Q3 2025 Loblaw Companies Ltd Earnings Call

1.

Good morning, ladies and gentlemen, and welcome to the Loblaws Inc. Third quarter, 2025 results conference call at this time. All lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this, call, you require immediate assistance, please press star zero for the operator.

This call is being recorded on Wednesday, November 12th, 2025.

I would now like to turn the conference over to Roy MacDonald, Vice President, Investor Relations. Please go ahead.

Good morning, everybody. Welcome to the Loblaw companies. Limited third quarter.

2025 conference call.

As usual, I'm joined in the room this morning by pair Bank, our president and chief executive offer officer and Richard dafran our Chief Financial Officer. So, before we begin the call, I'll remind you that today's discussion will feature forward-looking statements which may include but are not limited to statements with respect to anticipated future results.

These statements are based on assumptions and reflect Management's, current expectations.

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 regulators.

Any forward-looking statements speak only of the date they were made. The company disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, other than 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 financial measure. And with that, I'll turn the call over to Richard.

Thank you, Roy, and good morning, everyone.

I'm pleased to report that we delivered another quarter of consistent financial and operational performance reflecting our ongoing focus on retail excellence, and our commitment to deliver value, quality, service and convenience to Canadians.

Topline growth continues to be very strong supported by the opening of 76 doors, over the past 12 months an increase in our retail square footage of 2%.

On a Consolidated basis, Revenue grew by 4.6%, reaching 19.4 billion.

Our drug retail business grew at 3.8%, and our food retail business grew at 4.8% in the quarter.

Adjusted ibida increased by 7.2% to 2.2 billion dollars and margin improved by 20 basis points to 11.4%.

Adjusted diluted met earnings per share grew by 11.3% to 69 cents and on a gap basis. Our net earnings per share increased by 4.8%.

In food retail we delivered higher sales traffic and basket growth. Once again driving significant tonnage market, share gains.

absolute sales outpaced same store sale by 280 basis points at 4.8%, reflecting our new store growth while our food, same Source, sale grew 2%,

the impact from the stores we opened. So far has been in line with expectations.

We continue to see positive momentum across key categories, specifically on the right-hand side of our source, notably in apparel, cosmetics, and HNE.

That said, Edwin's from Liquors specifically in tobacco and our exits from the optical business led to a net. 30 basis point negative impact, to same store sales this corner

Our Q3 internal CPI like food. Inflation was lower than Canada's grocery. CPI of 3.6%.

Our average article price data, or AEP, which reflects our customers' actual basket mix and includes non-food items, not included in the CPI basket, was also lower than CPI.

Our lower internal inflation metrics, demonstrate that Canadians, who shop our stores or finding more value.

Cost increase requests from large Global vendors continue to Trend, well, above historical levels.

In response, we're pushing back harder than ever to ensure that any increases we accept are Justified.

Our heart discount banners continue to deliver strong sales growth based on consumers ongoing focus on value.

Momentum continues to build across the hard discount stores. We added to our network with conversions and new builds, proving that our strategy is resonating very well with Canadians.

We also pleased with the momentum and strong performance in our conventional stores which improved tonnage market share within their conventional sector.

This quarter, we announced that spec Savers would be opening 111 locations within Loblaw stores to replace our Theodore and Pringle Optical business.

While the exit from the Theodore and Pringle business coupled with our new agreement, with Specsavers is expected to generate approximately approximately 10 million dollars in annual run rate earnings accretion.

In drug retail, absolute sales increased 4.3%, excluding the impact of the sale of wellwise while same Source, sale, grew 4%.

Pharmacy and Healthcare Services. Grew, same store, sales by 5.9% driven by broad strength and prescription and new healthcare services.

Our specialty drug prescription. Growth continued to lead our Pharmacy performance.

Patients, continue to respond positively to the convenience and expanded level of primary care. We offer to our more than 1800 Pharmacy, across the country, including our 209 in store clinics.

We're on track to reach our Target of 250 in store clinics opened across Canada by the end of this year.

Our front store same store, sells continue to improve growing 1.9% reflecting the ongoing strength of our Beauty category.

This more than offset the impact from the exit of certain Electronics categories in the prior year, which will no longer be a headwind to same-store sales after the fourth quarter.

We continue to be pleased with the underlying strength, profitability and sales, momentum of Shoppers Drug of Mark front store business.

Online sales in the fourth quarter increased by 18% across our retail businesses.

Delivery continues to lead growth in the online grocery Channel and we continue to be pleased with our online sales penetration in both Food and pharmacy.

Our retail, gross margin improved 20 basis points led by drug retail reflecting improvements in shrink and both drug and food.

Food food. Trading margins. Remain stable.

Our SG rate as a percentage of sales was stable with operating leverage from higher sales, offsetting incremental costs related to the opening of new stores and the successful ramp up of our new automated distribution facility in East Glenn. This new DC continues to ramp up ahead of plan costs, remain. Lower than budgeted, and we are on track to ship. Significantly more cases than planned this year.

We have begun fulfilling orders in our and in section which is ramping up a full quarter ahead of time.

We're making considerable progress on the construction of our second automated DC in South Carolina. Ontario.

The project is on schedule.

In the quarter retail adjusted ebit, dog. Grew 6.8% and IBA margin agrees by 20 basis, point to 11.1%.

PC financials Revenue increased 5.5% driven by higher sales in our mobile shop and higher insurance commission income.

For PC money, spending and savings accounts are performing very well customer account. Deposits increased by 174 million in a quarter.

This increase in deposit is evidence of strong customer engagement and helps us lower our bank's funding costs.

The bank's adjusted earnings before tax, increase by 13 million, or 36.1% primarily driven by higher Revenue, lower operating costs and favorable impact from our ecl provisions.

We remain very comfortable with the risk. Profile of the bank's portfolio. We continue to take a conservative position in our loss provisioning with a strong and very well capitalized balance sheet.

Free cash flow from the retail segment was 2 325 million in the quarter.

And in the quarter, we repurchased 450 million dollars worth of common shares.

A balance sheet remains strong and we continue to improve our key return metrics.

Our return on Equity is 24.8% and our return on capital is 11.9%.

Looking ahead to Q4 while it's still early in the quarter. We are confident our results will be in line with our financial framework.

Reflecting our strong performance here to date. We now expect fully adjusted, EPS growth, during increased slightly from high single digits into the low double digits, excluding the impact of the 5030 week.

Our assets are well positioned, we are executing well, and we are investing for the future, all while delivering consistent operational and financial performance.

I will now turn the call over to Pair.

Thanks, Richard, and good morning, everyone.

I'm really pleased with our third quarter performance. We continue to generate strong revenue growth.

This while, increasing our spending to support the opening and ramp up of our new stores. The Accelerated transition to our new 1 million square ft DC. And the lapping of some real estate gains from, uh, from last year. This is a clear demonstration of the strength of our business and our ability to deliver consistent Financial results.

With our broad footprint, we know many Canadians are looking for opportunities to get the most out of their budgets in this challenging economic environment. And we believe it's our responsibility to deliver the quality value service and convenience across every corner of our business.

Every day, we fight to earn our customers' business. Where is that true competitive pricing? Meaningful promotions through omnichannel service or personalization? We also have our PC Optimum program.

As a result more Canadians shop, our stores and we generated 857 million in additional Revenue.

And Drug retail, we delivered another quarter of positive momentum in our front door sales, our proceeds cosmetic continue to be very strong supported by fragrance and Derm categories.

Due to categories, remain strong.

In pharmaceutical Healthcare Services, we saw ongoing strength in acute and chronic scripts and in our specialty drug and new prescribing Services categories, continue to deliver strong double-digit growth.

in drug retail, we enhancing our Omni Channel presence offering our customers more choice and speed

We're growing delivery through Skip and now Uber Eats and scaling our buy online, pick up and store Network to cover. 750 stores by early next year.

This delivers even greater convenience supporting servers customers, promise to help make lives easier.

Across the country. We are now open 12, new pharmacies and 55 new Pharmacy clinic this year, providing expanded the scope of care service to Canadians.

In food. Retail, same starts having was up and back, growth was positive, this contribute to turn its market share gains.

Our heart banners also continue to outperform same store, sales growth and grow. The majority of our absolute growth and the core of your own 19 Maxey and Northfield stores.

With 16 of these being small format stores. We are bringing heart discount to underserved, Urban progress, as well as suburban communities.

We see this as an investment to shrink our position in what is a long-term consumer Trend toward value.

similar, we saw higher frame store, sales growth rates in our Superstar banners,

Within the right hand side, we saw strong growth from our dear merchandise, refresh. And we are also showing very positive results. From the right hand side, inspired refills in our medium sized stores

10 to 12.

Is following the removal of Canadian countertops in September. The related costs increases and corresponding to sea levels were removed from ourselves as we sold through the inventory.

So in this time, we received a lot of positive feedback that our efforts were helping our customers make informed decisions. As always from every challenge comes opportunity.

More customers are discovering quality made in Canada products so we continue to support these customers and have now solved and onboarded more than 200 new Canadian vendors since the start of this year.

We actually believe that this is good for both our customers, good for Canadian producers and manufacturers, and good for the economy.

Our digital sales roles remain very strong and our weekly engage users hit an all-time high as we continue to differentiate ourselves by enhancing customer experience with more personalization and choice.

We're excited to have begun launching, Uber Eats across our Network.

This provides customers with optionality across, third-party delivers.

Providers, which already include skip in orders.

And some of you may have noticed something new and uh on on your last uh shop, 3 of our DJ Noel stores have implemented PCO go.

This is a new feature and is designed to provide a faster serving experience in. Enabling customer to scan grocery as they Shop with a real time. Estimated total of the bill and streamlining, their checkout process.

of course, this has only been less than a week, but we are seeing a 90% oet

for the customers who have, who have tried this this new feature. So, uh,

So feel free. Feel free to check it out. It's it's great. We're pleased with the Strategic Foundation that we have built. And I'm excited about the opportunities. That lie ahead. The strength and diversity of our business provides differentiation unique growth opportunities and allows us.

To deliver consistent operational and financial result.

How long the term growth ambitions?

Fail as a service is is a great example. Today, we are leveraging our existing supply chain delivery infrastructure enabling us to rent out our empty trucks as a return from the store delivery routes.

Next year, this business is expected to generate, more than 200 million in ebit. Delivering another year of more than 20% growth.

Similarly, our Advanced media business is expected to generate over 100 million in evenings here.

So we scaling this business with the rollout of more in store, digital screens and partnership with static cache.

Customers like the immediacy and relevance of inso screens.

Where it's a beauty trip. Seasonal promotions are greater product worth worth trying. The content feels personal and useful in the exact moment. It matters.

So advertisers value the ability to reach 4 million plus in store service every single day at the point of decision with measurable impact.

A visual example of this growth opportunity is that you will start seeing more screens with new content in our stores, over the coming months.

And we will pleased with the Strategic Advanced Advantage, uh, our reach first party data provides. It seems every week we're implementing a data-driven solution that allows us to better understand and serve our customers improve our operations. Make smarter decisions and deliver even more relevant offers. For example, we are now aggravating customer data to guide

Had an optimized speech planning for our store Network.

This initiative is driving a material sales lift and it ensures each store is better reflects. The needs and preferences of his local customers. Our data assets will be a key differentiator for Loblaws, continued success and growth.

These examples plus our PC optimal loyalty program.

And our expanding e-commerce business support, higher growth higher margin business opportunities, that should have a flywheel effect across everything that that we that we do this year, next will margin important milestone in our future growth.

We're well on our way, uh, in the construction of the second 1 million square foot DC in South Carolina and identical twin to the east grilling bird DC, that we are currently ramping up. We remain encouraged by the success of our new small form at discount stores and the new Clinic equipped pharmacist and tomorrow November 13th, we will be excitedly watching the the new opening of our second TNT in in the Seattle area. And by the end of next year, we will, we expect to have another 5 TT to also open in Washington and California.

So, I said that it remains anchored by unmatched call asset excellence in retail operations and consistent operational financial performance.

So, looking ahead.

You're well, positioned to, uh, to serve the everyday needs of Canadians today. And, and in the future,

I'm excited about the launch of our holiday insiders. Last week, this has been a holiday tradition for more than 40 years in Canada, our team. And I do take great pride in showcasing Innovative products, Crafters who Canadians can celebrate and share the spirit of the season with family and friends.

I just invite you to try my my personal favorite this year. I know it's probably always ice cream. So it's the the Santa Mills and cookie ice cream that has been received very well by by our customers.

I also like to call out the amazing generosity that happens every day in all of our grocery stores across the country. I'm very proud to share that. Each of our stores is partnered with at least 1, local school, who help support support the students with their access to nutritious food. Removing a significant barrier to learning this year. The PC children charity met its long-term goal of feeding 1 million Canadian children.

Thanks for the support of our customers and colleagues PC children's charity is the nation's largest service and direct to school food program. Where 100% of all customer donation goes to feed the students in their own community.

I'd like to thank all members of the Loblaw team for once again, the tremendous efforts.

Your passion and hard work are what allows us to consistently deliver the quality value and service that uh, that people in your community, relies on every single day. Finally,

uh, our clothes by letting you know that uh that we have successfully completed the global search for the, for the key role of uh, president for Sho stock market.

So I'm very pleased to announce the appointment of Greg as this for as president, Greg will be joining us January 26th. Next year, following his transition from major school, where he's currently group CEO, he's officially take office responsibilities on March 16th after a thorough onboarding process.

Growth and performance digital Innovation and operational excellence Shabbat has a well established strategy and leadership team. And I'm highly confident with uh with cragars will help take the organization to uh, to the next level in making this announcement. I would also like to acknowledge the significant contribution of David marwell interim president of Chaos.

And head of our technology and analytics group. David, trim himself into this interim, role with great energy and enthusiasm, and has made it from tremendous difference here. Of course, support Gregor's transition until he starts his official accountabilities on on March 16th. And also continued his role as Executive Vice President and technology and analytics as well as supporting several key Enterprise initiatives. Yes. That was the end of my script. I know it was long but I just had so much I wanted to share with you with that. I'll now open the floor for questions.

Thank you, ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star key followed by the number 1 on your touchtone phone, you will hear a prompt that your hand has been raised. Should you wish to decline from the polling process? Please press the star key followed by the number 2, if you are using a speaker-phone, please lift the handset before pressing any Keys 1 moment, please while we assemble the queue.

Your first question comes from Irene Mattel of RBC Capital markets. Please go ahead.

Thanks and good morning everyone. A lot of great color there. Thank you. Um, I was wondering if we could, please just start with what you're seeing in terms of consumer Behavior. Uh, same store, sales, growth of of 2% in food, was it was consistent with q1 but admittedly a deceleration from the Q2 level. So just wondering below the surface, you know, how should we be thinking about that? And how should we think about the growth rate on a go forward basis? Thank you.

Thank you. Good question on, uh, on consumer Behavior. I would say that we are seeing uh, seeing more of a more of the same, so our our plumbing penetration stays high, it's higher than last year, but it's actually not higher than, uh, than than quarter 2. Customers are still, uh, are still shopping more and more and heart discount, but we are not seeing it accelerating. So basically, we are we are seeing, uh, we're seeing more of a, more of the same with regards to, uh, to customer sentiment. At least that's, uh, that's what we see. See right now, as we, as we speak, our, our food, our food, or our grocery, uh, same store sales number.

Just trust me. It's it's continued to be an important number number for us even though that the more sales uh, will be coming from our new stores and will help fuel our our long-term long-term performance and

Also, I think it's a, it's a, it's important. Also to look at our our same store sales in in uh in a third of our business uh in in showers because there we saw the drops in store sales at 3.8 and

Our front store sales at at, at 1.9 which was the best caller in in in 9 in 9 quarters. And uh, adjusting for, uh,

For the, uh, for the electronics. Then we are about 3% point of of growth in in, in, in in front store. So, so I think that that's how I see it. So I'm pleased with our Q3 3 Performance. As we are heading into to Q4, but maybe you have some, some more you would reach out on on this. Yeah, I mean to specifically, if you look at same

Health and Q3 we need to go back to 2024, okay? As you know, uh, we had, uh, we hit some bumps in Q4 in the first half towards the end of the first half, and so internally. We had to play some catch-up to be able to recover, uh, over that bump. And so that led us to uh to be a somewhat more uh, more aggressive in the second half last year to be able to deliver on our market share objectives.

So now we're comping through that. So uh, so that's simply, uh, us company over what we did last year. Having said all that, I think what's key for us is if you look at our total food sales, growth of 4.8% and our internal inflation, Which is less than 3%,

Understand how to navigate that because they're not just buying the same as the last year. So they're buying more, they're buying more chicken as, as an example and you'll see the same in other categories. If Barry goes up then then they'll buy the cheaper barriers or not, buying barriers and buying and buying something else. So that's that's how customer they they continue to uh to navigate through inflation and and keeping their their cars, slow and of course as well shifting to discount for for some of our customers.

That's great. Thank you very, very much and just switching to Shoppers. Um, can you talk to how we should think about, um, the sustainability of that, uh, RX print as we lacked sort of, you know, year-over-year of of continuous? Sort of. Let's call it mid higher mid single digits same store sales,

Yeah, Arena. We the specialty drug category continues to grow quite significantly. We're going to see the introduction of generic drugs in that sector next year, which will affect the top line. But if we look historically on the introduction of generic drugs in general for our business, it's actually been a positive because we get more more more volume and, uh, and so that ends up generating more dollars of profits for the organization. Yeah, and maybe when the prices come down, we will see, we will see sales could include could increase as, as well. So, so what we know right now, uh, it looks like we will continue the trend that we have seen in the past.

That's great. Thank you and I'll be sure to try the the Santa milk and cookie ice cream. It's really good Irene.

Your next question comes from Michael Van alst of TD Cowen. Please go ahead.

I just want to follow on, um,

some of Irene's questions, but

We talked about market share gains in both discount and full service. And I think it's it's clear to a lot of people what you're doing in discount and uh, how you're trying to gain share. Uh, but on the full service side where you're not, really adding stores. How are you gaining tan and share? What are you? What would you say are the uh, is behind those gains? Yeah. So so just to be exactly. When we say this, every call, make a the the conventional Channel Mark share is going down, but we're doing better than our peers.

And so we we we see that very clearly, so we're doing better than our peers in uh in uh in conventional. And obviously we're doing better than peers on discount.

Yeah and we have we have a a number of initiatives in our conventional business. So uh so in our Super Source as as you know we are working on on the right hand side, adding more Brands into uh into clothing and food. We are increasing. Our Multicultural assortment, you're making a better better service shopping trip. We're working more with our digital offers. Uh, so we're doing a lot when it comes to our our Market, the recent

Alpacinos or Sears or Loblaws. There we are. We are giving customers more value in reform for better service, better products, but also better pricing. So, we're finding that sweet spot of combining value with, uh,

with, with the quality that we that we serve in our, in our conventional banners,

Yeah. And and net Network just to be very clear. Net Network organic when you add both of them together, we're gaining share. Yeah. And we shouldn't, we shouldn't forget that TNT. It's not in. We don't know about this year, but we know that, if we're adding adding that it's not in the nilson data, then it's even more. Because TNT is, is still a growth of the Indian for us both in Canada. And of course, what we're seeing in in the US,

Okay, so conventional. I think we've heard in past quarters that conventional was growing a little bit, but it sounds like this quarter you’re seeing it hasn’t, it isn’t growing, but you’re just getting share. It’s the same. We’ve been saying the same thing. Michael has been saying the same thing.

Conventional channel. It's not growing but the same Pace as the others and and what we're doing better than our peers.

yeah, but is it is it it's not growing at the same Pace, but is it growing

Yes, okay, yes, yes, yes, yes. It's going. Okay. Sales growth in Market are up. Same Source sale in markets are growing. Yes.

Okay, perfect. Thank you.

The next question comes from Mark karten of

good morning. Thanks so much.

Questions. So to start you guys called out strengthen your Superstore business, what was the contribution from these formats any bigger or smaller relative to last quarter?

So, uh, no. I think it's more, it's more the same and, uh, our, our Super Source have a very, very strong, strong position, especially especially in the west where it's, it's, it's driving, uh, some some significant sales and, and the DM, so, especially in the, in the home. So, so toys we're doing very well, uh, home and, and also on all the clothing, and that, of course, helping on our on our overall, overall margin. So, so in general Superstars, is is a good, uh, good fit to us. And now, we also. So, so, so much division. They, they combined our Atlantic Superstars, and our, our superstars in the west into 1 Super Source from coast to coast. So now we have 180 of those Superstars which of course we will try to get more of having having those having those calm combined.

Okay, great. And then just on the drug retail side, what is your learning spend thus far from the Shoppers locations that have offered some of the expanded Health Services capabilities. Have you found that it leads to higher spend in the front door as well and and just any quantification of possible on the left. Thank you. Yeah. Overall overall they're doing better and uh by the end of this year, we will have uh made our Target of having 250 years of service rock em with the with the, with clinics. So, of course, right now, it's mostly Alberta and it's Nova Scotia and then then we are we are seeing how much more we can do in another provinces as uh, they open up for for Moscow. So so we really pleased with

The forms, we're seeing then, of course it will, it has a high.

Great. Thanks so much. Good luck guys.

Your next question comes from Mark Petri of CIBC. Please go ahead.

Yeah, thanks uh, good morning. I just wanted to follow up maybe on competitive landscape just to clarify. Um,

Do you think the comment of gaining tonnage market share holds on a same store basis? Um, or would you say it's more stable there and then second, I know CPI is is noisy. So when you do your price benchmarking would that suggest that Loblaw is an outlier with an internal inflation below CPI. Or do you think that

Um, that's essentially you know consistent across the industry.

I think uh uh, I think I don't know what the others have, so I can't comment, but uh, I can tell you like, from a, from a market share perspective, year to date uh where uh, where uh, we're gaining share, and we're ahead of, uh, of our plans for last year. I don't

Know.

We to, uh, to finish, uh, a, a very strong. So, yes, we are. We are, uh, we are getting share. I think on, on the market, I, for me, it stays very rational. It's, it's a good competitive market to the benefit of of customers here here in Canada. But it also stays stays rational,

Yeah. Okay, thank you and then on shoppers. Uh, also 2 questions just based on the behavior that you're seeing. How would you characterize consumer confidence? I know you called out strength and beauty, um, maybe just Behavior within that category. If there's any, if there's any color and then second, you know, what is the impact bin of your shift, in your smir approach, on price and promo? Is there any, uh, adjustments to how your positioning on that? Uh, today?

I think the consumer sentiment again as I said before. It's, it's more the same. And we are seeing some, uh, some good growth in in fragrance and, and in the Derm category. So, so Cosmos might not buy as many, big electronic items, but, uh, but they buy, they they definitely continue to buy to buy fragrance and and do them. So so we are seeing a, a good, a good strong up list and that's helping our overall sales. And, uh, in in, in the way that we promote in, in shabas, um, we have we have lower lower prices, uh,

We started in November last year and we continue to do so, but we have not really changed the way that we trade in showers. Yeah, business and shoppers are pretty steady. Yeah. Like, uh, steady as she goes.

Yeah. Okay, fair enough. And then, just the last 1, maybe just on by Canadian. I think last quarter, you would commented that it accelerated from q1. How would you characterize it as a factor in Q3? And what do you think the momentum is on that? Yeah, I know. So after after the, the test has gone. So we in Canada, have a retailer to test and prices on Direct imported products from the US, has gone down to, to normal. And, of course, we are, we are seeing some customers who are going back to those products that they, they love. Now that they are much cheaper than than they were. And that will have some impact on on Canadian, Canadian sales overall Canadians. Just love to buy Canadian products. And that's also why we uh, we have an added another, another 200 suppliers, uh,

Was before because of lowering prices of those, uh, products from from the US.

Yeah, understood okay. Appreciate all the comments, all the best.

Thank you.

Your next question comes from John zaro of Scotia Bank. Please go ahead.

Thank you. Good morning. Uh, I wanted to ask about private label penetration and and I wonder if you could share the the Delta of growth rates in private label versus National brands in Q3 compared to recent quarters. And and is there any, uh, change in terms of response you're seeing from National Brands to try to support tonnage growth?

We uh, we like growth both in National Brands and in in control lines. So we like growing with uh, with both right now, we are seeing that, uh, our no name, especially in our in our discount division is growing ahead of of everything else. So customers are seeking, uh, a good choices that we, uh, that we have in having having no name overall. We don't see any big significant shift, uh,

to control brand or to, uh,

To, uh, to the big, the big National Brands, but but no doubt that the big, the big players, the big National Brands. They need more volume. So, so that might change that might change over time. Uh, but but for now and also what we see right now is that it's, uh, it's more of the same with a little bit favored favorability to our no name. Plus, right now that we're in the middle of our insiders loans. That's doing uh, incredible. Well for us.

Okay, thank you. And I wanted to ask also about uh e-commerce growth that it remains elevated. Um I I wonder how you think about this and if you could talk about the evolution of profitability from these sales because it's it's good to see the sales growth and uh, market share but but margins are lower on these sales. So I wonder how margins are evolving as uh as this business grows.

Yeah, so if I can just talk about the market and Richard, maybe a little bit on on, on the profits. But but overall overall, we are, we are we getting Marks here? And we have a, a mortgage here in, in online food that are way above our, our overall market and with the having added a uber of, I think, 2 weeks ago, we seeing a really, really good good uplift there. And and what we are really pleased about is that the penetration of customers shoving online food is increasing a lot in our heart discount store. So in no Fields, it's, it's up a lot. So we are giving access to online food to many more Canadians and they can access, uh, hard discount, where they get, they get more and more value for, uh, for the money and just 1 overall for the prophet. Before I give it to to you rich. That is that we don't, we don't have our own trucks.

So, a man, and a man is very, very expensive. And since we use the delivery services, actually, Martin is okay for us. It's not as good as if it was not lying. But it's still very, very good. And also customers who shop online. They also, they also tend to shop more in our stores, overall. It's, uh, it's good for us, so so we are pleased and it was an 18% uplift in, in online sales. It's a, it's a big part of our our business and we, we do expect that that's going to, that's going that kind of growth levels, would would continue into next year. Yes. So the, the drag, uh, the additional drag on earnings is minimal because essentially, the fast growing, uh, segment for us is, uh, is PC Express, which means we pick in store and we have a third party delivered to a home. So, so we're not paying for the delivery. So the impact, uh, on on, uh, on the earnings is not that significant anymore. So, uh, so we feel really good about growing this as fast as we can. So, and when we are into, uh, to loyalty and uh, online and digital, I just, I just

want to state that last

Last quarter. I, I talked about um, AI for uh, that the tool we had for district managers and and many, many companies they say they do a good talking about, uh, about AI. But due to the excellent team that we have, we actually delivering because that tool now is out in 43 districts. And uh, in quarter 1, it will probably be out in the in our entire entire solar store Network. So, so, we have a lot of great great use cases within within this.

Thanks very much. I'll pass it on.

The next question comes from vichelle Shreya of National Bank. Please go ahead.

Hi. Thanks for taking my quarter my questions with respect to your real estate program.

I know off the top you indicated that uh was in line with expectations, but as you look at your various projects, is there anything that's within the projects, whether Shoppers or the small for format, no fills that's coming in better than expected. And maybe you'd like to tweak going forward and accelerate 1 and de-emphasize another

What is clearly? Very successful is a small format Urban Shoppers continue to to tag along each 1 we open uh doing really really well. And as we've said in the past like uh, outside outside, urban areas, uh, we're going to go with a slightly larger box and a few we've opened this year. We're very happy with so, uh, so so far so good. The top metric, we're focused on is sales and so far, when we look at the sales of these stores, we're uh, we're happy,

Okay.

With respect to Industry square footage growth, your materials indicated. That was it was up. Do do you have a sense of how quickly Loblaws growing versus the industry? Are you all in line or? Or are you going a little bit quicker into just a little bit? Like we said, 2% over the last 12 months now and food is like, it's less than 2%. So, uh, so uh, but we've been playing catch up and I, I was actually looking at this figure, the this week look like our square footage. Share in Canada, has not yet back to the level that we were in 2019. So, uh, so, so we've been playing a bit of catch up. We're going to catch up to, uh, to to that and next year. So, uh, so, uh, so for us, it's, uh, it's pretty, uh, pretty sensible. And, uh, so far we feel good about all the stores, we've opened. And as long as that continues, we'll keep going and many of the new throws. We're opening. They are about 101517 thousand square foot, where previously, we might have opened them at at 4050 South

And so, so yes, we're opening more but less square foot, of course also also Less sales. So that's also a big difference. So don't only look at the and I know that you don't have the numbers.

Thank you for that with respect to e-commerce growth still still very strong and obviously, we're putting capex dollars in new stores. Do you anticipate the e-commerce growth to to, to taper at some point or, or do you anticipate this accelerated growth in econ to, to continue for several years? I think, your guess is as good as mine. But, uh, if I can just look at all the countries, I think that probably that's the best measurement of guessing, where it's going to, where it's going to land. I think overall, in in Canada uh penetration of Ecom in food. It's uh you said about 4 4, 4% about about about that number. We are, we are higher. We are higher than that.

We did end up being.

8 or 10, I don't know in the UK right now are for many years where everyone they really went for online online food. It's about it's about 11 and Germany and France, it stays about 4 uh, 4 5%. So

Us. I'm not aware aware of the numbers. So we, we predict that growth level of whatever 15% as an industry over the next few years. And at some point, yes, it is going to take off because so many customers, they, they want to do both, they also want to go down, they want to touch their produce. They want to look at what they buy. They want to get the experience going. Uh, going.

To uh, 2 stores. So I think 7, 8 years ago, I think we all in in our industry thought that there was no need to build new stores, but there definitely is because

Customers. They, they want to, they want to shop. And uh, and many customers, they're not good at planning, and you also need to be good at planning to, uh, to show online.

Yeah. 1 thing I would add to the show is uh, a phenomenon that's definitely affecting the Topline. Growth of everybody is uh, is the Advent of the new gig player. Like all the gig players are filling up their channels, whether it's tubers the instacart, skip the dishes. So as everybody sort of fills up their channel, it's going to lead to higher growth once that's all filled. Like I think you're going to get to a more normal uh, growth. I we don't know what that number is yet. We'll figure it out. Probably 2 years from now,

Thank you.

Your next question comes from Chris Lee of deja Don. Please go ahead.

Oh, thank you. Good morning everyone. Um, it sounds like there's a lot of interesting and exciting developments within your Advanced media business. Um, if I heard you correctly, I think you're targeting like 100 million of people. It's next year. I'm just wondering, um, are you able to share? What what is the the level right now in this year?

In the advanced media business. Yeah. It's it's lower than 100 million. How much we said? We said we would mention it what it reaches that number. Yeah. And I think. Yeah, so it starts with a 9. Okay. And that's what that's all. I'll say I think over time also the static catch deal will uh will help us generate more and more income there. Um,

But that's going to be rolled out over the next year.

So, all the screens and all of those. Yeah.

Of course there have been some delays from Health Canada in terms of approving applications by the generic drug manufacturers. Are you guys seeing that as well? And do you have a sense of when the generics will be available on the shelves?

Ya know we've we've heard the same thing as you. Uh, we know they're coming and maybe not early 26, but maybe mid 2026. So, uh, so that's that's all we know, we know as much as you do. Probably. Yeah, but we are good either way. And uh, what we think about is, how customers? So, when you go to an area, it's going to be so much cheaper for, for, for many, many, many customers. And so many customers now, they will have access to, uh, to that drop. Which is, uh, which is good for good for us. Good for customers, and good for our, our Healthcare in, uh, in Canada. So, uh, so we hope it comes sooner than later.

And then when you mentioned earlier that, um, obviously you get the listing volumes, which makes a lot of sense, is that good? Like in terms of more dollars from volume, is that good for the top line, as well as the bottom line?

Yes, so that's still to be seen. So our prediction will be that we're going to see so even though that it's going to be significant achiever, then we will sell more. So but that's like that's the best guess. So right now, the best guess would be that. Uh we will uh we will still have a good Topline Topline growth.

Um, and then under dollar will be fine.

Okay, and then may I have a question, just maybe on the supply chain, um, on the East cool and very DC. Um, is it still on track to be fully ramped up by the middle of next year? And I know it's a bit of an, it's an earnings drag right now for you. But as the ramp is complete, is it fair to assume that that headwind will turn into a tailwind for you in the back half of the year? Yep. Um, yep. Okay. Yeah. Mid 2026. No, like the ambient section, which is the last section that we've opened. We started tiling orders a few weeks ago. So, uh, as I said in my remarks, uh, we're a full head of ramped up. So, uh, by mid 2026, though, we should be, uh, we should be well on our way and we should start to get the benefits from it. It's going to be for sure. And I'm surprised at how much progress we've done at Kaladan. Like let's not forget. We started construction on that one in January, steel is up. We're going to be finishing direct steel by the end of winter and it's going to be fully enclosed. I think by...

The summer, so, uh, that's also progressing well and on plan, and that one will open in 2028.

That okay? And my last question is just maybe on on TNT. Um obviously you guys are planning to convert that Loblaw at Empress Walk in North York to a TNT, which I think makes a lot of sense given the demographics there. Um, I guess my question is, as you look to potentially double the footprint of TNT in Canada over the longer term, do expect store conversion to play a bigger role.

Than in the past, in terms of, um, how you opening up new TNTs. Know, I think, I think there's the audience odds store, that could become TNT and number, as well as 1. Uh, I think more, most of the growth will come from, uh,

From Greenfield site. Yeah, so overall, I think that's the same for all our clothes, our our Network. Um, we have not planned for a lot of, a lot of conversions. There might be a few here and there, that makes sense. But uh, but overall, that's not a, that's not a big, big part of our Saturday.

Okay, that’s helpful. Thanks very much.

Thank you.

Was a reminder. If you wish to ask a question, please press star 1.

Your next question is from FTM Ricard please. Oh from BMO Capital markets. Please go ahead.

Thank you and good morning. So um, Revenue growth from new stores continues to accelerate.

Given um that openings appear to be weighted to the second half of this year.

Should we expect this growth to uh accelerate further over the next 3 quarters?

Good question. So what I'll say is, if you look at the 2-year, stacked growth of absolute Revenue, blah blah or Q3, which is 6.1, which is like, uh, 4.6 + 15. We expect that. The 2 years stacked, growth of revenue for Q4 will be in line with the 2 years that growth of Q3

Which will answer your questions because it reflects the timing of new stores. Yeah. And we opened a lot of new stores, its most popular. Last year, we opened a lot of new stores in Q4. Last year, we're opening a lot of new store since you for this year. So that's going to be the best guide because you can see you'll see if you go back that in Q3 of last year or absolute sales were up 1 5 and in Q4 they were up 29.

So because of new store, so you're going to see a similar phenomenon in Q4.

Hope that's helpful.

Um, and and as you continue to open uh, the new small format, No Frills. I'm curious. Are these stores. Giving you new um, read throughs or maybe customer data?

That would be additive to the, uh, retail media business.

But to me, it's more of the same, like, uh, one more box with one more stream of data with one more opportunity to put screens. So the answer is yes. But it would probably be similar to the type of data that we get in any of our discount stores across the country.

Yeah, so we have so much data already. Now that uh we're working utilizing even better and and our team is doing an incredible good uh good job of doing uh doing exactly that

Great, thank you very much.

Thank you.

There are no further questions at this time. I will now turn the call back over to Roy MacDonald. Please continue.

Thank you, everybody, for your time this morning. If you've got any follow-up questions, drop me a line.

And, um, mark your calendar for Wednesday, the 25th of February. We will be reporting our Q4 and full year results. Have a great day.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.