plan is more or less the same as it has been for some time now. And of course, different players in the industry have different tactics. Some do more everyday low price, some do more promotions. But what we do, like having a great combination of good shelf price and good promotions, that's what we believe will resonate well with customers. And over the quarter, we have invested more back in shelf price.
Richard Dufresne: Thank you Roy and good morning, everyone.
Richard Dufresne: Pleased to report that we continued to deliver consistent financial and operational performance in the second quarter with strong revenue growth fueling solid performance against our plan.
Richard Dufresne: Our ongoing focus on delivering value quality service and convenience to Canadians continues to resonate with customers and has resulted in strong market share performance across our businesses.
Richard Dufresne: Top line growth is the theme this quarter and is becoming the norm as we open new stores.
Richard Dufresne: On a consolidated basis revenue growth was five 2%, reaching $14 5 billion, an increase of $725 million over last year.
Per Bank: And that's why our... That's also why our margin is stable and we'll continue to be sharp on our prices so we can compete both on shelves and on promotions.
Richard Dufresne: If we exclude the divestiture of our worldwide stores last quarter.
Richard Dufresne: Revenue growth would have been even higher at five 4%.
Richard Dufresne: Our new stores are performing well and are reaffirming our strategy.
John Zamparo: Your next question comes from John Zamparo with Scotiabank. Your line is now open. Thank you very much. Good morning.
Richard Dufresne: Adjusted EBITDA increased by seven 4% to $1 8 billion.
John Zamparo: I wanted to move to the drug side.
Richard Dufresne: Adjusted diluted net earnings per share grew by 11, 6% to $2 40, and on a GAAP basis, our net earnings per share increased by 60%.
Per Bank: And I wonder if you can address the recent loss of patent protection for Ozempic and Wacobi and what the implications are for Loblaw. And obviously, there's lots of unknowns here. But historically, this has been these types of transitions have been positive for even the dollar generation. And I wonder if you're confident that that's the case here as well. And are there any other relevant metrics?
Richard Dufresne: You will notice that we have now completed the bulk of the amortization related to our 2014 acquisition of shoppers drug Mart.
Richard Dufresne: Completing the amortization was a significant driver of $106 million benefit to GAAP earnings in Q2.
Richard Dufresne: Going forward GAAP earnings growth will be positively impacted by these lower charges through Q1 of next year.
Per Bank: It's a very relevant question and for us it's a little bit too early to say because we are in the middle of it and we are trying now to discover how that's going to play out. We don't know yet, but one thing we know is that this is great news for customers. I think when prices come down, which we believe they will, I think we will have more customers that will be able to utilize this GLP-1 drug, more customers who need it and also more customers who can't afford to stay on it today. So good news for customers and I believe good news for us as well.
Richard Dufresne: In food retail, we did delivered higher sales tonnage and basket growth driving significant tonnage market share gains.
Richard Dufresne: Absolute sales outpaced same store sales by 230 basis points at five 8%, reflecting our new store growth, while our food same store sales momentum continues increasing three 5%.
Richard Dufresne: Our Q2 internal CPI like food inflation was lower than Canada grocery CPI of three 3%.
Richard Dufresne: Looking at our average article price data, which reflects the full basket mix bought by our customers across our network our internal inflation rate continues to be much lower than CPI.
John Zamparo: Okay, understood.
Per Bank: And then sticking with the the pharmacy on the clinics, can we get an update on how these are performing in terms of revenue generation and you saw a meaningful acceleration in script count in the quarter on a SAMHSA basis? I wonder if you think the clinics are contributing to that and traffic results? Yeah, they are. The clinics, they are helping and they are building more scripts than the stores with our clinics. And they're also giving a little bit more sales to the entire store, so helping the trips and helping the basket size, but that's minimal.
Richard Dufresne: Opening more discount stores is helping to maintain low prices for Canadians.
Richard Dufresne: Higher than normal cost increase request from larger global vendors continue to be a concern.
Richard Dufresne: Only a third of the supplier cost submission we have received over the last months had been tariff related in response, we are pushing back harder than ever to ensure that any increases we except our fair and reasonable and are partnering with our vendor community to mitigate price increases.
Richard Dufresne: Our hard discount banner sales continued to deliver strong growth based on the ongoing consumer focus on value.
Per Bank: But within the pharmacy care, they are helping and they are delivering up to the plans that we have. And by the end of the year, we're still planning on adding another, I think, 76. So we will be just over 250 at the end of the year. But it's also worth to remember that in all our 1,800 pharmacies, we are providing primary care. But in the clinics, customers feel more confident that they have more privacy and they are just doing the job that we expected them to do. So we feel really, really pleased with that and we will continue building more clinics.
Richard Dufresne: We're seeing strong momentum across the hard discount stores, we added to our network through conversions and new builds last year and our recent openings in 2025 are continuing this trend.
Richard Dufresne: Many more are coming over the coming months.
Richard Dufresne: We're also pleased with the momentum and strong performance in our conventional stores, which also grew tonnage market share.
Richard Dufresne: Within their sector.
Richard Dufresne: South of the border or Seattle, TMT store remains strong with sales volume that have significantly outpaced our expectations. Our next door opened in November we now have a total of six confirmed location in the U S and more are planned.
Per Bank: That's great.
Unknown Executive: I'll pass it on.
Vishal Shreedhar: Thank you. Your next question comes from Vishal Shreedhar with National Bank. Your line is now I thank you for reading my questions.
Unknown Executive: South of the border, our Seattle TNT store remains strong with sales volume that have significantly outpaced our expectations.
South of the border or Seattle, TNT store remains strong with sales volume that have significantly outpace our expectations. Our next door opened in November we now have a total of six confirmed location in the U S and more are planned.
Richard Dufresne: In drug retail absolute sales increased four 8%, excluding the impact of the sale of worldwide. While same store sales grew four 1%.
Unknown Executive: Our next store opens in November. We now have a total of six confirmed locations in the U.S. and more are planned.
Richard Dufresne: Pharmacy and healthcare services grew same store sales by six 2% this quarter driven by broad strength in prescription and new health care services.
Vishal Shreedhar: With respect to the Buy Canada and anniversarying some of the media comments last year relating to gross are you able to isolate the benefit on your comp or give us some some sense? And should we expect that that that benefit if if you agree there is some on a year per year basis to fade as we go? Very hard to measure, Vishal, like very hard. Yeah, we were up against a little bit of a weaker comp, as you said before, in quarter two, but that's, that's all we can say. And we still have good momentum in quarter two.
Unknown Executive: In drug retail, Absolute Sales increased 4.8% excluding the impact of the sale of Wellwise, while Same Store Sale grew 4.1%. Pharmacy and health care services grew by 6.2% this quarter, driven by broad strength in prescription and new health care services. Our specialty prescription growth continued to lead our pharmacy numbers. Patients continue to respond very positively to the convenience and expanded level of primary care we offer to our 1,800 pharmacies across the country, including our 174 in-store clinics. Our front store same-store sales continue to improve, growing 1.7% and reflecting the ongoing strength of our beauty category.
In drug retail absolute sales increased four 8%, including the impact of the sale of worldwide. While same store sales grew four 1%.
Richard Dufresne: Our specialty prescription growth continued to lead our pharmacy numbers patients continued to respond very positively to the convenience and expanded level of primary care, we offer through our <unk> thousand 800 pharmacies across the country, including our 174 in store clinics.
Pharmacy and health care services grew same store sales by six 2% this quarter driven by broad strength in prescription and new health care services.
Our specialty prescription growth continued to lead our pharmacy numbers patients continued to respond very positively to the convenience and expanded level of primary care, we offer to our 1800 pharmacies across the country, including our 174 in store clinics.
Richard Dufresne: Our front store same store sales continued to improve growing one 7% and reflecting the ongoing strength of our beauty category.
Richard Dufresne: This was partially offset by the previous exit of certain items in the electronics category.
Per Bank: Yeah, quarter three. I think you look on an absolute basis. That's what you should focus on. Like, we were all of our business are doing well. So that's what we're really fully focused on. And the noise and comp like is it's a bit noisy, but the business is definitely heading in the right direction.
Richard Dufresne: We remain pleased by the underlying strength profitability and sales momentum of shoppers drug Mart front store business.
Our front store same store sales continued to improve growing one 7% and reflecting the ongoing strength of our beauty category.
Richard Dufresne: Online sales in the quarter increased by 17, 5% across our retail businesses.
Unknown Executive: This was partially offset by the previous exhibit of certain items in the electronics category. We remain pleased by the underlying strength, profitability, and sales momentum of Shoppers Drug Mart's front store. Online sales in the quarter increased by 17.5% across our retail business. Delivery continues to lead growth in the online grocery channel and we remain pleased with our online sales penetration in both food and pharmacy. Our retail gross margin was stable at 32%, primarily driven by improvements in shrink offset by changes in sales. I'm particularly pleased with the shrink improvement at Shoppers Drug Our SG&E rate as a percentage of sales improved by 10 basis points, with operating leverage from higher sales partially offset by incremental costs related to the opening of new stores and the ramp-up of our new automated distribution facility in East Gwillimbourg.
Was partially offset by the previous exit of certain items in the electronics category. We remain pleased by the underlying strength profitability and sales momentum of shoppers drug Mart front store business.
Richard Dufresne: Delivery continues to lead growth in the online grocery channel and we remain pleased with our online sales penetration in both food and pharmacy.
Per Bank: Okay.
Online sales in the quarter increased by 17, 5% across our retail businesses.
Richard Dufresne: With respect to East Quillenbury, you said in the preliminary comments that it was ahead of schedule. So is 40% still the target by end of year in terms of capacity? I don't have that number off hand, but the number I do have in on hand is like, we're going to be shipping Over 6 million more cases than planned by year-end based on the trend we're in. And our budgeted costs are going to be down from budget by some millions of dollars. And just to cite our vendor, Vitron, Vitron has told us that this has been the smoothest and fastest ramp-up that they've seen in any of their facilities globally.
Richard Dufresne: Our retail gross margin was stable at 32%, primarily driven by improvements in shrink offset by changes in sales mix I am, particularly pleased with the shrink improvement at shoppers drug Mart.
Delivery continues to lead growth in your online grocery channel and we remain pleased with our online sales penetration in both food and pharmacy.
Richard Dufresne: Our SG&A rate as a percentage of sales improved by 10 basis points with operating leverage from higher sales, partially offset by incremental costs related to the opening of new stores and the ramp up of our new automated distribution facility in equal numbers.
Our retail gross margin was stable at 32%, primarily driven by improvements in shrink offset by changes in sales mix I'm, particularly.
Really pleased with the shrink improvement at shoppers drug Mart.
Our SG&A rate as a percentage of sales improved by 10 basis points with operating leverage from higher sales, partially offset by incremental costs related to the opening of new stores and the ramp up of our new automated distribution facility in equilibrium.
Richard Dufresne: The transition to our new DC is progressing very well and is ahead of plan.
Richard Dufresne: We have completed the deployment of frozen categories in the first phase of fresh.
Richard Dufresne: Our ramp up of this new DC is proceeding better than plan, we will ship significantly more cases than planned this year and our costs are actually running lower than budgeted.
Unknown Executive: The transition to our new D.C. is progressing very well and is ahead of plan. We have completed the deployment of frozen categories and the first phase of fresh. Our ramp-up of this new D.C. is proceeding better than planned. We will ship significantly more cases than planned this year, and our costs are actually running lower than budget. Because of this faster ramp-up, we have made the decision to bring our Ambien section online a full quarter ahead of plan, which will allow us to realize benefits earlier than expected.
The transition to our new D. C is progressing very well and is ahead of plan.
We have completed the deployment of frozen categories in the first phase of fresh.
Richard Dufresne: So all of that and the way it's ramping up is giving us confidence to launch ambient earlier than expected. And so I suspect, yes, the number you have in your head is definitely going to be higher. But the beauty of this is because the faster we ramp up, the faster we realize benefits. So we're excited because that's going to help us in 26 as this facility will be processing more and more volume.
Richard Dufresne: Because of this faster ramp up we have made the decision to bring our ambient section online a full quarter ahead of plan, which will allow us to realize benefits earlier than expected.
Our ramp up of this new DC is proceeding better than plan, we will ship significantly more cases than planned this year and our costs are actually running lower than budget.
Richard Dufresne: Speaking of supply chain logistics I would like to share. An example of the significant progress we've achieved in integrating AI solutions into our everyday supply chain operations.
Because of this faster ramp up we have made the decision to bring our ambient section online a full quarter ahead of plan, which will allow us to realize benefits earlier than expected.
Hi, driven initiatives are already yielding tangible improvements across key areas of our business.
Unknown Executive: Speaking of supply chain logistics, I would like to share an example of the significant progress we've achieved in integrating AI solutions into our everyday supply chain operations. AI-driven initiatives are already yielding tangible improvements across key areas of our business. We are streamlining our supply chain operations using AI-enabled tools that help us proactively manage inventory replenishment with vendors, optimize load building, and manage our transport scheduling and communication.
Speaking of supply chain logistics I would like to share. An example of the significant progress we've achieved in integrating AI solutions into our everyday supply chain operations.
Richard Dufresne: We are streamlining our supply chain operations using AI enabled tools that help us proactively manage inventory replenishment with vendors optimize load building and manage our transport scheduling and communication.
Richard Dufresne: Okay, and with respect to the real estate growth and the pressure associated with East Gwillimbury, I know in the past, you know, people have asked about quantifying those pressures. sidestep those questions. So maybe another way to ask it is, when should the anniversary that pressure and expect the real estate growth to start contributing on a P&L basis and the earnings basis and the DC pressure? you also. For sure, once we cycle that, it's definitely going to help because opening 80 stores brings drag, ramping up a DC brings drag, so the drag of that DC will be over sometime next year.
AI driven initiatives are already either yielding tangible improvements across key areas of our business.
We are streamlining our supply chain operations using AI enabled tools that help us proactively manage inventory replenishment with vendors optimized low building and manage our transport scheduling and communication.
Richard Dufresne: Another AI initiative that I'm really excited about is currently being rolled out across our store network, nicknamed Robyn we are leveraging <unk> AI and a custom built tool to save time and enhanced decision, making in our stores using conversion conversational action focused insights based on real time day.
Unknown Executive: Another AI initiative that I'm really excited about is currently being rolled out across our store network. Nicknamed Robin, we are leveraging agentic AI in a custom built tool to save time and enhance decision making in our stores using conversational action focused insights based on real time data. Robin provides a dashboard of KPIs, presents AI generated insights and recommends solutions, then tracks and executes to-do lists. Managers will spend less time on back end logistics and more time with their customers and staff while improving store level profitability. The success of this initiative has spawned a second version of the app that is now being tested with district managers to help them better manage their store networks.
Another initiative that I'm really excited about is currently being rolled out across our store network, nicknamed Robyn we are leveraging <unk> AI and a custom built tool to save time and that has decision making in our stores. He was in conversion of conversational action focused insights based on real time.
Richard Dufresne: <unk>.
Richard Dufresne: Robin provide a dashboard of Kpis presents AI generated insights and recommend solutions, then tracks and execute to do list.
Richard Dufresne: Managers will spend less time on back end logistics and more time with their customers and staff, while improving store level profitability.
Richard Dufresne: The drag from a new store will no longer be a drag because we're opening more or less the same number of stores next year, and so that'll help. But we're reopening a new DC in Caledon, we call it Tullamore. We started construction on that one, and so that will create another drag, but that one is later, it's more in 28. But before that, we're going to start to see the benefits.
Data.
Robin provide a dashboard of Kpis presents AI generated insights and recommend solutions than tracked and execute to do list.
Richard Dufresne: The success of this initiative are spawned a second version of the App that is now being tested with district managers to help them better manage their store networks by the way the speed at which we are developing and launching these new initiatives is impressive.
Managers will spend less time on back end logistics and more time with their customers and staff, while improving store level profitability.
The success of this initiative are spawned a second version of the App that is now being tested with district managers to help them better manage their store networks by the way the speed at which we are developing and launching these new initiatives is impressive.
Richard Dufresne: These developments are actively driving efficiencies, which will translate directly into cost savings to date and the open opportunities for future applications.
Unknown Executive: By the way, the speed at which we are developing and launching these new initiatives is impressive. These developments are actively driving efficiencies which will translate directly into cost savings today and the open opportunities for future applications.
Richard Dufresne: In the quarter retail adjusted EBITDA grew six 7% and EBITDA margin increased by 10 basis points to 12, 2%.
Chris Lee: Your next question comes from Chris Lee with Desjardins. Your line is now open. Oh, hi, good morning. When you said that Q3 was off to a good start, I'm running for food retail. Is it fair to say that the comp so far in Q3 is similar to Q2? Would that be a fair? and others.
These developments are actively driving efficiencies, which will translate directly into cost savings to date and the open opportunities for future applications.
Richard Dufresne: PC financials revenue increased two 7% driven by higher sales in our mobile mobile shop, and higher insurance Commission income.
Unknown Executive: In the quarter, retail adjusted EBITDA grew 6.7%, and EBITDA margin increased by 10 basis points to 12.2%. PC Financial's revenue increased 2.7%, driven by higher sales in our mobile shop and higher insurance commission.
In the quarter retail adjusted EBITDA grew six 7% and EBITDA margin increased by 10 basis points to 12, 2%.
Richard Dufresne: Our <unk> spending and savings account are performing very well deposits are ahead of plan and now exceeds $700 million.
P C financials revenue increased two 7% driven by I yourselves, and our mobile mobile shop, and higher insurance Commission income.
Per Bank: Because of the ease that we had versus Q2 of last year, COMP and Q3 in food will be slightly lower than what we have in Q2, but still very healthy and our top line growth will also be very healthy. Okay, that's helpful. I'm sorry if I missed it earlier, but the right-hand side impact on com this quarter, was it minimal or? Negligible. Like it's only six stores, like mathematically. But overall, it's 35 bps. So overall, it's not the new six stores, but that's the way that we treat and we trade the right-hand side. So we're not just waiting for those new stores.
Richard Dufresne: Enhancing customer engagement and lowering our bank's funding costs.
Unknown Executive: Thank you. Our PC money, spending and savings accounts are performing very well. Deposits are ahead of plan and now exceed $700 million, enhancing customer engagement and lowering our bank's funding costs. The bank's adjusted earnings before tax increased by $14 million or 87.5%, primarily driven by higher revenue, lower operating costs, and lower credit card receivable charge. We remain very comfortable with the risk profile of the bank's portfolio. We continue to take a conservative position in our provisioning with a strong and well, very well capitalized balance. On a consolidated basis, adjusted EBITDA increased by 7.4% to $1.8 billion.
Richard Dufresne: The bank's adjusted earnings before tax increased by $14 million or <unk> 87, or seven 5%, primarily driven by higher revenue lower operating costs and lower credit card receivable charge offs.
B C money spending and savings account are performing very well deposits are ahead of plan and now exceed $700 million enhancing customer engagement and lowering our bank's funding costs.
Richard Dufresne: We remain very comfortable with the risk profile of the bank's portfolio. We continue to take a conservative position in our provisioning with a strong and well very well capitalized balance sheet.
The bank's adjusted earnings before tax increased by $14 million or 87, or seven 5%, primarily driven by higher revenue lower operating costs and lower credit card receivable charge offs.
Richard Dufresne: On a consolidated basis adjusted EBITDA increased by seven 4% to $1 8 billion free cash flow from the retail segment increased by $165 million to $640 million and in the quarter, we repurchased $445 million worth of common share.
We remain very comfortable with the risk profile of the bank's portfolio. We continue to take a conservative position in our provisioning with a strong and well very well capitalized balance sheet.
Per Bank: We're also applying new trade mechanics to all of the stores. So if we get some early learnings on, for example, toys, then we try to deploy that to all stores. So some of that's helping. So we can't wait three years or four years until we have finished all 180 super stores. But what I think is very encouraging for us, still small numbers, and it still takes some time for us to deploy it. But that's how we have managed to take some of the learnings from the first piles in super stores and bring them back to the Loblaws and the Shares and the Jigs stores.
The consolidated basis, adjusted EBITDA increased by seven 4% to $1 8 billion free cash flow from the retail segment increased by $165 million to $640 million and in the quarter, we repurchased $445 million worth of common share.
Richard Dufresne: Our balance sheet remains strong and we continue to improve key return return metrics are return on equity sits at 24, 7% and our return on capital at 11, 9% both.
Unknown Executive: Free cash flow from the retail segment increased by $165 million to $640 million. And in the quarter, we repurchased $445 million worth of common capital. Our balance sheet remains strong and we continue to improve key return values. Our return on equity sits at 24.7% and our return on capital at 11.9%. Both metrics continue to improve.
Richard Dufresne: Both metrics continue to improve.
Our balance sheet remains strong and we continue to improve key retro and return metrics.
Richard Dufresne: Looking ahead to the second half of the year, we remain confident in our ability to deliver our outlook.
Our return on equity sits at 24, 7% and our return on capital at 11, 9%.
Richard Dufresne: Our third quarter is off to a good start carrying on the momentum from the first half of the year.
Both metrics continue to improve.
Richard Dufresne: New stores will continue to drive topline growth and the second half of the year, we'll see the bulk of our new store activity.
Unknown Executive: Looking ahead to the second half of the year, we remain confident in our ability to deliver our Our third quarter is off to a good start, carrying on the momentum from the first half of the year. New stores will continue to drive top line growth. And the second half of the year, we'll see the bulk of our new store activity. Our relentless focus on retail excellence and on the execution of our strategic initiatives will allow us to keep delivering value to our customers and strong performance to our shareholders.
Per Bank: And we've seen some really, really good numbers on the non-food there in the first two, three stores. Again, early days, but It's good to see.
Looking ahead to the second half of the year, we remain confident in our ability to deliver our outlook.
Richard Dufresne: Our relentless lantus focused on retail excellence and on the execution of our strategic initiatives.
Our third quarter is off to a good start carrying on the momentum from the first half of the year.
Per Bank: Yeah, just to be precise, I was referring to like the impact of the new renovation on our six stores. If you look at the normal drag we get from right hand side, like it's, yeah, it's in the 30, 35 basis. Getting better than last year. Okay, that's great.
Richard Dufresne: Allow us to keep delivering value to our customers and strong performance to our shareholders.
New stores will continue to drive topline growth and the second half of the year, we'll see the bulk of our new store activity.
Richard Dufresne: To date, we announced a four for one stock split effective at market close on August 18, 2025, which shareholders of record at close of business on August 14, 2025, receiving three additional shares for each common share held essentially our number of shares will be multiplied by four post split I will now.
Our relentless, let let's focus on retail excellence and on the execution of our strategic initiatives will allow us to keep delivering value to our customers and strong performance to our shareholders.
Chris Lee: And then maybe just a quick follow up on the early discussion around sort of what's driving the tinnish growth in conventional. I remember attending a recent industry conference, and I think it was discussed that there's a lot of sort of blocking and tackling the enhancement you guys have made in fresh, multicultural, natural, organic foods are all kind of contributing to growth. I just wonder if you can elaborate a little bit more on sort of what's driving the tinnish growth in conventional beyond the bi-Canadian or, or sort of the industry factors that were Fresh and Multicultural, that would be the two drivers.
Unknown Executive: Today, we announced a 4-for-1 stock split effective at market close on August 18, 2025, with shareholders of record at close of business on August 14. additional shares for each common share held.
Today, we announced a four for one stock split effective at market close on August 18, 2025, which shareholders of record at close of business on August 14th 2025, receiving three additional shares for each common share held essentially our number of shares will be multiplied by four post split I will now.
I'll turn the call over to Derek Thanks.
Derek: Thanks, Richard and good morning, everyone. So.
Speaker Change: Really pleased with.
Speaker Change: Second quarter performance, a very strong revenue growth reflects both our continued momentum in same store sales performance and the absolute growth and that's driven by our strategic investments in new stores and banner conversions. This top line growth, we'll have accelerates due to same store sales and support our long term earnings.
Richard Dufresne: I will now turn the call over. Thanks, Richard, and good morning, everyone. So, I'm really pleased with our second quarter performance. Our very strong revenue growth reflects both our continued momentum in same-store sales performance and the absolute growth, and that's driven by our strategic investments in new stores and banner conversions. This top-line growth will help accelerate future same-store sales and support our long-term earnings growth. And our adjusted EPS growth of 11.6% was accomplished while we supported the opening and ramp-up of 61 new stores since Quarter 2 last year, plus the ongoing transition to our new million-square-foot DC in East Gillingbury.
Gary: I'll turn the call over to Gary Thanks.
Gary: Thanks, Rachel and good morning, everyone. So I'm really pleased with.
Gary: Second quarter performance, a very strong revenue growth reflects both our continued momentum in same store sales performance and the absolute growth and that's driven by our strategic investments in new stores and banner conversions.
Per Bank: And of course, we're still doing well with our control bank, of course, center of source. But except for that, it's actually healthy and it's all over the piece. It's not one category. But Multicultural and Fresh Special Produce, that's one of the areas where we're doing very well. Okay, yeah, again, to be precise, again, to be precise, Chris, like, like, conventional as a as a sector is still trending a little bit negative. And but our tonnage growth versus our peers is really, really good. And like the absolute tonnage growth is, is all coming Okay, that's helpful.
Speaker Change: Both.
Speaker Change: And our adjusted EPS growth of 11, 6% was accomplished while we supported the opening and ramp up of 61, new stores since quarter, two last year, plus the ongoing transition to our new million square foot DC in east Greenberg. Most importantly, all of US are resonating so well with more Canadian.
Gary: Topline growth will help accelerate future same store sales and support our long term earnings growth.
Gary: And our adjusted EPS growth of 11, 6% was accomplished while we supported the opening and ramp up of 61, new stores since quarter, two last year, plus the ongoing transition to our new million square foot DC and east Greenberg. Most importantly, how all of those are resonating so well with more Canadian.
Speaker Change: Every single day.
Speaker Change: We remain focused on helping Canadians get the most of their budgets in a challenging economic environment.
Galen Weston: Most importantly, our offers are resonating so well with more Canadians every single day. We remain focused on helping Canadians get the most of their projects. In a challenging economic environment, our responsibility is to deliver value, quality, service, and convenience across every corner of our business, whether that's through competitive pricing, meaningful promotions, or personalized rewards through our PC Optimum program. By being responsive to customer needs and innovating across our banners, we are reinforcing our position as a trusted partner for households across the country. As a result, more Canadians are shopping in our stores. Actually, traffic is up, unit sales are up, and basket growth was positive in the quarter.
Speaker Change: One is to deliver value quality service and convenience and cost every corner of our business, whether that's through competitive pricing meaningful promotions all personal lines, we've launched through our PC optimum program.
Per Bank: Maybe just a couple of quick ones on shoppers. Your beauty category continues to be to be very strong. And I think you made some investment in technology recently. Again, wondering sort of what's driving that that that growth and if the bay sort of exiting is that having any meaningful impact on Yeah, so our investment in technology, I think we're only in a few stores now, and that will help us over time, but it'll take a little bit of time, so that's too early to judge. I think the bay, we got some benefit last year, and of course we are going to get some benefit this year as well.
Gary: Every single day.
Gary: We remain focused on helping Canadians get the most of their budgets in a challenging economic environment. All my friends is to deliver value quality service and convenience and cost every corner of our business well that is true competitive pricing meaningful promotions, all personalized rewards swap piece you off.
Speaker Change: By being responsive to customer needs.
Speaker Change: And of course, our banners, we are reinforcing our position as a trusted partner for households across the country.
Speaker Change: As a resource more Canadian or shopping in our stores.
Gary: On program.
Gary: By being responsive to customer needs and innovating across our banners, we are reinforcing our position as a trusted partner for households across the country.
Speaker Change: Actually traffic is up unit sales are up and basket growth was positive in the quarter. This drove tonnage market share gains overall in our both our hard discount and <unk> grew market shares within their market segments.
Per Bank: And you are right, it is overall the prestige, the harbor, the beauty categories that's helping the growth in shoppers. Food has also turned in to be positive, but it's still marginal positive, so it's been driven by locally the higher margin categories, and the market in general for beauty and prestige is just a good market to be in, it's growing over and above the food, and customers, it seems like they're not as price sensitive when they are buying fragrances compared to when they are buying food. And I normally say that if we are 10 cents off a loaf of bread, then customers, they won't forgive us, but they don't discuss fragrances.
Gary: As a result, more Canadian or shopping in our stores.
Gary: Actually traveling is up units and top and bottom growth was positive in the quarter. This drove a ton as Marcia games overall in our both our harvest down and show them our panels grew market shares within the market segments.
Speaker Change: This success reflects not only on the strength of our strategy, but also the incredible work of our teams from coast to coast.
Unknown Executive: This drove tonnage market share gains overall, and both our hard discount and supermarket banners grew market shares within the market segment. This success reflects not only on the strength of our strategy, but also the incredible work of our teams from coast to coast. Another highlight this quarter is continuous success of our new stores. This quarter we opened another 10 new stores. That was 9 new Maxi and No-Fill stores and 1 Shopper's Drug Mart store. We have now opened 20 out of our planned 80 new stores for the year. And we are really pleased with the performance out of the gate.
Speaker Change: Another highlight this quarter is continuous success of our new stores. This quarter. We opened another 10, new stores that was nine new maxion notices doors and one sharper drop milestone. We have now opened 20 out of our plan 80, new solutions for the year and we are really pleased with the performance out of the gate and we are excited.
Gary: Our success reflects not only on the strength of our Saturday, but also the incredible work of our teams from coast to coast.
Gary: Another highlight this quarter is continuous success of our new stores. This quarter, we opened another tens and 10, new stores that was nine new Maxi I know if its doors and in one Silva 12 months. We have now opened 20 out of a planned 80, new stores for the year and we are really pleased with the performance out of the gate and we exercise.
Speaker Change: About our continued sales growth momentum.
Speaker Change: The global shift towards discount retail is a long term trend and we are leaving it here in Canada in May we celebrated the opening of our 500 Hot discount stone with the community of pinch Creek in Alberta.
Per Bank: But that's also because our offers, our redemption offers in shoppers, when they can go in and trade points, like 30 times the points or whatever, then we are the most competitive player in beauty in Canada. So that's resonating really well and continues to do so for our customers. Yeah, over the last few months, Chris, like, we see we've seen slowly building momentum in front store, and that momentum, we're seeing it again and Okay, that's great.
Unknown Executive: And we are excited about our continued sales growth momentum. The global shift toward discount retail is a long-term trend and we are leading it here in Canada. In May, we celebrated the opening of our 500th hot discount store with the community of Pincher Creek in Alberta. By expanding our reach into communities where affordability matters most, we are meeting customers where they are and delivering exactly what they need. Our supermarket banners also had a strong quarter. Fortuno's and T&T continued to perform very well, but our real Canadian superstores led with very strong comps growth in Quarter 2.
Gary: About our continued sales growth momentum.
Speaker Change: By expanding our reach into communities, where affordability matters. Most we're meeting customers, where they are and delivering exactly what they need.
Gary: The global shift towards discount retail is a long term trend and we are leaving it here in Canada in May we celebrated the opening of our 500 is hot discount store with the community of pinch a creek in Alberta.
Speaker Change: <unk> also had a strong quarter for Chinas TMT continued to perform very well for a real Canadian superstore slate with very strong comps growth in quarter two.
Gary: By expanding our reach into communities, where affordability matters. Most we're meeting customers, where they are and delivering exactly what they need.
Speaker Change: We rolled out our right hand side to refresh and three more superstores and we remain pleased with customer reaction and our ability to transfer these learnings to our general merchandise all of us.
Per Bank: And my very last question, just maybe a follow up on the discussion around the GLP drugs becoming generic, is it fair to say just the gross profit dollars that you earn on this generic version of those drugs should be higher than on the dependent drugs? Is that fair to say? I think it's probably what could happen, but we actually don't know right now, because we're still looking at it, we're still negotiating, we're still talking to, and we don't know whether those players right now, whether they want to lower their prices, and it's something that of course we're on top of, but it's too early to tell.
Gary: Super Mommy Penthouse also had a strong quarter for Chinas TMT continue to perform very well, but a real Canadian superstore slate with very strong comps growth in quarter two.
Speaker Change: A source as well.
Unknown Executive: We rolled out our right-hand side refresh in three more superstores and we remain pleased with customer reactions and our ability to transfer these earnings to our general merchandise offers in our smaller stores as well. We continue our leadership in supporting Canadian products and vendors. We have doubled down on our effort and have onboarded another 100 new Canadian vendors. Adding 130 new Canadian vendors into our ecosystem this year do strengthen our local supply chain and brings even more choice to ourselves. Further strengthening our base of Canadian suppliers, that remains so important to us.
Speaker Change: We continued our leadership in supporting Canadian products and vendors, we have doubled down on our efforts and onboard another 100, new Canadian windows.
Gary: Rolled out all right hand side, the refresh and three more superstars and we remain pleased with customer reaction and our ability to transfer these learnings to our general merchandise all of us in our smaller stores as well.
Speaker Change: Adding 130, new Canadian vendors into our ecosystem this year to strengthen our local supply chain and brings even more choice to ourselves further strengthening our base of Canadian suppliers that remains so important to us.
Gary: Continuing our leadership and support in Canadian products and Windows, we have doubled down on our efforts and how and onboard another 100, new Canadian windows, adding.
Gary: Adding 130, new Canadian vendors into our ecosystem this year to strengthen our local supply chain and brings even more choice to ourselves further strengthening our base of Canadian suppliers that remains so important to us.
Speaker Change: There's some misconception that the tariffs are no longer a factor in grocery nothing could could actually be further from the truth to retailers. It is reality.
Unknown Executive: Thank you. That's great. Thank you very much. Oh, Vishal, I got your number to your question. 40% becomes 60% with advancing the volume in these Ladies and gentlemen, as a reminder, should you have a question, please press star 1.
Speaker Change: The reality is that the tariffs counter measures remain in place and about a third of all supplier cost submissions have been that have been tariff related.
Unknown Executive: There's some misconception that the tariffs are no longer a factor in grocery. Nothing could actually be further from the truth. The reality is that the tariff countermeasures remain in place, and about a third of all supply-cost submissions have been tariff-related. We continue to do our best to help customers navigate the impact of terrorists, including our T-Symbol program. This initiative, unique to us, identifies the imported items that are directly subject to retaliatory terrorists with the T symbol on the shelf. It has been successful on several levels. As intended, it has helped our customers by clearly identifying terrorist items, supporting Canada and saving money.
Gary: There's some misconception that the tariffs are no longer a factor in grocery nothing could there could actually be further from the truth to read tenants. It is oh, sorry, the reality.
Mark Petrie: Your next question comes from.
Speaker Change: We continue to do our best to help customers navigate the impact of tariffs, including our key simple program.
Mark Petrie: Mark Petrie with CIBC, your line is now open. Good morning. I just had one follow up question, actually, just with regards to the square footage growth outlook. I think I heard Richard say that you expected about 80 stores again next year. Although I think I heard Per earlier in the call say something about accelerating impact, but maybe that was just from the ramp up on stores, the previously opened new stores, if you could just clarify that. And then any commentary just about the mix of stores in 2026, or just generally going forward, and specifically wondering about discount and the mix of urban versus smaller market stores.
Alex: Alex is that that the terrorists counter measures remain in place and about a third of all supplier cost submissions have been there had been tariff related we.
Speaker Change: This initiative unique to us identifies the important items that are directly subject to retaliatory tariffs, we did see symbol on shelf.
Alex: We continue to do our best to help customers navigate the impact of tariffs, including our <unk> simple program.
Speaker Change: It has been successful on several levels as intended it has helped our customers by clearly identifying cherish items support in Canada and saving money.
Alex: This initiative unique to us identifies the important items that are directly subject to retaliatory tariffs with a T symbol on shelf.
Speaker Change: Seems it is also.
Speaker Change: Incentives supply suppliers to mitigate the tariff impact to avoid the T label designations sales volume on key items declined in the quarter. The trend is accelerating we are now seeing weeks with with a declining by more than 15% all.
Alex: It has been successful on several levels as intended it has helped our customers by clearly identifying terrorism items support in Canada and saving money behind the scenes. It is also.
Unknown Executive: Behind the scenes, it has also incented suppliers to mitigate the terrorist impact to avoid the T label designations. Sales volume on T items declined in the quarter. The trend is accelerating. We are now seeing weeks with a declining by more than 15%. Our data shows that Canadians are responding positively to these initiatives.
Alex: Incentives supply suppliers to mitigate the tariff impact to avoid the T label designations sales volume on T items declined in the quarter. The trend is accelerating we are now seeing weeks with a with a declining by more than 15%.
Speaker Change: Our data shows that Canadians are risk.
Speaker Change: Broadening partially attributed to these to these initiatives.
Richard Dufresne: Thanks.
Richard Dufresne: Okay, it's still early days, though we have not like finalized the full numbers. So, I was saying in the zone of, so we'll come back to you later as to the specific of the number of store for next year. As to the makeup of it, I think it's going to look a lot like this year, like Shoppers Remarked and discount stores. There's going to be a few tenty stores and we might be able to slip one conventional or two in there, but like that should be what you should expect to see in 2026.
Speaker Change: Assisting DSO and Archrock business, we deliver continued positive momentum in our front store a prestige cosmetics continued to be very strong supported by fragrance interim categories.
Alex: Our data shows that Canadians are responding positively to these to these initiatives.
Speaker Change: And pharmacy and healthcare services, our speciality dropped a new prescribing services categories are delivering strong double digit growth showing continued strength in acute and chronic slips.
Unknown Executive: System Gear, so in our drug business, we deliver continued positive momentum in our front store. Our perceived cosmetic continues to be very strong, supported by fragrance and derm category. In pharmacy and healthcare services, our specialty drug and new prescribing services categories are delivering strong double-digit growth, showing continual strength in acute and chronic stress. We have opened 23 new pharmacy-led clinics this year, and we remain on track to have 250 clinics providing expanded scope of care services to Canadians by year-end. Our digital business continues to generate double-digit growth driven by continuous strength in our PCX delivery channel.
Alex: Shifting gear so in our truck business will deliver continued positive momentum in our in our front store a procedure cosmetics continued to be very strong supported by fragrance and home categories.
Speaker Change: We have opened 22 23, new pharmacy led to earnings this year and we remain on track to have 250 clinics, providing expanded scope of guesses as to Canadians buyer by year end.
Alex: In pharmacy, and healthcare services, our speciality dropped a new prescribing services categories are delivering strong double digit growth showing continuous strength in acute and chronic slips.
Per Bank: But we will get back to you in a few quarters. And the rainbow I was alluding to is just that I think previously when I've been talking is that I I expected to see the second year comp sales to be much higher than the normal comp sales and by measuring the first... 60 stores that we have opened the past year, we're seeing that. We're seeing that those second year, like for like as I call it, they're doing very well. So that was what I was talking about. Understood. Okay, thanks.
Speaker Change: Our digital business continues to generate double digit growth driven by continued strength in our PCH delivery channel.
Alex: We have opened 22 23, new pharmacy electronics this year and we remain on track to have 250 clinics, providing expanded scope of course is to Canadians by by year end.
Speaker Change: And I'm happy to see our weekly engage user growth continued to be strong and customers are spending more time in apps and digital our focus remains on enhancing optionality and convenience across our business.
Alex: Digital business continues to generate double digit growth driven by continued strength in our PC extra literature.
Unknown Executive: And I'm happy to see our weekly engaged user growth continue to be strong and customers are spending more time in the app. In digital, our focus remains on enhancing optionality and convenience across our business. In the quarter, we strengthen our collaboration with DoorDesk, allowing customers to now earn PCO points. Innovation remains core to how we improve operations. We do reduce costs and enhance the customer experience at Loblaw's. Our enhanced My Shop functions within the PCI Express is just another great example. Improving our customer experience means personalization is increasingly important. We're using advanced AI models to analyze each customer's behavior and preferences and deliver the right products, content, and promotions at the right time on an individual level.
Alex: And I'm happy to see our weekly engage user growth continued to be strong and customers are spending more time in the app and digital our focus remains on enhancing optionality and convenience across our business.
Speaker Change: In the quarter, we strengthened our collaboration with <unk>, allowing customers to know MPC points PCL points.
Richard Dufresne: And then maybe just to clarify, Richard, just with regards to or follow up, the performance of this discount, small format discount stores that you've opened so far, would that be relatively consistent for those urban markets versus those more rural markets that you've also been opening stores in? I would say that the urban stores, we are really, really pleased. We haven't really tested rural stores yet. I think we had the first one opening very soon. And there are lots of potential to go into rural, but it takes a little bit longer time to plan, to build, because we had many more options downtown, the big cities, where we could just go into existing buildings.
Speaker Change: Innovation remains core to how we improve operations reduce costs and enhance the customer experience levels, our enhanced MISO functions within the Pega Express is just not a great example, improving our customer experience means personalization is increasingly important we are using advanced AI model.
Alex: In the quarter, we strengthened our collaboration with daughters, allowing customers to know and PC points P. J O points.
Alex: Innovation remains core to how we improve operations reduce costs and enhance the customer experience at loblaw, our enhanced my shop functions within the Pizza Express is just another great example, improving our customer experience means personalization is increasingly important we're using advanced AI model.
Speaker Change: To analyze each customer's behavior and preferences and deliver the right products content and promotions at the right time on an individual level <unk> app and websites are increasingly being powered by algorithms that percent customized deals panel recommendation and content unique to each <unk>.
Alex: To analyze each customer's behavior and preferences and deliver the right products content and promotions at the right time on an individual level five semi official app and websites are increasingly being powered by algorithms that percent customized deals panel recommendation and content unique to each.
Richard Dufresne: So it takes more time to test the rural. But I do stay as optimistic as I have been when I came here a couple of years ago on going into rural.
Speaker Change: <unk> need.
Speaker Change: We have even now like meal suggestion based on customers' statute profile and purchase history with relevant ingredients also added to the comp.
Unknown Executive: For example, our PCO app and website are increasingly being powered by algorithms that present customized deals, product recommendations, and content unique to each shopper's needs. We have even now meal suggestions based on customers' dietary profiles and purchase history, with relevant ingredients also added to the cart. We are excited about the opportunities ahead. These innovations represent an exciting step forward in how technology can transform how we work and how efficiently and effectively we serve Canadians.
Richard Dufresne: But we haven't really tested enough yet to let you know. Yeah.
Speaker Change: We're excited about the opportunities ahead regeneration represent an exciting step forward in how technology can transform how we would and how efficiently and effectively we serve Canadians in closing I would like to thank all members of the local team for their tremendous efforts during this quarter Youll passion hardware each one.
Alex: It's neat.
Alex: We have even now like meal suggestion based on customers' padgett profile and purchase history with relevant degreed ingredients also added to our to the card.
Richard Dufresne: Suburban is one where we're asking ourselves questions. So we need to do some more work there, but definitely urban, where every site we can put our hands on, we're doing. Yeah. And suburban, we're only asking ourselves questions how big we're going to build them. We're not asking the question whether it works or not. So we're a 10,000 square feet store, and probably also rural. Then I think first indication is that we want to build them bigger in the suburban. Yeah, understood. Okay, thanks for all the comments. All the best. Thank you.
Alex: We're excited about the opportunities ahead regeneration represent an exciting step forward in how technology can transform how we would and how efficiently and effectively we serve Canadians in closing I would like to thank all members of the loblaw team for their tremendous efforts during this quarter your passion hard way each one.
Speaker Change: It allows us to consistently deliver the value quality and service that Canadians rely on every day. So as Richard mentioned, our third quarter is off to a good start and we enter the second half of the year, but confident in our strategy and in our ability to deliver on our full year plan without set.
Galen Weston: In closing, I would like to thank all members of the Loblaw team for their tremendous effort during this quarter. Your passion, hard work is what allows us to consistently deliver the value, quality and service that Canadians rely on every day. So as Richard mentioned, our third quarter is off to a good start. And we enter the second half of the year with confidence in our strategy and in our ability to deliver on our full year plan.
Alex: It allows us to consistently deliver the value quality and service that the Canadians rely on every day. So as Richard mentioned, our third quarter is off to a good start and we enter the second half of the year, but confident in our strategy and in our ability to deliver on our full year plan, but that's it.
Michael Van East: Your next question comes from Michael Van East with TD Cowen. Your line is now open. I just wanted to ask about T&T, because it seems like every store you open seems to blow the lid off of your expectations. And I know you have, I think one coming this fall, and you mentioned six confirmed locations in the US with more planned. What, what are the key indicators you're looking for as you open up in the US to make you confident? give you confidence that this is a banner that can actually. Transcripts provided by Transcription Outsourcing, LLC.
Speaker Change: I will now open the floor for your questions. Thank you so much.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone you will hear from by your hand has been raised should you wish to decline from the polling process. Please press star followed by the Q.
Unknown Executive: With that said, I will now open the floor for your questions. Thank you so much. Thank you.
Alex: I'll now open the floor for your questions. Thank you so much.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
Unknown Executive: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the 1 on your touchtone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by the. If you are using a speakerphone, please lift the handset before pressing.
Speaker Change: You are using a speaker phone please lift the handset before pressing analyses.
Irene <unk>: First question comes from Irene <unk> with RBC capital markets. Your line is now open.
Speaker Change: But your hand has been raised and you will see a decline from the polling process. Please press star followed by the Q.
Speaker Change: Thank you and good morning, everyone.
Speaker Change: It looks as though the momentum is in the top line is continuing to accelerate and I was wondering if you could talk about what youre seeing.
Speaker Change: You are using a speaker phone please lift the handset before pressing and Rockies.
Irene Nattel: Your first question comes from Irene Nattel with RBC Capital Markets. Your line is now open. Thank you and good morning everyone.
Per Bank: Yeah, I think we are, of course, we're looking for absolute sales and the first store is so good and it's better than... far most of the supermarkets in the U.S. to our knowledge. And what we're seeing that really, it's really, really encouraging, it's our offer in kitchen and bakery. So with our commissary and the way that we have our recipes for TNT, what Tina tells me is that this is a big, big part of sales and much more in the U.S. than in Canada. So that's a big driver of footfall to our stores. So basically, sales and marketing and it's all holding up and actually much better than we expected.
Irene: First question comes from Irene <unk> with RBC capital markets. Your line is now open.
Irene: Thank you and good morning, everyone.
Ross: Ross <unk> in terms of magnitude and also to what degree is this.
Unknown Executive: It looks as though the momentum in the top line is continuing to accelerate and I was wondering if you could talk about what you're seeing across the banners in terms of magnitude and also to what degree is the step up both in same store sales and revenue growth due to the new stores versus the rest of the network. If I can start, so the new stores, we just started to ramp up, so I believe you will see more in the future, more this year, more next year, more the following year. So it's not a significant part, but of course it's contributing as we are adding more stores.
Speaker Change: It looks as though the momentum is in the top line is continuing to accelerate and I was wondering if you could talk about what you're seeing.
Speaker Change: Step up both in same store sales and revenue growth due to the new stores versus the rest of the network.
Ross: Yes.
Speaker Change: Ross the banners in terms of magnitude and also to what degree is it is the step up both in same store sales and revenue growth due to the new stores versus the rest of the network.
Ross: If I if I can start so so the new stores. We just started we just started to ramp up. So I believe you will see more in the future more this year <unk> Mulder following year. So it's.
Ross: It's not a significant part but of course it is contributing as we are adding muscle. Let's remember we added 50, new stores last year were adding 80, new stores. This year in the second year comp of new stores are doing a really really good job for us, but so far that's not the main the main the main part is that we are we are doing well and customers say.
Speaker Change: Yes.
Speaker Change: If I if I can start so so the new stores. We just started we just started to ramp up. So I believe you will see more in the future more this year more next year more and more of the following year. So it's a it's not.
Per Bank: So we stay very bullish, but again, it's early days, it's one store only, but we are so happy with the first stores that, as Richard said, we have approved six and we're going to extend the trial with a few more stores so we don't lose time ramping up. Yeah, and I think we need we need to have that the Canadian business is also very healthy. If you were to look at the absolute sales growth of TNT Canada, it's actually our most performing banner of the whole organization. And where we continue to, to fail miserably, is in our ability to forecast the sales of the new stores, we systematically underestimate the sales of all the TNT we've opened.
Speaker Change: A significant part but of course, it's it's contributing as we are adding more so let's remember we added 50, new stores last year were adding 80, new stores. This year in the second year comp of new stores are doing a really really good job for us, but so far that's not the main the main the main part is that we are we are doing well and customers say they like the.
Unknown Executive: Remember we added 50 new stores last year, we're adding 80 new stores this year. And the second year comp of new stores are doing a really, really good job for us. But so far, that's not the main. The main part is that we are doing well and customers, they like the offers that we are giving them. And that's both, as I mentioned, the Canadian superstore is doing really well for us. Our hard discount, both on a comp level and on an absolute level, is doing well. TNT, as Richard mentioned, the U.S. store, it's just a success story.
Ross: They like the <unk> that we're giving it.
Ross: Giving them and Thats, both as I mentioned, the Canadian resource doing really well for us our hot discount both on a comp level and all in.
Speaker Change: <unk> level is doing well TNT as Richard mentioned, the U S or its just a success, though we are taking somewhat saves and much more than.
Speaker Change: Over that we're giving them, we're giving them and that's both as I mentioned, there's the Canadian so it was all doing really well for us our hot discount both on a comp level and I'll end on a absolute level is doing well TNT as Richard mentioned, the U S or its just a success, though we are taking somewhat sales and much more than that.
Speaker Change: And then we expect it so so globally basically it's not just one part of our proven quarter to everything delivered some some nice sales momentum for us.
Unknown Executive: We are taking so much sales and much more than we expected. So luckily, basically, it's not just one part of our group in quarter two. Everything delivered some nice sales momentum for us.
Speaker Change: Nothing to add to hiring.
Speaker Change: Thanks, and then just as a follow up.
Speaker Change: And then we expect it so some lovely basically it's not just one one part of our group in quarter two everything delivered some some nice sales momentum for us.
Speaker Change: Given the strong momentum that youre, having your cake.
Speaker Change: Can you walk us through why you chose not to revise upward our guidance for the year.
Per Bank: So I guess what I'm trying to figure out, though, is at what point like how many how many success stories You have to have a new and U.S. new store openings for you to get confidence that this is actually transferable. I think if we're seeing the first six works, then it will work everywhere. So we are, and if you ask Tina Liu, the CEO of TNT, she's confident already now, but I think we need to see five or six, and then we can talk to you about a plan how to accelerate.
Unknown Executive: Yeah, I agree.
Unknown Executive: I think that I Thanks.
Speaker Change: I agree nothing to add to hiring.
Unknown Executive: And then just as a follow up, given the strong momentum that you're having year to date, can you walk us through why you chose not to revise upward your guidance for the year? Yeah, Irene, I guess two points, I guess. First, it's early. Okay, it's early in the year to upgrade our guidance. And also, there's still a lot of uncertainty out there. So, so we thought it'd be more prudent to wait.
Speaker Change: Thanks, and then just as a follow up.
Speaker Change: Yes.
Speaker Change: I guess two points I guess first it's early it's early in the year to upgrade our.
Speaker Change: Given the strong momentum that you're having here today.
Can you walk us through why you chose not to revise upwards our guidance for the year.
Speaker Change: Guidance and also Theres still a lot of uncertainty out there. So we thought it would be more prudent to wait so well update guidance when we when we release Q3.
Speaker Change: Yeah.
Speaker Change: I guess two two points I guess first it's early it's early in the year to upgrade our guidance and also theres still a lot of uncertainty out there. So so we thought it'd be more prudent to wait so well update guidance. When we are when we released Q3.
Speaker Change: Understood. Thank you.
Speaker Change: Your next question comes from Mark Carden with UBS. Your line is now open.
Unknown Executive: So we'll, we'll update guidance when we, when we release Q3. Understood. Thank you.
Mark Carden: Okay. Thanks, so much for taking the question wanted to just start out with the broader health to consumer just what youre seeing on that front any shifts in buying patterns or trade across categories.
Speaker Change: Understood. Thank you.
Roy MacDonald: There are no further questions at this time.
Mark Carden: Your next question comes from Mark Carden with UBS. Your line is now open. Thanks so much for taking the questions.
Roy MacDonald: I will now turn the call over to Roy MacDonald for closing remarks. Thanks for your time this morning, everybody. Let me know if you have any follow-up questions and put a circle on your calendar for Wednesday, November 12th, when we will be releasing our Q2 results.
Speaker Change: Your next question comes from Mark Carden with UBS. Your line is now open.
Speaker Change: Then just related any changes you guys are seeing.
Mark Carden: Thanks, So much for taking the question wanted to just start out with the broader health to consumer just what youre seeing on that front any shifts in buying patterns or trade across categories. And then just related any changes you guys are seeing in the.
Speaker Change: The underlying competitive environment from a pricing standpoint, thank you.
Unknown Executive: I want to just start out with the broader health of the consumer, just what you're seeing on that front, any shifts in buying patterns or trade across categories, and then just related any changes you guys are seeing in the underlying competitive environment just from a Thanks for the question, and I think that's more relevant than ever. So we're seeing more of the same compared to the past quarter. Customers, they are increasingly seeking values, and value, they can get that in many ways. Of course, our hard discount stores, they're doing well, and they're still leading and doing better compared to the rest of the portfolio.
Speaker Change: Thanks for the question and I think thats more relevant than ever. So we are seeing we're seeing more more of the same compared to compared to the past quarter customer. They are increasingly seeking seeking values in value. If they can get that in many ways of course, our hot discount stores.
Unknown Executive: Thanks very much and have a great day.
Mark Carden: Underlying competitive environment, just from a pricing standpoint, thank you.
Unknown Executive: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.
Mark Carden: Thanks for the question and I think that's a more relevant than ever. So we are seeing are we seeing more more of the same compared to compared to the past quarter customer. They are increasingly seeking are seeking value and value that they can get that in many ways of course are all hot discount stores.
Speaker Change: They're doing well and Theyre still there.
Speaker Change: We're leading in doing doing better compared to the rest of the portfolio. So that comm saves is better and that's also what we are seeing in the beginning of <unk>.
Speaker Change: Quarter of quarter, three but also the rest of our flex portfolio is doing well so customers. They are increasingly seeking to buy more on promotions by more on the private label and then of course. They also they are also shipping I think probably a good a good way to look at.
Mark Carden: They're doing well and there still are they still leading and doing doing better compared to the rest of our portfolio. So that comm saves as a spread and that's also what we're seeing in the beginning of <unk>.
Unknown Executive: So their comp sales is better, and that's also what we're seeing here in the beginning of quarter three, but also the rest of our portfolio is doing well. So customers, they are increasingly seeking to buy more on promotions, buy more on the private label, and then, of course, they're also shifting. I think probably a good way to look at it is on our cheap products. So customers, they probably like a lot of their brands coming from the U.S., but now that we are seeing that in some weeks, more than 15% decline in volume for those products means that price matters to our customers, so they're shifting into other categories.
Mark Carden: A quarter of quarter three but also the rest of our flex portfolio is doing well so customers. They are increasingly seeking to buy more on promotions by more on the private label and then of course. They also have they also shifting I think probably a good a good way to look at it is on our key products. So so customer they are they probably like.
Speaker Change: Our key products, so so customer.
Speaker Change: They probably like a lot of that Brian is coming from the U S. But now that we are seeing that in some weeks more than 15% decline in volume for those product means that price matters to our customers to their shifting into <unk>.
Mark Carden: A lot of that Brian is coming from the U S. But now that we are seeing that in some weeks here more than 15% decline in volume for those product means that price matters to our customers. So they are shifting into a into a into other categories. So that they are looking out for radio more more than more than we have.
Speaker Change: <unk> into other categories. So that they are looking out for radio more more than more than we have ever seen so I'm not I'm not very I think I think customer they are.
Speaker Change: <unk> and in a good way theyre not trading a lockdown, but it's probably much more of the same as we have seen before and what we can say that some macro uncertainty out there some uncertainty with tariffs, but it's not well. We are one of the businesses that are least impacted by that do you have anything to add yes. The only thing I would add is if you look.
Unknown Executive: So they're looking out for value more than we have ever seen. So I'm not worried. I think customers, they are acting in a good way. They're not trading a lot down, but it's probably much more the same as we have seen before.
Mark Carden: Have you ever seen so I'm not I'm not worried I think I think costs might be.
Mark Carden: They are acting and acting in a good way theyre not trading a lockdown, but it's probably much more of the same as we have seen before and what we can say that some macro uncertainty out there are some uncertainty with tariffs, but it's not well we have one of our businesses.
Speaker Change: At the credit card industry data you would note that the spend the growth in spend in Canada slowed quite significantly and we have our own credit card data that also corroborate that information. So clearly customers are more as they tend to spend and so that's being reflected in that.
Unknown Executive: And what Richard said, there are some macro uncertainty out there. There are some uncertainty with tariffs, but it's not – well, we are one of the businesses that are least impacted by that.
Speaker Change: <unk> impacted by by that do you have anything to add yeah. The only thing I would add is like if you look at the credit card industry data you would note that the spend the growth in spend in Canada slowed quite significantly and we have our own credit card data that also corroborate that information so clearly custom.
Unknown Executive: Do you have anything to add? Yeah, the only thing I would add is, like, if you look at credit card industry data, you would note that the spend, the growth in spend in Canada slowed quite significantly, and we have our own credit card data that also corroborates that information. So clearly, customers are more hesitant to spend, and so that's been reflected in the growth we're seeing in our discount stores.
Speaker Change: And the growth, we're seeing in our discount stores.
Speaker Change: That's great color and then Youre superstores contributed nicely to sales in the quarter would you say this is a broader reflection on just consumer behavior overall or more specific to some of your assortment changes how you think about the balance.
Speaker Change: These are more as they tend to spend and so that's been reflected in the <unk> and the growth we're seeing in our discount stores.
Unknown Executive: Great Color. And then your superstores contributed nicely to sales in the quarter. Would you say this is a broader reflection on just consumer behavior overall, or more specific to some of your assortment changes? How do you think about the balance about essentially the contribution to the balance of the year? And then would you expect for it to remain an outsized contributor to your group? I think we are positively surprised and remember the superstore business is a quarter of our total business at Loblaw, so that's meaningful for us, but what the team under the leadership of Frank Gambioli have done, how they have been more close to the customers, how they are starting to do things on the right-hand side, actually that delivered another 35 bps plus to the growth, it's helping.
Speaker Change: That's great color and then Youre superstores contributed nicely to sales in the quarter would you say this is a broader reflection on just consumer behavior overall or more specific to some of your assortment changes how you think about the balance.
The contribution for the balance of the year.
Speaker Change: And then what do you exactly which remain an outsized contributor to your growth rate.
Speaker Change: I think we have a positive surprise and remember the <unk> business is a quarter of our total business at local so that's meaningful for us, but what what the team under the leadership of offering can be only have done how they have.
Speaker Change: Essentially the contribution for the balance of the year.
Speaker Change: And then once you have the experts remain an outsized contributor to your growth rate.
Speaker Change: Be more be more closer to customers. How they are starting to do things on the right hand side exited that delivered another 30 to 35 bps plus two to the growth. It's helping remember we are really really focusing on on.
Speaker Change: No I think I think we have a positive surprise and remember the superstore business as a quarter of our total business at loblaw, So that's meaningful for us but.
Speaker Change: What are what the team under the leadership of run can be only have done how they have.
Speaker Change: On value, we making small small tweaks to the business, then and probably that some of it was what we see.
Speaker Change: Be more be more closer to customers. How they are starting to do things on the right hand side actually that delivered another 30 35 bps plus two to the growth. It's helping remember we are really really focusing on on value, we are making small and small tweaks to the business end and probably that some of it but what we're seeing.
Speaker Change: With the board yesterday.
Speaker Change: Walking our Milton stall in there what's the best Super saw work I've ever had a really really felt optimistic off after that that will just always hearing lots of customers are gauging engaging in our deals with testing some things like the PTO go where the customers can do like the spin and when certain categories certain products, which get.
Unknown Executive: Remember we are really, really focusing on value, we're making small tweaks to the business and probably that's some of it, what we're seeing.
Unknown Executive: I was with the board yesterday walking our Milton store and that was the best superstore walk I've ever had. I really, really felt optimistic after that walk. The store was heaving, lots of customers engaging in our deals, we're testing some things like the PCO Go, where customers can do the spin and win on certain categories, certain products, which gets them around our entire store.
Speaker Change: With the board yesterday.
Speaker Change: Walking our Milton stall in there what's the best Super solid work I've ever had a really really felt optimistic after that that wall. Just always hearing lots of costumers are gauging and engaging and all deals with testing some things like the PTO go well where customers can do like the spin and when certain categories certain products, which get.
Speaker Change: Some around on <unk> also but I think what we do is starting to help in the superstores and also as well.
Speaker Change: Great. Thanks, so much good luck guys.
Speaker Change: Okay.
Speaker Change: Your next question comes from Michael Van <unk> with TD Cowen. Your line is now open.
Speaker Change: Some around the onto highest also but I think what we do is starting to help in the superstores and also as well.
Michael Van: Hi, there.
Speaker Change: So just looking at your food revenues they are up five 8% and I think you said.
Unknown Executive: Thanks so much. Good luck, guys.
Speaker Change: Great. Thanks, so much good luck guys.
Speaker Change: Okay.
Michael Van East: Your next question comes from Michael Van East with TD Cowen. Your line is now open. Hi there. So just looking at your food revenues up, they're up 5.8%. And I think you're, you're saying your sales are up three and a half. So there's a 2.3% delta. Your square footage growth is only at 1.9. So is the performance of these new stores It's difficult to say whether it's better than the average, but it's doing at least as well as we expected when we are making the business cases for each of them. And of course, the store in the U.S., the T&T store there, is also in the mix and contributing well, which is also something we will see when we open the six stores that Richard talked about and we have planned to add a few more to the test.
Michael Van: Their sales were up three and a half so there is a two 3% delta there.
Speaker Change: Your next question comes from Michael vanished with Gd Cowen. Your line is now open.
Speaker Change: Square footage growth was only up one 9%.
Michael: Hi, there.
Michael: So just looking at your food revenues that they're up five 8% and I think you're in your same store sales were up three and a half. So there's a 2.3% delta there I guess square footage growth is only up one nine.
Speaker Change: As the performance of these new stores.
Speaker Change: Better than the average.
Speaker Change: It's difficult to say, whether its better better than the average but its doing.
Speaker Change: It's doing at least as well as we expected when we are making the business cases for each of them and of course of course.
Speaker Change: As the performance of these new stores.
Speaker Change: Other than the average.
Speaker Change: So in the U S to TNT store. There is also is also going to make sense and contributing well.
Speaker Change: It's difficult to say, but its better better than the average but its doing.
Speaker Change: It's always something we will see when we opened six stores that Richard talked about and we have planned to open to add a few more too.
Speaker Change: It's doing at least that's what as we expected when we are making the business cases for a place to them and of course across the store in the U S. The TNT store. There. It's also it also makes it and contributing well, which is always something we will see when we opened the six stores that Richard talked about and we have plan to them to add a few more too.
Speaker Change: The test so yes, they're doing about one example would be that it's a small store that we opened that at Richmond III downtown Toronto.
Speaker Change: It's doing twice as much as we expected and Thats only on the <unk>.
Speaker Change: 9880, 9000 square square feet.
Speaker Change: Two of the test so yes, they're doing but I want. One example would be that it is more store that we opened that at Richmond III downtown Toronto.
Unknown Executive: So yes, they're doing well.
Unknown Executive: One example would be that it's a small store that we opened at Richmond Street, downtown Toronto. It's doing twice as much as we expected, and that's only on 8,000, 9,000 square feet, just showing how much our customers, they love the great offers that they can get at a hard discount and customers are looking to get that cheap offer. So I think overall, yes, it's doing as expected and some stores even much better. Yeah, we're very happy with our 20 new stores opened to date. Like I just need to mention one too, we've opened a Maxi in St.
Speaker Change: Just showing how much our customers that they love the great offers that they can get it get it.
Speaker Change: It's doing twice as much as we expected and that's only on a 9008 89000 square foot square feet.
Speaker Change: <unk> and customers are looking to get to get that Chiba offline. So so I think overall, yes, it's doing as expected in some stores, even even much better yes, we're very happy with our 20, new stores opened to date like I just need to mentioned went too low we've opened at Maxine St last week.
Speaker Change: Just showing how much our customers that they loved the way it offers that they can get it get it to the.
Speaker Change: The hottest calling them and customers are looking to get to get that Chiba offline. So so I think overall, yes, it's doing as expected in some stores, even even much better yeah. We're very happy with our 20, new store opened today like I just need to mentioned one tool we've opened up vaccines late last week.
Speaker Change: And the store is already doing 50% higher than our planned sales. So so definitely.
Speaker Change: We see discount resonating with customers and it's showing up in <unk>.
Unknown Executive: Adèle last week and the store is already doing 50% higher than our planned sales. So definitely, we see discount resonating with customers and it's showing up in like not insignificant sales. Thank you, that helps a lot.
Speaker Change: Like.
Speaker Change: And the store is already doing 50% higher than our planned sales. So so definitely.
Speaker Change: Not insignificant sales growth.
Speaker Change: Okay. Thank you that helps a lot.
Speaker Change: You had an improvement in your opex rate despite the ramp up in your.
Speaker Change: We see discount resonating with customers and it's showing up in the in light.
Speaker Change: And your store count as you add another 60 stores in the back half of this year and accelerated.
Speaker Change: Not insignificant sales growth.
Speaker Change: Okay. Thank you, yes that helps a lot and yeah, yeah yeah.
Unknown Executive: And you had an improvement in your OPEX rate, despite the ramp up in your your store count as you add another 60 stores in the back half of this year and accelerate Do you see Loblaw being able to maintain the OPEX rate as it is? Or, and if so, how would you, you know, where are the other areas or what are the other levels you'd like? The answer to that is yes, like we've mentioned that our outlook was to have stability in the SG&A rate for the year and that's what we're seeing despite the ramp up that's coming over the coming months.
Speaker Change: Do you see or do you see <unk> being able to maintain the opex rate as it is art.
Speaker Change: An improvement in your Opex rate, despite the ramp up in your.
Speaker Change: And your store count as you add another 60 stores in the back half of this year and accelerated.
Speaker Change: And if so how would you what are the other areas are what are the other levels levers you're pulling on yes.
Speaker Change: Yes, the answer to that is yes, like we've mentioned that our outlook was to have stability in SG&A rate for the year end and Thats. What we are seeing despite despite the ramp up that that's coming over the coming months.
Speaker Change: Do you see or do you see a lot about being able to maintain the opex rate as it is art.
Speaker Change: And if so how would you you know where are the other areas are what are the other levels levers you're pulling on yeah. The answer to that is yes, like we've mentioned that our outlook was to have stability in SG&A rate for the year end and that's what we are seeing despite the despite the ramp up that that's coming over the coming months.
Speaker Change: Okay, and what are the some of the offsets Richard that.
Richard Dufresne: To help.
Richard Dufresne: Grant that from going up with the new strategy, we've discussed over the year like we always put in place.
Richard Dufresne: <unk> to be relentless on costs and those plans implemented last year are allowing us to cover the.
Unknown Executive: And what are some of the offsets, Richard, to help prevent that from going up with the new stores? As we've discussed over the years, we always put in place plans to be relentless on costs, and those plans implemented last year are allowing us to cover the increased costs that we're seeing on new stores and the ramp-up of our new DC. And so we have plans in place for next year as well. So cost is a part of our strategy. So remember, our strategy is to grow with hard discount, to grow with choppers, to grow with TNT, and then really be hard-focused on cost, so over time that cost can be diluted.
Speaker Change: Okay, and one of the some of the offsets Richard that.
Speaker Change: To help.
Speaker Change: Prevent that from going up with the new strategy, we've discussed over the year like we always put in place.
Richard Dufresne: The increased costs that we're seeing on new stores and the ramp up of our UDC and so we have plans in place for next year as well so cost is a part of our Saturday. So remember Australia is two.
Speaker Change: Plans to to be relentless on costs in those plans implemented last year are allowing us to cover the.
Richard Dufresne: To grow with <unk> to grow with us to grow with TNT, and then really be be hopped focused on costs. So over time that cost can that can be dilutive, but of course opening new stores and the DC at a little bit of extra cost and Thats why we are redeploying those those initiatives.
Speaker Change: The increased costs that we're seeing on new stores and the ramp up of our new D. C and so we have plans in place for next year as well. So cost is a part of all our Saturday. So remember all Australia is too.
Speaker Change: To grow with hottest them to grow with each other as to grow with TNT and then really be a b hopped focused on costs. So over time that cost can that can be dilutive, but of course opening new stores and the D. C as a little bit of extra cost and that's why we are where we're deploying those are those initiatives.
Speaker Change: Mike as we've discussed is to showcase stability gross margin stability in SG&A rate and have our topline be the driver of earnings and so that's what you saw in Q1, that's what you saw in Q2 and that's what we see for the rest of the year.
Unknown Executive: But of course, opening a bit of new stores and the DC adds a little bit of extra cost, and that's why we are deploying those initiatives. You know, our plan, Mike, as we discussed, is to showcase stability in gross margin, stability in SG&A rate, and have our top line be the driver of earnings. And so, so that's what you saw in Q1. That's what you saw in Q2. And that's what we we see for the rest of the year. Great, thank you.
Speaker Change: Glenn and Mike as we've discussed is to showcase stability in gross margin stability in SG&A rate and all of our top line be the driver of hurting and so so that's what you saw in Q1 and that's what you saw in Q2 and that's what we see for the rest of the year.
Speaker Change: Great. Thank you.
Speaker Change: Your next question comes from Jimmy Chen with BMO capital markets. Your line is now open.
Jimmy Chen: Hi, good morning, Thanks for the question.
Speaker Change: I guess I just wanted to revisit the block.
Speaker Change: Alright, thank you.
Speaker Change: Consumer dynamic in how you're performing.
Tamy Chen: Your next question comes from Tamy Chen with BMO Capital. Your line is now. Hi, good morning. Thanks for the question. I guess I just wanted to visit the broader consumer dynamic. in their … You know, I noticed you're saying your conventional banners have been improving. It doesn't seem to be taking anything away from the momentum in your discount banners. So specifically, I'm wondering about the buy Canadian dynamic there. How would you characterize that trend now versus Q1, both prepping for local products but also Canadian retail?
Speaker Change: Your next question comes from Tami, Chen with BMO capital markets. Your line is now open.
Speaker Change: I noticed youre, saying your conventional banners has been improving.
Speaker Change: We'll be taking anything away from the momentum so specifically I'm wondering about the.
Speaker Change: Hi, good morning, Thanks for the question.
Speaker Change: Yes, I just wanted to revisit that.
Speaker Change: The consumer dynamic and how you're performing.
Speaker Change: Dynamic there.
Speaker Change: How would you characterize that now versus Q.
Speaker Change: Sure, you're saying your conventional banners have been improving.
Paul: Q1, Paul.
Speaker Change: I hope in a way.
Speaker Change: Local time.
Speaker Change: So specifically I'm wondering about the goodbye.
Speaker Change: Thank you Catherine.
Speaker Change: So so Q.
Speaker Change: Dynamic.
Speaker Change: Q2, compared to Q1 is a big step up.
Speaker Change: How would you characterize that now we're seeing Q1 well.
Speaker Change: When we look at the effect, which is the Nielsen data and compare our sales of Canadian products compared to the rest of the industry. We are several percentage points higher higher than average and then.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah.
Unknown Executive: So Q2 compared to Q1 is a big step up and when we look at the facts, which is the Nielsen data and compare our sales of Canadian products compared to the rest of the industry, we are several percent points higher than average and then of course it's not for me to judge who are doing better and who are doing worse. But at least we are we are doing much better than than the industry So so we are we feel we feel very good on on the by Canadian sentiment One thing I want to add, Tamy, like if you if you remember, last year in Q2, we had some weakness in same store sale, particularly in our conventional business.
Speaker Change: So so Q.
Speaker Change: Q2, compared to Q1 is a it's a big step up and when we look at the facts, which is the Nielsen data and compare all saves of Canadian products compared to two director of the industry.
Speaker Change: Of course, it's not for me to judge who are doing better on who are doing we are doing worse.
Speaker Change: But at least we are we are doing much better than the industry. So so we feel we feel very good.
Speaker Change: We are several percent points high up higher than average and then of course, it's it's not for me to judge who are doing better on who we're doing it we're doing worse.
Speaker Change: By Canadian sentiment.
Speaker Change: One thing I want to add I mean, like if you. If you remember last year in Q2, we had some weakness in same store sales, particularly in our conventional business. So.
Speaker Change: But at least we are we are doing much better than the industry. So so we are we feel we feel very good on the on the <unk>.
Speaker Change: Obviously, comping that and so that's that is helping our comp and conventional but despite that our absolute performance has been better than the plan.
Speaker Change: By Canadian sentiment.
Speaker Change: One thing I want to add that I mean, like if you. If you remember last year in Q2, we had some weakness in same store sales, particularly in our conventional business. So we were obviously comping that and so that's that is helping our comp in conventional but despite that our absolute performance.
Unknown Executive: So we're out, we're obviously comping that. And so that's that is helping our comp in conventional, but despite that, our absolute performance has been better than than planned. Okay, got it.
Speaker Change: Okay got it and my follow up is are you seeing any change or any slight uptick in promotional intensity in the industry.
Speaker Change: Been better than the plan.
Speaker Change: A bit more price rollbacks by competitor. So just wondering if you have got some trying to regain some of that.
Speaker Change: Okay.
Speaker Change: Okay got it and follow.
Unknown Executive: And my follow up is, are you seeing any change or any slight uptick in promotional intensity in the industry? I think we have recently seen a bit more price rollbacks by competitors. So just wondering if that's them trying to regain some lost tonnage during this whole buy Canadian aspect. The promo pen is more or less the same as it has been for some time now. And of course, different players in the industry have different tactics. Some do more everyday low price, some do more promotions. But what we do, like having a great combination of good shelf price and good promotions, that's what we believe will resonate well with customers.
Speaker Change: Follow up is are you seeing any change or any slight uptick in promotional intensity in the industry.
Speaker Change: Tonnage during this whole backbone.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Promo the promo opinion is it's more or less.
Speaker Change: I'm seeing a bit more personal backed by a competitor. So just wonder if you have got some trying to regain.
Speaker Change: The same as it has been for some for some time now and of course different.
Speaker Change: I'm lost tonnage trying to call back.
Speaker Change: Different different players in the industry have different tactics, some do more everyday low price and do more promotions, but but what we do like having a great combination of good show for us and good promotions. That's what we believe will resonate well with customers and over the quarter, we have invested more begging them all back into a price and that's why.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: The promo the promo opinion is it's more or less.
Speaker Change: The same as it has been for some for some time now and of course different.
Speaker Change: Some different players in the industry have different tactics, some do more everyday low price and do more promotions, but but what we do like having a great combination of good show for us and good promotions, that's where we believe will resonate well with customers and over the quarter. We have invested more begging them all back into a face and that's why our.
Speaker Change: Sure.
Speaker Change: That's also why our margin is stable and we will continue to be sharp on oil prices. So we can compete both on shelf and on promotions.
Unknown Executive: And over the quarter, we have invested more back in shelf price. And that's why our... That's also why our margin is stable and we'll continue to be sharp on our prices so we can compete both on shelf and on promotions.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Your next question comes from John <unk> with Scotiabank. Your line is now open.
Speaker Change: That's also why our margin is stable and we will continue to be sharp on oil prices. So we can compete both on shelf and on promotions.
Speaker Change: Thank you very much good morning, I wanted to move to the drug side and I Wonder if you can address the recent loss of patent protection for <unk> and will be and what the implications are for loblaw and obviously, there's lots of unknowns here, but historically this has been these types of transitions have been positive for EBITDA.
Speaker Change: Okay.
Speaker Change: Thank you.
John Zamparo: Your next question comes from John Zamparo with Scotiabank. Your line is now open. Thank you very much. Good morning.
Speaker Change: Your next question comes from John <unk> with Scotiabank. Your line is now open.
Speaker Change: Thank you very much good morning.
Unknown Executive: I wanted to move to the drug side.
John: Wanted to move to the drug side and I Wonder if you can address the recent loss of patent protection for is that they can with Obi and what the implications are for loblaw and obviously, there's lots of unknowns here, but historically this has been these types of transitions have been positive for EBITDA dollar generation and I Wonder if you are confident.
Unknown Executive: And I wonder if you can address the recent loss of patent protection for Ozempic and Wacobi and what the implications are for Loblaw. And obviously, there's lots of unknowns here. But historically, this has been these types of transitions have been positive for even the dollar generation. And I wonder if you're confident that that's the case here as well. And are there any other relevant metrics?
Speaker Change: For generation and I Wonder if you are confident that that's the case here as well and are there any other relevant metrics you can share.
Speaker Change: It's a very relevant question.
Speaker Change: And for US, it's a little bit too early to say because we are in the middle of it and we are trying now to discover how thats going to play out we don't know yet, but one thing. We know is that this is great news for neutral customers I think when prices come down, which we believe they will I think we will have more custom.
John: That's the case here as well and are there any other relevant metrics you can share.
Unknown Executive: It's a very relevant question and for us it's a little bit too early to say because we are in the middle of it and we are trying now to discover how that's going to play out. We don't know yet, but one thing we know is that this is great news for customers. I think when prices come down, which we believe they will, I think we will have more customers that will be able to utilize this GLP-1 drug, more customers who need it and also more customers who can't afford to stay on it today. So, good news for customers and I believe good news for us as well.
Speaker Change: Yeah, it's a very relevant question.
John: And for Us, it's a little bit too.
John: Early to say because we are we are in the middle of it and we're trying now to discover how that's going to play out we don't know yet, but one thing. We know is that this is great news for neutral customers I think when prices come down, which we believe they will I think we will have more customers that will that will be able to utilize.
Speaker Change: Most of that will.
Speaker Change: We'll be able to utilize.
Speaker Change: These are the LPN DLP, one drop more customers, who need it and also more customers who can afford to stay on it today. So so good news for customers and I believe the good news for us as well.
John: Yes.
John: These are the LPN the APLP, one drop more customers, who need it and also more customers who can afford to stay on it today. So so good news for customers and I believe they are good news for us as well.
Speaker Change: Okay understood and then sticking with the pharmacy.
Speaker Change: On the clinics can we get an update on how these are performing in terms of revenue generation and you saw a meaningful acceleration in script count in the quarter on a same store basis I Wonder. If you think the clinics are contributing to that and traffic results at shoppers.
Unknown Executive: Okay, understood.
John: Okay understood and then sticking with the pharmacy on the clinics can can we get an update on how these are performing in terms of revenue generation and you saw a meaningful acceleration in script count in the quarter on a same store basis I Wonder. If you think the clinics are contributing to that and traffic results at shoppers.
Unknown Executive: And then sticking with the the pharmacy on the clinics, can we get an update on how these are performing in terms of revenue generation? And you saw a meaningful acceleration in script count in the quarter on a same store basis. I wonder if you think the clinics are contributing to that and traffic results? Yeah, they are. The clinics, they're helping and they're building more scripts than the stores with our clinics. And they're also giving a little bit more sales to the entire store, so helping the trips and helping the backer side, but that's minimal. But within the pharmacy care, they are helping and they are delivering up to the plans that we have.
Speaker Change: Yes, they are the kleenex.
Speaker Change: They are helping them Theyre building more scripts and then dispose with our clinics and Theyre also giving a little bit more.
Speaker Change: Most sales sort of impact also so helping helping the trade show and having your basket size, but thats minimum but within that within the pharmacy care. They are helping in there.
John: Yeah. They are the clinics.
John: They are there helping them. They are they are building more scripts, then and then the stores with our with our clinics and Theyre also giving a little bit more.
Speaker Change: They're delivering up to two other plants that we have and by the end of the year. We are still planning on adding in auto I think 76. So we would be just over 250 at the end of this year, but it's also worth to remember that in all of our 1800 pharmacies. We are we are providing.
John: Most of them sort of in past also so helping helping the trade show and having their basket size, but thats minimum but within that within the pharmacy care. They are helping and they are they are there.
John: They're delivering up to two other plants that we have and by the end of the year, we were still planning on adding another I think 76. So we will be just over 250 at the at the end of the year, but it's also worth to remember that in all of our 1800 pharmacies. We are we are providing.
Unknown Executive: And by the end of the year, we're still planning on adding another, I think, 76, so we will be just over 250 at the end of the year. But it's also worth to remember that in all our 1,800 pharmacies, we are providing primary care, but in the clinics, customers feel more confident that they have more privacy and they are just doing the job that we expected them to do. So we feel really, really pleased with that and we will continue building more clinics.
Speaker Change: Primary care, but in the clinic customers feel more confident that that they have more privacy and they are just doing doing the job that we expected them to do so so we feel really pleased with that and we will continue building amongst any.
John: The primary care, but in the clinics customers feel more confident that that they have more privacy and they are just doing doing the job that we expected them to do so so we feel really pleased with that and we will continue building marketing.
Speaker Change: Okay, that's great I'll pass it on thank you.
Speaker Change: Thanks.
Speaker Change: Your next question comes from Vishal <unk> with National Bank. Your line is now open.
Speaker Change: Hi, guys. Thanks for taking my questions with respect to the <unk>.
Unknown Executive: That's great.
Speaker Change: Okay, that's great I'll pass it on thank you.
Unknown Executive: I'll pass it on.
Unknown Executive: Thank you.
John: Thanks.
Speaker Change: <unk>, Canada and Anniversarying some of the media comments last year relating to two grocers.
Vishal Shreedhar: Your next question comes from Vishal Shreedhar with National Bank. Your line is now Thanks for reading my questions. With respect to the Buy Canada and an anniversary, some of the media comments last year relating to growth. Are you able to isolate the benefit on your comp or give us some sense? And should we expect that benefit if you agree there is some on a year-over-year basis to fade as we go? Very hard to measure, Vishal, like very hard. But yeah, we were up against a little bit of a weaker comp, as you said before, in quarter two, but that's all we can say.
Speaker Change: Your next question comes from Vishal <unk> with National Bank. Your line is now open.
Speaker Change: Are you able to isolate the benefit on your comp or give us some sense and should we expect.
Speaker Change: Hi, guys. Thanks for taking my questions with respect to the the by Canada, and and Anniversarying. Some of the media comments last year relating to the two grocers.
Speaker Change: That that benefit if you agree there is some on a year over year basis to fade as we go through the year.
Speaker Change: Very hard to measure Michelle.
Speaker Change: Are you able to isolate the benefit on your comp or give us some sense and should we expect.
Speaker Change: Very hard to measure but.
Speaker Change: Yeah, we were up against a little bit of a weaker commerce as we said before in quarters over that that's all we can say and we still have good momentum in quarter two quarter three things I think if you look on an absolute basis lyddite, that's what you should focus on.
Speaker Change: That debt that benefit if you agree there is some on a year over year basis to fade as we go through the year.
Speaker Change: Very hard to measure Michelle.
Speaker Change: Hard to measure.
Speaker Change: Yeah, we were up against a little bit of a week of Columbus, as we said before.
Speaker Change: Sure.
Speaker Change: All of our businesses are doing well. So so that's what we're really really focused on and the noise in comp like it's a bit noisy but.
Speaker Change: In quarter, two but that's that's all we can say and we still have good momentum in quarter two quarter. Three I think you look on an absolute basis. That's what you should focus on like we were.
Unknown Executive: And we still have good momentum in quarter two. Yeah, quarter three.
Unknown Executive: I think you look on an absolute basis, that's what you should focus on. Like, we were, all of our business are doing well. So that's what we're really fully focused on. And the noise and comp like is, it's a bit noisy, but the business is definitely heading in the right direction. Okay. With respect to East Quillenbury, you said in the preliminary comments that it was ahead of schedule. So is 40% still the target by end of year in terms of capacity? I don't have that number off hand, but the number I do have in on hand is like, we're going to be shipping over 6 million more cases than planned by year-end based on the trend we're in.
Speaker Change: The business is definitely heading in the right direction here.
Speaker Change: Okay.
All of our businesses are doing well also so that's what we're really really focused on and the noise in comp like isn't it a bit noise noisy but.
Speaker Change: With respect to east preliminary.
Speaker Change: You said in the preliminary comments that it was ahead of schedule. So it's 40% still the target by end of year in terms of capacity utilization.
Speaker Change: The business is definitely heading in the right direction here.
Speaker Change: Okay.
Speaker Change: I don't have that number off hand, but that number I do have an on hand is.
Speaker Change: With respect to our east preliminary.
Speaker Change: You said in the preliminary comments that it was ahead of schedule. So it's 40% still the target by end of year in terms of capacity utilization.
Speaker Change: We're going to be shipping.
Speaker Change: Over 6 million more cases than planned by year end based on the trend we're in.
Speaker Change: I don't have that number offhand, but the number I do have an on hand is like.
Speaker Change: Our budgeted costs are going to be down.
Speaker Change: From budget Bye Bye bye.
Speaker Change: We're gonna be shipping.
Speaker Change: <unk> of dollars.
Speaker Change: Over 6 million more cases than planned by year end based on the trend we're in and our budgeted costs are going to be down.
Speaker Change: And so and just to just to cite our vendor veteran veteran has told US that this has been.
Unknown Executive: And our budgeted costs are going to be down from budget by some millions of dollars. And so, and just to cite our vendor, Vitron, Vitron has told us that this has been the smoothest and fastest ramp-up that they've seen in any of their facilities globally. So, all of that and the way it's ramping up is giving us confidence to launch ambient earlier than expected. And so, I suspect, yes, the number you have in your head is definitely going to be higher. But the beauty of this is because the faster we ramp up, the faster we realize benefits.
Speaker Change: Smooth. This then fastest ramp up that <unk> seen in any of their facilities globally. So so all of that and the way it's ramping up is giving us confidence to two.
Speaker Change: From budget Bye bye bye, some millions of dollars and and so and just to just to cite our vendor veterans Medtronic told us that this has been.
Speaker Change: To launch ambient earlier than expected and so so I suspect yes.
Speaker Change: Smoothing and fastest ramp up that they've seen in any of their facilities globally. So so all of that and the way, it's ramping up is giving us confidence to.
Speaker Change: The number you have in your head definitely going to be higher but the beauty of this is because like the faster we ramp up the more the faster we realized benefits. So so we're excited because that's going to help us in 'twenty six.
Speaker Change: To launch ambient earlier than expected and so so I suspect yes that.
Speaker Change: The number you have in your heads, it's definitely going to be higher but the beauty of this is because like the faster we ramp up the more the faster we realized benefits. So so we're excited because that's going to help us in 'twenty six.
Speaker Change: This facility will be processing more and more volume than expected.
Speaker Change: Okay, and with respect to the real estate growth.
Unknown Executive: So, we're excited because that's going to help us in 26 as this facility will be processing more and more volume.
Speaker Change: And in.
Speaker Change: And the pressure associated with <unk> I know in the past.
Speaker Change: This facility will be processing more and more volume than expected.
Speaker Change: People have asked about quantifying those pressures.
Speaker Change: Sidestep those questions. So maybe another way to ask it is when should be anniversary that pressure than expected real estate growth to start contributing on a P&L basis on an earnings basis, and the mtc pressure too.
Unknown Executive: And with respect to the real estate growth and the pressure associated with East Gwillimbury, I know in the past... know what people have asked about quantifying those pressures. sidestep those questions. So maybe another way to ask it is, when should the anniversary that pressure and expect the real estate growth to start contributing on a P&L basis and the earnings basis and the DC pressure? you also. For sure, once we cycle that, it's definitely going to help because opening 80 stores brings drag, ramping up a DC brings drag, so the drag of that DC will be over sometime next year.
Speaker Change: Okay, and with respect to the real estate grows and the and and the pressure associated with equal and Barry I know in the past you know people have asked about quantifying those pressures and.
Speaker Change: Also inflect.
Speaker Change: You've sidestepped those questions. So maybe another way to ask it is when should be anniversary that pressure and expect our real estate growth to start contributing on a P&L basis in the earnings basis N D. M D C pressure too.
Speaker Change: For sure once we cycle that is definitely going to help because opening 80 stores brings brings drag ramping up at EC brings drag. So so the drag of the of that DC will be over sometime next year. The drag from new store will no longer be a drag because we're opening more or less the same number of stores.
Speaker Change: To also inflect.
Speaker Change: Yeah.
Speaker Change: For sure once we cycle that is definitely going to help because opening 80 stores brings breakage drag ramping up at EC brings drag. So so the drag of the of that D. C will be over sometime next year the drag from new store will no longer be a drag because we're opening more or less the same number of stores next year.
Speaker Change: Next year.
Speaker Change: And so that will help and and but yes.
Speaker Change: Opening and UDC and Caledon with volatile tomorrow.
Unknown Executive: The drag from a new store will no longer be a drag because we're opening more or less the same number of stores next year, and so that'll help. But we'll be opening a new DC in Caledon, we call it Tullamore. We started construction on that one, and so that will create another drag, but that one is later, it's more in 28. But before that, we're going to start to see the benefits.
Speaker Change: We started construction on that one and so so that will create another drag but that's one is later it's more in 2008, so so but along before that like where we're going to start to see the benefits of that.
Speaker Change: And and so that'll help and and but.
Speaker Change: The opening a new DC in Caledon was solid telemark.
Speaker Change: Started construction on that one and so so that will create another drag but that's one is later its more than 28, so so but along before that like where we're going to start to see the benefits of that.
Speaker Change: Thank you.
Speaker Change: Your next question comes from Chris <unk> with Deutsche Bank. Your line is now open.
Speaker Change: Hi, good morning.
Speaker Change: When you said that Q3 is off to a good start I'm wondering for food retail is it fair to say the comps so far in Q3 similar to Q2 would that be a fair.
Speaker Change: Thank you.
Chris Lee: Your next question comes from Chris Lee with Desjardins. Your line is now open. Oh, hi, good morning. Um, when you said that Q3 was off to a good start, I'm running for food retail. Is it fair to say that the comp so far in Q3 is similar to Q2? Would that be a fair?
Chris <unk>: Your next question comes from Chris <unk> with Deutsche Bank. Your line is now open.
Speaker Change: Comment.
Chris: Alright, good morning.
Speaker Change: Because of the.
Speaker Change: When you said that Q3 is off to a good start I was just wondering for food retail is it fair to say that the comps so far in Q3 similar to Q2 would that be a fair.
Speaker Change: <unk>.
Speaker Change: Is that we had versus Q2 of last year.
Speaker Change: Year comp in Q3, and food will be slightly lower than what we have in Q2, but still very healthy and our top line growth will also be very healthy.
Chris: Comment.
Unknown Executive: Because of the ease that we had versus Q2 of last year, COMP and Q3 in food will be slightly lower than what we have in Q2, but still very healthy and our top line growth will also be very healthy. Okay. That's helpful. I'm sorry if I missed it earlier, but the right-hand side impact on com this quarter, was it minimal or? Negligible. Like, it's only six stores, like, mathematically. But overall, it's 35 bps. So overall, it's not the new six stores, but that's the way that we treat and we trade the right-hand side. So we're not just waiting for those new stores.
Chris: Because of the AR.
Chris: Is that we had versus Q2 of last year, we added last year comp in Q3, and food will be slightly lower than what we have in Q2, but still very healthy and our top line growth will also be very healthy.
Speaker Change: Got it okay. That's helpful I'm.
Speaker Change: Sorry, if I missed it earlier, but.
Speaker Change: The right hand side impact on comp this quarter was it minimal.
Speaker Change: Negligible, it's only six stores like mathematically.
Chris: Got it okay. That's helpful I'm.
Speaker Change: But overall, it's 35 bps. So overall, it's not the new <unk> stores, but thats the way that we treat and we trade the right hand side. So we're not just waiting for those new stores. We are also applying you a new trade mechanics to all of the store. So if we get some early learnings on flex inventories then we try to deploy that.
Chris: Sorry, if I missed it earlier, but.
Chris: The right hand side impact on comp this quarter was it minimal.
Chris: Negligible like it's only six stores like mathematically.
Chris: But overall, it's 35 bps. So overall, it's not it's not the new <unk> stores, but that's the way that we treat and we trade the right hand side. So we're not just waiting for those new stores. We also applying you a new trade mechanics to all of the store. So if we get some early learnings on flex and choice then we try to deploy that.
Speaker Change: So that's some of that's helping so we cant wait three years four years until we have.
Unknown Executive: We're also applying new trade mechanics to all of the stores. So if we get some early learnings on, for example, toys, then we try to deploy that to all stores. So some of that's helping.
Speaker Change: Have finished all 180 <unk> results, but what I think is very encouraging for us since more numbers and it still takes some time for us to deploy but thats. How we have managed to take some of the learnings from the first pilot in superstores and bring them back to the local laws in the SaaS and the <unk>.
Chris: So that's some of that's helping so we can wait three years four years until we have that.
Unknown Executive: So we can't wait three years or four years until we have finished all 180 super stores. But what I think is very encouraging for us, still small numbers and it still takes some time for us to deploy, but that's how we have managed to take some of the learnings from the first piles in super stores and bring them back to the Loblaws and the shares and the Yig stores. And we're seeing some really, really good numbers on the non-food there in the first two, three stores. Again, early days, but... It's good to see.
Chris: Have finished all 180 <unk> results, but what I think is very encouraging for us since more numbers and it still takes some time for us to deploy but thats. How we have managed to take some of the learnings from the first pilot in superstores and bring them back to the local laws in the SaaS and the <unk>.
Speaker Change: And we're seeing some really really good numbers on.
Speaker Change: The non food there in the first two or three stores again early days, but.
Speaker Change: It's good to see yes, just to be precise I wasn't referring to like the impact of the EU.
Chris: And we're seeing some really really good numbers on.
Speaker Change: Renovation on our six stores if you look at the normal drag we get from right hand side like gets yet in the 30 to 35 basis points.
Chris: The non food there in the first two or three stores again early days, but.
Chris: It's good to see yeah, just to be precise I wasn't referring to like the impact of the new renovation on our six stores. If you look at the normal drag we get from right outside like yes, yes, it's in the 30 to 35 basis points.
Speaker Change: Getting just getting better than last year.
Unknown Executive: Yeah, just to be precise, I was referring to, like, the impact of the new renovation on our six stores. If you look at the normal drag we get from right-hand side, like, yeah, it's in the 30, 35 basis. Getting better than last year. Okay, that's great.
Speaker Change: Okay. That's great and then maybe just a quick follow up on the early discussion around sort of what's driving the tonnage growth in conventional I remember attending a recent industry conference and I think it was discussed that there is a lot of sort.
Chris: Getting just getting better than last year.
Speaker Change: Sort of blocking and tackling the enhancement you guys are making fresh multicultural natural organic foods are all kind of contributing to growth I'm. Just wondering if you can elaborate a little bit more on sort of what's driving the tonnage growth in conventional beyond by Canadian or or sort of the industry factors that were already discussed.
Speaker Change: Okay. That's great and then maybe just a quick follow up on that the early discussion around sort of what's driving the tonnage growth in conventional I remember attending a recent industry conference and I think it was discussed that there's a lot of sort of blocking and tackling. The enhancement you guys are making fresh multicultural natural organic foods are all kind of contributing to growth.
Unknown Executive: And then maybe just a quick follow up on the early discussion around sort of what's driving the tinnish growth in conventional. I remember attending a recent industry conference, and I think it was discussed that there's a lot of sort of blocking and tackling the enhancement you guys have made in fresh, multicultural, natural organic foods are all kind of contributing to growth. I just wonder if you can elaborate a little bit more on sort of what's driving the tinnish growth in conventional beyond the bi-Canadian or, or sort of the industry factors that were Fresh and Multicultural, that would be the two drivers, and of course we're still doing well with our control bank across centers, center of stores, but except for that, it's actually healthy and it's all over the piece, it's not one category, but Multicultural and Fresh Special Produce, that's one of the areas where we're doing very well.
Speaker Change: Press and multicultural that.
Speaker Change: That would be the two drivers and of course, we are still doing doing well with our with our control then of course into center stores, but except for that is that.
Speaker Change: If you can elaborate a little bit more on sort of what's driving the tonnage growth in conventional beyond by Canadian or or sort of the industry factors that were already discussed.
Speaker Change: Actually healthy and it's all it's all over the piece, it's not one category, but multicultural and fresh special project with one of the areas, where we don't over.
Speaker Change: Fresh and multicultural that's that would be the two drivers and of course, we are still doing are doing well with our with our control brands across center center store, but except for that is actually healthy and it's all it's all over the piece, it's not one category, but multicultural and fresh special project since one of the areas, where we're doing very well.
Speaker Change: Yes, again to be precise.
Speaker Change: To be precise Chris.
Speaker Change: <unk>.
Speaker Change: Conventional as as a sector is still trending a little bit negative and but our tonnage growth versus our peers is really really good and like it is at the absolute tonnage growth is.
Unknown Executive: Okay, yeah, again, to be precise, again, to be precise, Chris, like, like, conventional as a as a sector is still trending a little bit negative. And but our tonnage growth versus our peers is really, really good. And like the absolute tonnage growth is, is all coming Okay, that's helpful.
Speaker Change: Yes, I guess it would be precise again to be precise Chris Lake.
Speaker Change: Like a conventional as a as a sector.
Speaker Change: Is all coming from discount.
Speaker Change: Got it Okay. That's helpful and maybe just a couple of quick ones on Shoppers' beauty category continues to be to be very strong and I think you've made some investment in technology recently.
Speaker Change: Trending a little bit negative and but our tonnage growth versus our peers is really really good and like you said that the absolute tonnage growth is.
Speaker Change: I am wondering sort of what's driving that growth.
Speaker Change: Is all coming from discount.
Speaker Change: Got it Okay. That's helpful. Maybe just a couple of quick ones on shoppers computer category continues to be to be very strong and I think you've made some investment in technology recently.
Unknown Executive: Maybe just a couple of quick ones on shoppers. Your beauty category continues to be to be very strong. And I think you've made some investment in technology recently. Again, wondering sort of what's driving that that that growth and it's the base sort of exiting is that having any meaningful impact on Yeah, so our investment in technology, I think we're only in a few stores now, and that will help us over time, but it'll take a little bit of time, so that's too early to judge. I think the bay, we got some benefit last year, and of course we are going to get some benefit this year as well.
Speaker Change: Base sort of exiting is that having any meaningful impact on that front.
Speaker Change: Yes, so so our investment in technology I think we own in a few stores now and that will help us over time, but it will take a little bit of time so that.
Speaker Change: I am wondering sort of what's driving that growth and it's the base sort of exiting is that having any meaningful impact on that front.
Speaker Change: Too early to too.
Speaker Change: So Josh I think debate, we got some we got some benefit last year and of course, we are we are going to get some some benefit this year as well and you are right. It is overall the prestige the hopper the beauty category Thats, helping the growth in Charlotte food has also turned into be positive, but it still is.
Speaker Change: Yes, so so our enrichment technology I think we own in a few stores now and that will help us over time, but it will take a little bit of time, so that that's too early to.
Speaker Change: Josh I think debate, we got some we got some benefit last year and of course, we are we are going to get some some benefit this year as well and you are right. It is overall the prestige the hopper the beauty categories. That's helping the growth in Chavez food is also turned into be it would be positive, but it says.
Speaker Change: Fill marginal project. So it's been driven by locally to hire at a higher margin and mountain categories.
Unknown Executive: And you are right, it is overall the prestige, the harbor, the beauty categories that's helping the growth in shoppers. Food has also turned in to be positive, but it's still marginal positive, so it's been driven by locally the higher margin categories, and the market in general for beauty and prestige is just a good market to be in, it's growing over and above the food. And customers, it seems like they are not as price sensitive when they are buying fragrances compared to when they are buying food, and I normally say that if we are 10 cents off a loaf of bread, then customers, they won't forgive us, but they don't discuss fragrances.
Speaker Change: The market in general for beauty and prestige is just it's just a good market to be and it's growing over and above above the food.
Speaker Change: It's a marginal positive.
Speaker Change: It's been driven by locally the higher the higher margin margin categories.
Speaker Change: And customers. It seems like they are not as price sensitive and they are buying fragrances compared when they are buying food an anomaly to say that we are.
Speaker Change: The market in general for beauty and prestige is just it's just a good market to be and it's growing at over and above above the food.
Speaker Change: If your attention.
Speaker Change: <unk> spreads than customer they won't forgive us, but they don't discuss fragrances, but thats also because our office our redemption offers in.
Speaker Change: And customers it seems like they are not as price sensitive when they are buying fragrances compared when that when they are buying food and I normally say that if we are if.
Speaker Change: And shove us when they can go in and trade points like 30 times the points or whatever then we are the most competitive player in beauty in Canada. So that's that's resonating really well and continues to do so for our customers.
Speaker Change: If we had 10% off of a loaf bread then customers they won't forgive us, but they don't discuss fragrances, but that's also because our office I'll redemption offers.
Unknown Executive: But that's also because our offers, our redemption offers in shoppers, when they can go in and trade points, like 30 times the points or whatever, then we are the most competitive player in beauty in Canada. So that's resonating really well, and continues to do so for our customers. Yeah, over the last few months, Chris, like we've seen slowly building momentum in front store, and that momentum, we're seeing it again and Okay, that's great.
Speaker Change: And shove us when they can go in and trade points like 30 times a points or whatever then we are the most competitive player in beauty and in Canada. So so that's that's resonating really well and continue to do so for our customers.
Speaker Change: Over the last few months, Chris like.
Speaker Change: We've seen slowly building momentum in front store and that momentum we're seeing it again in Q3.
Speaker Change: Okay, that's great.
Speaker Change: Last question, just maybe a follow up on the discussion around the <unk>.
Speaker Change: Over the last few months, Chris like.
Speaker Change: It's becoming a generic is it fair to say just the gross profit dollars that you're in.
Speaker Change: We sleep, we seen slowly building momentum in front store and that momentum we're seeing it again in Q3.
Speaker Change: On the generic version of those drugs should be higher than.
Speaker Change: Okay, that's great and my very last question, just maybe a follow up on the discussion around the G. L. P.
Unknown Executive: And my very last question, just maybe a follow up on the discussion around the GLP drugs becoming generic, is it fair to say just the gross profit dollars that you earn on the generic version of those drugs should be higher than on the independent drugs? Is that fair to say? I think it's probably what could happen, but we actually don't know right now, because we're still looking at it, we're still negotiating, we're still talking to, and we don't know whether those players right now, whether they want to lower their prices, and it's something that of course we're on top of, but it's too early to tell.
Speaker Change: On the independent drugs is that fair.
Speaker Change: I think it's.
Speaker Change: It's becoming a generic is it fair to say just the gross profit dollars that you are not just a generic version of those drugs should be higher than.
Speaker Change: It's probably about.
Speaker Change: What could happen, but we actually don't know right now because we have said we're still looking at it when we're still negotiating with them talking to and we don't know where those those players right now where do they want to lower their prices.
Speaker Change: On the independent drugs is that fair.
Speaker Change: I think.
Speaker Change: I think it's.
Speaker Change: It's probably a Walmart Walmart about what could happen, but we actually don't know right now because we have said we're still looking at it when we're still negotiating with them talking to and we don't know where those those tradeoffs right now where do they want to lower their prices and it's.
Speaker Change: Its something Thats of course, we on top off but it's too early too early to tell.
Speaker Change: Okay. That's great. Thank you very much.
Speaker Change: Well, we shall I got your number to your question, 40% becomes 60% with advancing the volume in these preliminary.
Speaker Change: Its something Thats of course, we on top off quite as too early too early to tell.
Unknown Executive: That's great. Thank you very much. Oh, Vishal, I got your number.
Speaker Change: Okay. That's great. Thank you very much.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one.
Speaker Change: Well, we shall I got your number to your question, 40% becomes 60% with advancing the volume in these preliminary.
Unknown Executive: To your question, 40% becomes 60% with advancing the volume in these Ladies and gentlemen, as a reminder, should you have a question, please press star 1. Your next question comes from.
Speaker Change: Our next question comes from.
Speaker Change: Mark Petrie with CIBC. Your line is now open.
Mark Petrie: Hey, good morning, I just had one follow up question actually just with regards to the square footage growth outlook.
Speaker Change: Okay.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question. Please press star one.
Speaker Change: Your next question comes from.
Mark Petrie: I heard Richard say that you expected about 80 stores again next year, although I think I heard pair earlier in the call say something about accelerating impact, but maybe that was just from the ramp up on stores.
Mark Petrie: Mark Petrie with CIBC, your line is now open. Good morning. I just had one follow up question, actually, just with regards to the square footage growth outlook. I think I heard Richard say that you expected about 80 stores again next year. Although I think I heard Per earlier in the call say something about accelerating impact, but maybe that was just from the ramp up on stores, the previously opened new stores. If in 2026, or just generally going forward, and specifically wondering about discount and the mix of urban versus smaller market stores. Thanks.
Speaker Change: Mark Petrie with CIBC. Your line is now open.
Speaker Change: Sure.
Speaker Change: Hey, good morning, I just had one follow up question actually just with regards to the square footage growth outlook.
Speaker Change: Think I heard Richard say that you expected about 80 stores again next year, although I think I heard pair earlier in the call say something about accelerating impact, but maybe that was just from the ramp up on source.
Mark Petrie: Previously opened new stores, if you could just clarify that and then any commentary just about the mix of stores.
Mark Petrie: In 2026, or just generally going forward and specifically wondering about discount and the mix of urban versus versus smaller market.
Speaker Change: Previously opened new stores, if you could just clarify that and then any commentary just about the mix of stores.
Mark Petrie: Stores.
Mark Petrie: Okay. It's still early days, though we have not life finalize the full numbers as I was saying in the zone. So we'll come back to you later as to this specific.
Speaker Change: In 2026, or just generally going forward and specifically wondering about discount and the mix of urban versus versus smaller market.
Speaker Change: Stores.
Mark Petrie: The number of store for next year as to the makeup of it I think it is going to look a lot like this year like.
Unknown Executive: Okay, it's still early days, though we have not like finalized the full numbers. So, I was saying in the zone of, so we'll come back to you later as to the specific of the number of store for next year. As to the makeup of it, I think it's going to look a lot like this year, like Shoppers Remarked and discount stores. There's going to be a few tenty stores and we might be able to slip one conventional or two in there, but like that should be what you should expect to see in 2026.
Speaker Change: Okay. It's still early days, though we have not liked finalize the full numbers I saw I was saying in the zone. So we'll come back to you later as to the specific of the.
Mark Petrie: Shoppers drug Mart and discount stores is going to be a few 20 stores and we might be able to slip one conventional or two in there, but like that that should be what you should expect to see.
Speaker Change: The number of star for next year as to the makeup of it I think it's going to look a lot like this year like a.
Mark Petrie: In 2026, but we will get back to you in a few quarters and the ramp of I was alluding to is just that I think previously, but I've been told me is that I.
Speaker Change: Shoppers drug Mart and discount stores, that's going to be a few tens of stores and we might be able to slip one conventional or two in there, but like that that should be what you should expect to see in 2026, but we are we will get back to you in a few quarters and the ramp up I was alluding to is just that I think.
Mark Petrie: I expect it to see the second year comp sales to be much higher than the normal comp sales and by measuring the first 60 stores that we've opened the past year. We are seeing that we're seeing that those second year like for like as I call. It they're doing very well.
Unknown Executive: But we will get back to you in a few quarters. Yeah, and the rainbow I was alluding to is just that. I think previously when I've been talking is that I... I expected to see the second-year comp sales to be much higher than the normal comp sales. And by measuring the first 60 stores that we have opened the past year, we're seeing that. We're seeing that those second-year like-for-like, as I call it, they're doing very well.
Speaker Change: Previously, but I've been told me is that I.
Speaker Change: I expect it to see the second year comp sales to be much higher than the normal comp sales and by measuring the first 60 stores that we've opened the past year. We are seeing that we're seeing that those second year like for like as I call. It they're doing very well.
Mark Petrie: That was what I was talking about.
Speaker Change: Understood. Okay. Thanks, and then maybe just to clarify Richard just with regards to or follow up.
Speaker Change: The performance of this discount small format discount stores.
Unknown Executive: So that was what I was talking about. Understood. Okay, thanks.
That was what I would say it was talking about.
Speaker Change: Opened so far.
Speaker Change: Understood. Okay. Thanks, and then maybe just to clarify Richard just with regards to or follow up.
Unknown Executive: And then maybe just to clarify, Richard, just with regards to or follow up, the performance of this discount, small format discount stores that you've opened so far, would that be relatively consistent for those urban markets versus those more rural markets that you've also been opening stores in? I would say that the urban stores, we are really, really pleased. We haven't really tested rural stores yet. I think we had the first one opening very soon. And there are lots of potential to go into rural, but it takes a little bit longer time to plan, to build, because we had many more options downtown, the big cities, where we could just go into existing buildings.
Speaker Change: Would that be relatively consistent for those urban markets versus those more rural markets.
Speaker Change: You've also been opening sorting.
Speaker Change: The performance of this discount small format discount stores that you've opened so far.
Speaker Change: I would say that the urban force.
Speaker Change: Really really pleased we haven't really tested rural stores, yet I think we had the first one opening very soon and there are lots of potential to go into the ROE into rule, but it takes a little bit longer time to plan to build.
Speaker Change: Would that be relatively consistent for those urban markets versus those more rural markets.
Speaker Change: You've also been opening circle.
Speaker Change: I would say that the urban force.
Speaker Change: Really really pleased we haven't really tested rural stores, yet I think we had the first one opening very soon and there are lots of potential to go into the rural into rule, but it takes a little bit longer time to plan to build.
Speaker Change: Because we have many more options downtown the big cities wherever it can just go into existing building. So it takes more time to test the rule.
Speaker Change: I do say as optimistic as I have been.
Speaker Change: When I when I when I came here a couple of years ago ongoing into two rule, but we haven't really tested enough yet to us we'll let you know.
Speaker Change: We have many more options downtown in the big cities wherever we can just go into existing building. So it takes more time to test the rule, but I I do stay as optimistic as I have been when I when I. When I came here a couple of years ago ongoing into two rule, but we haven't really tested enough yet to us we'll let you know.
Unknown Executive: So it takes more time to test the rural. But I do stay as optimistic as I have been when I came here a couple of years ago on going into rural.
Suburb in is one where we're asking ourselves questions. So so so we need to do some more work there, but like definitely urban.
Unknown Executive: But we haven't really tested enough yet to let you know. Suburban is one where we're asking ourselves questions, so we need to do some more work there, but definitely urban, where every site we can put our hands on, we're doing. Yeah, and suburban, we're only asking ourselves questions how big we're going to build them. We're not asking the question whether it works or not. So where a 10,000 square feet store works well urban, and probably also rural, then I think first indication is that we want to build them bigger in the suburban.
Speaker Change: Every every site we can put our hands on we're doing yes in suburban we own asking ourselves present, how big we're going to build them for asking a question, whether it works or not so well.
Speaker Change: Suburb in is one where our where we're asking ourselves questions. So so so we need to do some more work there, but like definitely urban.
Speaker Change: 10000, Traffics always relevant.
Speaker Change: But also a rule then I think first indication is that we werent building bigger into suburban.
Speaker Change: We're every every site we can put our hands on we're doing yes in suburban B I want to ask ourselves. The question, how big we're going to build them for asking the question, whether it works or not so well.
Speaker Change: Yeah understood. Okay. Thanks for all the comments all the best.
Speaker Change: Thank you.
Speaker Change: At 10000 graphics always where I live and probably also a rural than I think first indication is that we want to build a bigger into suburban.
Speaker Change: Your next question comes from Michael Van <unk> with TD Cowen. Your line is now open.
Michael Van: Yes. Thanks, I just wanted to ask about TNT because it seems like every store you open seems to blow the.
Unknown Executive: Yeah, understood. Okay, thanks for all the comments. All the best.
Speaker Change: Yeah understood. Okay. Thanks for all the comments all the best.
Unknown Executive: Thank you.
Speaker Change: Thank you.
Michael Van: Let off of your expectations and I know you have I think one coming this fall.
Michael Vannies: Your next question comes from Michael Vannies with TD Cowen. Your line is now open. I just wanted to ask about T&T because it seems like every store you open seems to blow the top lid off of your expectations. And I know you have, I think one coming this fall and you mentioned six confirmed locations in the U.S. with more planned. What, what are the key indicators you're looking for as you open up in the US to make you confident? to give you confidence that this is a banner that can actually. Yeah, I think we are, of course, we're looking for absolute sales.
Speaker Change: Your next question comes from Michael Van <unk> with TD Cowen. Your line is now open.
Michael Van: <unk> six confirmed locations in the U S with more plan, but.
Michael Van: Yes. Thanks, I just wanted to ask about TNT because it seems like every store you open seems to blow the.
Speaker Change: What what are the key indicators youre looking for as you open up in the U S to make you confident or to give you confidence that this is a banner that can actually be expanded more aggressively throughout the U S. Yes.
Michael Van: Let off of your expectations and I know you have well I think one coming this fall and you mentioned six confirmed locations in the U S with more plan, but.
Speaker Change: What what are the key indicators, you're looking for as you open up in the U S to make you confident or to give you confidence that this is a banner that can actually be.
Speaker Change: Yes, I think we are of course, we're looking for absolute sales in the first oil is so good and its.
Speaker Change: There then.
Speaker Change: Most of the supermarkets.
Michael Van: Expanding more aggressively throughout the U S. Yes.
In the U S to our knowledge.
And what we are seeing that it's really really encouraging is our is our offer in kitchen and bakery.
Michael Van: Yes, I think we are of course, we're looking for absolute sales in the first of all is so good and it's it's fair then.
Unknown Executive: And the first store is so good. And it's, it's better than far most of the supermarkets in the U.S. to our knowledge. And what we're seeing that really, it's really, really encouraging, it's our offer in kitchen and bakery. So with our commissary and the way that we have our recipes for T&T, what Tina tells me is that this is a big, big part of sales and much more in the U.S. than in Canada. So that's a big driver of footfall to our stores. So basically, sales and marketing and it's all holding up and actually much better than we expected.
Speaker Change: So with our commentary in the way that we we have our recipes for TNT.
Michael Van: Most of the supermarkets.
Michael Van: In the U S to our knowledge.
Speaker Change: Mattina Latina tells me is that this is this is a.
Michael Van: And while we have seen that really it's really really encouraging it's our it's our offer in kitchen and bakery.
Speaker Change: Big Big part of sales and much more in the U S than in Canada. So that's a big driver of footfall into our stores. So so basically sales and margin and is holding.
Michael Van: So with our commentary in the way that we we have our recipes for TNT.
Speaker Change: Mattina Latina tells me is that this is this is a.
Speaker Change: Holding up and actually much better than we expected. So we stay very bullish but again. It's early it's early days, it's one store only but we are we are so happy with the first stores that as we said we have approved six.
Speaker Change: Big Big part of our sales and much more in the U S than in Canada. So that's a big driver of footfall into our stores. So so basically sales and margin and its all holding up and actually much better than we expected. So we stay very bullish but again. It's early it's early days, it's one store.
Speaker Change: And we're going to extend the trial with a few more stores. So we don't lose time ramping ramping up.
Unknown Executive: So we stay very bullish, but again, it's early days, it's one store only, but we are so happy with the first stores that, as Richard said, we have approved six and we're going to extend the trial with a few more stores so we don't lose time ramping up. Yeah, and I think we need to add that the Canadian business is also very healthy. If you were to look at the absolute sales growth of TNT Canada, it's actually our most performing banner of the whole organization. And where we continue to fail miserably is in our ability to forecast the sales of these new stores.
Speaker Change: But we are we are so happy with the first stores that as Richard said, we have approved six and we're going to extend the trial with a few more stores. So we don't lose time ramping ramping up.
Speaker Change: Yes.
Speaker Change: We need to add that the Canadian business is also very healthy if you were to look at the absolute sales growth.
Speaker Change: TNT, Canada is actually our most performing banner on the whole organization.
Speaker Change: Yes.
Speaker Change: Where we continue to fail miserably in our ability to forecast the sale of the new stores, we systematically underestimate the sales.
Speaker Change: We need to add that the Canadian business is also very healthy if you were to look at the absolute sales drove.
Speaker Change: TNT, Canada, it's actually our most performing banner on the whole organization and where we continue to to fail miserably is in our ability to forecast the sale of the new stores, we systematically underestimate the sales all of the TNT we've opened so far.
Speaker Change: All the TNT, we've opened so far.
Speaker Change: So I guess, what I'm trying to figure out though is at what point, how many how many success stories.
Speaker Change: I have to have in these U S. New store openings for you to get confidence that this is <unk>.
Unknown Executive: We systematically underestimate the sales of all the TNT we've opened So I guess what I'm trying to figure out though is at what point, like how many, how many success stories You have to have a new. U.S. new store openings for you to get confident. I think if we have seen the first six works, then it will work everywhere.
Speaker Change: Italy transferable to other parts of the country.
Speaker Change: So I guess, what I'm trying to figure out though is at what point, how many how many success stories.
Speaker Change: I think if we had we've seen the first six works then it will work everywhere. So so so we are and if you ask Athena needed with the CEO of Tnt's Who's confident already now, but I think we need to we need to see five or six and then then we can we can talk to you about our plan how to how to accelerate.
Speaker Change: You have to have in these.
Speaker Change: New store openings for you to get confidence that this is actually transfer of balls to other parts of the country.
Speaker Change: I think if we have if we're seeing the first six works then it will work everywhere. So so so we are and if you ask Athena and he was the CEO of Tnt's Who's confident already now, but I think we need to have we need to see five or six and then then we can we can talk to you about our plan how to how to accelerate.
Unknown Executive: So we are, and if you ask Tina Liu, the CEO of TNT, she's confident already now, but I think we need to see five or six and then we can talk to you about how to plan, how to accelerate. There are no further questions at this time.
Speaker Change: Perfect. Thank you.
Speaker Change: There are no further questions at this time I will now turn the call over to Roy Macdonald for closing remarks.
Roy MacDonald: Thanks for your time. This morning, everybody. Let me know if you have any follow up questions and put a circle on your calendar for Wednesday November 12, when we will be releasing our Q2 results. Thanks, very much and have a great day.
Speaker Change: Perfect. Thank you.
Speaker Change: There are no further questions at this time I will now turn the call over to Roy Macdonald for closing remarks.
Roy MacDonald: I will now turn the call over to Roy MacDonald for closing remarks. Thanks for your time this morning, everybody. Let me know if you have any follow-up questions and put a circle on your calendar for Wednesday, November 12th, when we will be releasing our Q2 results. Thanks very much and have a great day.
Roy MacDonald: Thanks for your time. This morning, everybody. Let me know if you have any follow up questions and put a circle on your calendar for Wednesday November 12, when we will be releasing our Q2 results. Thanks, very much and have a great day.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating in assay. Please disconnect your lines.
Unknown Executive: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your line.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
Speaker Change: Okay.
Speaker Change: [music].