One of Canada’s Largest Grocers Says It’s Not to Blame food inflation The move drew the ire of some consumers after a series of social media posts.
Loblaw Company Limited incorporated Twitter The account began responding earlier this week to users who tweeted about it Grocer’s price freeze on no name products ends,
While the company claims its price is stable, it was founded last October with the aim of helping Canadians cope with the decade-high inflationSome Twitter users accused the grocer of raising prices to increase its profit margin.
In answers, Loblaw admitted that he had Be the “face of food inflation” and said that “while it’s easy to blame grocers for high grocery prices,” it made a profit of $4 per $100 spent in its stores.
Some Twitter users seemed convinced of the grocer’s online messaging campaign, with many alleging corporate greed in response to Loblaw’s tweet.
Global News asked Loblaw to break down its profit margin, and a spokesperson said it derived the figure by dividing its net income by its total revenue for the same period.
For the third quarter of the year, when Loblaw posted a profit of $556 million on revenue of $17.4 billion, that worked out to a margin of about 3.2 cents per dollar.
Loblaw also directed Global News to comments made by chief financial officer Richard Dufresne during the company’s third-quarter earnings call in November, where he pointed to global factors driving up food costs from suppliers in the form of price increases. pointed to.
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“The suppliers set the cost, and we set the retail price,” he said.
Dufresne said the company received “unprecedented cost increases” from suppliers last year and continues to face pressure. He claimed the company pushed back “vigorously” when the supplier costs “didn’t make sense”.
The flat gross margin on food sales over the past year shows that Loblaws is not raising prices to keep up with cost pressure, he said.
“This gives us the confidence to say unequivocally that retail prices are not rising faster than cost, and the company is not taking advantage of inflation for profit,” he said.
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Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, spoke Thursday morning on The Start 680 CJOB in Winnipeg about the backlash Loblaw has faced.
He directly questioned Loblaw’s PR strategy in disputing Canadians’ experiences at the grocery store on Twitter.
“Loblaw is its worst messenger. While people are suffering, going on the defensive may not be the best thing to do right now,” Charlebois said in the interview.
“I don’t think people really care. They’re just watching food prices go up and they’re wondering what’s happening.
While he said he understands consumers are frustrated with paying higher grocery prices, he noted that Loblaw’s earnings report showed food sales were up 6.9 percent in the third quarter, with the company taking a hit from its pharmaceuticals and cosmetics segments. Saw huge growth.
“What that says to me is that Loblaw is not making much money selling food. They’re making money selling lipstick and drugs,” Charlebois said.
Loblaw’s third-quarter earnings report pointed to more business among discount brands like No Frills and Real Canadian Superstore and private labels including No Name as driving higher sales in the quarter.
A September Report of Agri-Food Analytics Lab found that among Canada’s Big Three grocers, there was little evidence of the so-called “Greed,” The profit margin remained stable in the first half of 2022 despite rising food inflation.
a Follow up report from lab in November found that in the first half of 2022, Loblaws, Metro and Empire Company all exceeded their average profits of the previous five years. But the authors then noted that a lack of transparency in the grocer’s financial data makes it difficult to say where the high profit margins are actually coming from.
Charlesbois also said Thursday that further investigation into the food supply chain is due, however, as there are too many unknowns on the processing side. For example, egg prices have recently been down at the farm level, but retail prices are rising, he said.
“To point the finger at just the grocers, I think I think it’s a very complex issue.”
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