Loblaw Companies Q1 2026 Earnings Report

Loblaw Companies EPS Results

• Actual EPS: C$0.52
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Loblaw Companies Revenue Results

• Actual Revenue: $14.48 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Loblaw Companies Announcement Details

• Quarter: Q1 2026
• Date: 5/6/2026
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 6, 2026
• Conference Call Time: 10:00AM ET

Loblaw is one of Canada's largest grocery, pharmacy, and general merchandise retailers, operating the most expansive store footprint in Ontario and maintaining sizable presences in provinces like Quebec and British Columbia. Key grocery banners include Loblaw, No Frills, and Maxi, while its pharmaceutical operations are the product of its 2014 acquisition of Shoppers Drug Mart. The firm carries a robust private-label assortment, with top sellers like President's Choice and No Name. In addition to its retail operations, Loblaw oversees a financial-services business, which provides credit card services and guaranteed investment certificates, and also operates its PC Optimum loyalty program. The firm's controlling shareholder is George Weston Limited, which owns 52.6% of the equity.

Loblaw Companies Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Strong Q1 results — normalized revenue rose ~4.5%, total adjusted EBITDA was CAD 1.7B (+6%) with a 20 bp margin improvement, and adjusted diluted EPS grew ~10.6% (GAAP diluted EPS CAD 0.50, +19%).
• Positive Sentiment: PC Financial sale to EQ Bank expected to close in Q3, unlocking ~CAD 600 million that Loblaw plans to use to increase buybacks (already repurchased CAD 648M in Q1) and purchase EQB shares, while also raising the dividend by 10%.
• Positive Sentiment: Store expansion and format efficiency — hard-discount banners are driving double-digit comps and Loblaw plans ~30 discount openings this year; construction cost improvements (management cites ~30% reduction) enable faster, lower‑cost rollouts into underserved markets.
• Negative Sentiment: GLP-1 uncertainty — GLP-1 prescription sales accelerated (~40% YTD) boosting pharmacy performance today, but pending generic approvals (expected around August) create uncertainty around future same‑store sales mix and margins.
• Neutral Sentiment: Automation and U.S. expansion are transitional — East Gwillimbury DC ramp and T&T U.S. investments are a near‑term drag (management cites ~1% EPS headwind this year) but are expected to turn positive in H2 and no longer drag next year.

Presentation

[Operator]

Good morning, ladies and gentlemen, welcome to the Loblaw Companies Limited 2026 Q1 results conference call. This call is being recorded on Wednesday, May 6, 2026. After the speakers' remarks, we will conduct a question-and-answer session. Please ask that you limit yourself to one question and one follow-up if needed. Thank you. If you'd like to ask a question at that time, please press star 1 on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, you can simply press star one again. I would now like to turn the conference over to Roy MacDonald, Vice President, Investor Relations.

[Roy MacDonald, VP of Investor Relations at Loblaw Companies]

Great. Thanks very much, Colby, and good morning, everybody. Welcome to the Loblaw Companies Limited Q1 2026 results conference call. As usual, I'm joined this morning by Per Bank, our President and Chief Executive Officer, and by Richard Dufresne, our CFO. Before we begin, I want to remind you that today's discussion will include forward-looking statements, which may include, but are not limited to, statements with respect to Loblaw 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 expectations. These risks and uncertainties are discussed in the Company's materials filed with the Canadian Securities Regulators.

[Roy MacDonald, VP of Investor Relations at Loblaw Companies]

Any forward-looking statements speak only of the date they are made, and 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, other than what's required by law. Certain non-GAAP financial measures may be discussed or referred to today. 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.

[Roy MacDonald, VP of Investor Relations at Loblaw Companies]

Also note, following the announced sale of PC Financial to EQ Bank and our ongoing partnership, PC Financial results are presented under discontinued operations, and it's important to note that we are not getting out of the financial services business as such, unless otherwise indicated. Our remarks today will focus on the comparable total adjusted consolidated results. With that, I'll hand the call over to Richard.

[Richard Dufresne, CFO at Loblaw Companies]

Thank you, Roy, and good morning, everyone. I'm pleased to report another quarter of consistent financial and operational performance, carrying on the momentum from last year. 2026 is off to a strong start. Our business continues to perform well, reflecting our ongoing focus on retail excellence and our commitment to deliver value, quality, service, and convenience to Canadians. In the Q1, revenue growth was strong at 4.5% when normalized for the exit of our optical business and the divestiture of Wellwise. Our top line growth was supplemented by the opening of 13 stores in the Q1, eight Shoppers and five hard discount in underserved communities. Total company adjusted EBITDA increased by 6% to CAD 1.7 billion, and margin improved by 20 basis points to 11.5%. Adjusted diluted net earnings per share grew by 10.6%.

[Richard Dufresne, CFO at Loblaw Companies]

On a GAAP basis, revenue grew CAD 600 million or 4.2%. Diluted EPS was CAD 0.50, up 19% in the quarter. In food retail, we delivered traffic and basket growth on a same-store basis. Absolute sales grew 3.9%. Our food same-store sales grew 2.4%. Our investments in the right-hand side of our stores are seeing positive results in apparel and most GM categories. However, we see ongoing pressure in liquor and tobacco. Normalized for this right-hand side impact, our food same-store sales grew 2.7%. Our internal CPI, like food inflation metric, continues to be significantly lower than Canada's grocery CPI of 4.4%. Customers are seeking value and are finding it in our stores. This is a function of the effectiveness of our loyalty program, promotional offers, and value on shelf.

[Richard Dufresne, CFO at Loblaw Companies]

Our efforts to push back on unjustified cost increases from global suppliers has delivered results, helping to reduce the inflationary pressures on Canadian. This shows up in our inflation measures at the cash register, which was more or less aligned with our same-store sales growth. As consumers continue to focus on value, our hard discount banners remain a key driver of absolute sales growth. We opened five new hard discount stores in the quarter and will open about 30 stores in total this year. We are pleased with the performance of our new stores. Included in this quarter's food comparable sales growth results are 28 hard discount stores that have opened since 2023. These stores are averaging double-digit same-store sales growth. We are looking forward to bringing more No Frills and Maxi stores into more communities across Canada. We're also pleased with the momentum and performance of our conventional stores.

[Richard Dufresne, CFO at Loblaw Companies]

This growth continues to be led by our Fortinos, YIG, and T&T banners. In drug retail, absolute sales increased 4.8%, while same-store sales grew 4.1%. Pharmacy and healthcare services grew same-store sales by 6.7%. Our specialty prescription growth continued to lead our pharmacy performance. Within this category, our GLP-1 sales growth continues to outperform and has further accelerated in the quarter. Across our pharmacy network, patients continue to respond positively to the convenience and expanded level of primary care we offer through our more than 1,800 pharmacies across the country. We opened eight new drug stores in the quarter and remain on target to open more than 30 new locations in 2026. Front store same-store sales were up 1%. Beauty remained strong, while OTC was affected by the timing of the cough and cold season and inclement weather.

[Richard Dufresne, CFO at Loblaw Companies]

Online sales continued to perform well, growing by 20.3% in the quarter. E-commerce sales were driven by growth in PCX delivery, along with the successful integration of third-party delivery options. Retail gross margin of 31.4% was stable. While our food margins were flat, our drug retail gross margins were down. This was driven by changes in sales mix in drug retail categories, timing of the cough and cold season, partially offset by continued improvements in shrink. Retail SG&A was better by 40 basis points, primarily driven by operating leverage from higher sales and timing benefit on certain costs. I'm very pleased with our ability to reduce this rate despite the additional costs associated with opening new stores and ramping up our automated DCs.

[Richard Dufresne, CFO at Loblaw Companies]

Retail adjusted EBITDA grew 6.5%, and retail EBITDA margin increased by 20 basis points to 11.1%. The ramp-up of our first automated DC in East Gwillimbury continues to progress well. Both cost and operational improvements have been better than planned. We remain pleased with our progress and expect to be fully ramped up later this year. Construction on our second automated DC in South Caledon is progressing very well. The project remains on plan, with automation installation beginning at the end of this year. PC Financial's revenue increased 3.9%, driven by higher insurance commission and higher interest income. The bank's adjusted net earnings increased by CAD 9 million, or 40.9%. This was primarily driven by higher revenue and favorable impact from lower expected credit loss provisions.

[Richard Dufresne, CFO at Loblaw Companies]

The previously announced sale of PC Financial to EQ Bank has obtained all required regulatory approvals, and we now expect the deal to close in the tQ3. We are very excited about this transaction, as it will expand the benefits of our PC Optimum program and offer more ways for Canadians to earn rewards. As previously stated, Loblaw will now unlock approximately CAD 600 million in cash related to this transaction. We expect to deploy a portion of these proceeds to increase our share buybacks in 2026 and the balance to purchase EQB shares in the market. Free cash flow from the retail segment was strong at CAD 432 million for the quarter. We repurchased CAD 648 million worth of common shares and announced a 10% dividend increase, our 15th consecutive annual increase.

[Richard Dufresne, CFO at Loblaw Companies]

Our balance sheet is strong, we continue to improve our key return metrics, as shown by our recent credit rating upgrade by DBRS to A Low. Our return on equity sits at 26.8% and our return on capital at 12.4%, reflecting our strong capital allocation discipline focused on cost management and proven strategy. Looking ahead to the balance of the year, performance should closely resemble what we're seeing in Q1. As mentioned earlier, 2026 is a year where the ramp-up of our East Gwillimbury DC and our investments in T&T US have the greatest negative impact on our earnings growth. Despite that, we feel confident in our ability to deliver on our outlook for the year, as we've shown in Q1.

[Richard Dufresne, CFO at Loblaw Companies]

Our focus on retail excellence and on the execution of our strategic initiatives will allow us to keep delivering value to our customers while continuing to reward our shareholders. I will now turn the call over to Per.

[Per Bank, President and CEO at Loblaw Companies]

Thanks, Richard, good morning, everyone. We are very pleased to report a strong Q1 for 2026, making a robust and successful start to the year. We delivered solid financial results, including strong revenue and adjusted EPS growth. I'm delighted that we're able to achieve this while making significant investments to grow our pharmacy and discount presence, expand our T&T banner into the U.S., and advance two new technology-enabled distribution centers. Our performance reflects the successful execution of our strategic priorities and our unwavering focus on the customer. Our strategic and deliberate investment in opening new stores are clearly resonating with Canadians. We are listening to what Canadians need and investing where it matters. Our everyday focus remains steadfast on providing quality, value, service, and convenience for customers across our coast-to-coast network.

[Per Bank, President and CEO at Loblaw Companies]

These efforts are clearly resonating, as evidenced by continued strong customer engagement and increased traffic levels across our business. From the strong performance and the continual growth of PC Express Delivery to the consistent strength of our pharmacy services, we are demonstrating our commitments to being there where and when our customers need us most. We have momentum in our food retail segment, marked by the contribution from our new store investment and our same-store sales growth. Increased customer traffic was underpinned by our compelling everyday value offering, personalized PC Optimum loyalty offers, and impactful promotions. The ongoing outperformance of our hard discount banners, Maxi and No Frills, was a key driver of this success, reinforcing their vital role in helping Canadians manage affordability. We're also very pleased with our conventional performance, where our multicultural and preferred food delivered a very strong growth.

[Per Bank, President and CEO at Loblaw Companies]

Our conventional stores gained tonnage and share gains against their peers. We also achieved strong e-commerce sales growth, led by PC Express Delivery and the successful integration of third-party delivery options. This growth was significantly driven by our discount customers, as they are increasingly choosing the convenience of delivery, highlighting the broad appeal and accessibility of our digital offering. In drug retail, Shoppers Drug Mart and Pharmaprix continue to demonstrate resilience and growth. Pharmacy and front store growth reflected positive trends in prescription volumes, specialty drugs and beauty categories, underscoring the vital role of our pharmacies and healthcare professionals play in Canadian healthcare. This performance proves the strength of our healthcare services and our commitment to meeting the evolving needs of Canadians. The strategic investments we have made across retail to expand and enhance our network continue to pay off.

[Per Bank, President and CEO at Loblaw Companies]

During the quarter, we expanded Canadians' access to both nutritious food and essential healthcare services. We opened five new hard discount stores and eight new drug stores, further solidifying our commitment to being where Canadians need us most. Our commitment to modernization was also evident with the introduction of a new look for our No Frills banner, marked by the opening of a new store in Komoka, Ontario. A modern design delivered at an efficient build cost. For everyone living in the GTA area, I hope you're able to visit our newly opened T&T Supermarket in Erin Mills, which we celebrated with a wonderful opening ceremony that was really well attended by many stakeholders.

[Per Bank, President and CEO at Loblaw Companies]

These investments are crucial to strengthen our foundation, expanding our reach in key growth areas, and providing the best possible shopping choices for our customers. Last quarter, we launched the PC Express integration with OpenAI, so ChatGPT, turning previously dead-end recipe searches into transactions. Customer adoption is already ahead of plan. We are continuing to advance our leadership with the 2.0 version coming soon. Earlier this week, we were proud to announce that we are partnering with Canadian technology firm Secudo, providing our team with a common platform that will enable us to manage and scale AI and machine learning across our data infrastructure. In addition, we're starting to roll out AI productivity tools across our teams to support them in their day-to-day work. There's more to come here. We're just getting started.

[Per Bank, President and CEO at Loblaw Companies]

As a proud Canadian company with more than 2,800 locations and 220,000 colleagues, we remain deeply committed to supporting the communities we serve and providing a life's everyday essential to families from coast-to-coast. As we look ahead, we remain confident in our outlook for 2026. We have a strong portfolio of businesses that are really exceptionally well-positioned to meet the evolving needs of Canadians and successfully navigate the macro environment. I want to once again express my sincere gratitude to all our colleagues for their unwavering dedication, commitment, and focus on our customers. Their hard work is the cornerstone of our success. With that, I'll now open the floor for questions. Thank you.

[Richard Dufresne, CFO at Loblaw Companies]

Thanks, Per.

[Operator]

Thank you.

[Richard Dufresne, CFO at Loblaw Companies]

Go ahead, Colby.

[Operator]

Thank you. We will now begin the question and answer session. Again, if you would like to ask a question, please press star then the number 1 on your telephone keypad to raise your hand and enter the queue. If you'd like to withdraw your question at any time, simply press star 1 again. We'll pause just for a moment to compile the roster. With our first question comes from Irene Nattel with RBC Capital Markets. Your line is open.

[Irene Nattel, Managing Director at RBC Capital Markets]

Thanks, good morning, everyone. I was wondering if you could talk about what you're seeing in terms of consumer behavior in the store. Notably, as you went through the quarter, and we saw the spike in gas prices, you know, did you see any sort of notable changes in how people are trying to adapt, and where are we at Q2-to-date? Thank you.

[Per Bank, President and CEO at Loblaw Companies]

Thank you, Irene, and a great question that of course we are thinking a lot about. Honestly, what we are seeing right now is more of the same. We are fighting back on the price increases from our suppliers. So far, we are not seeing any price increases due to that reason. Customers, they are still doing what they did in the last quarter. They are trading down. For example, I just got an example this morning on chicken, where our customers, they are buying more into the opening price point of chicken, and they're buying less of the Free Form.

[Per Bank, President and CEO at Loblaw Companies]

It's a double-digit decline in the Free Form, it's a double up in our opening price point. More growth in chicken. The same for steaks. Customers are buying less steaks, but they're buying more minced beef. They're still buying more on promotion. We are not worried about the customer sentiment because we do believe that the offering we have across our entire portfolio actually plays well to the customer sentiment. More of the same than the last quarter. It's also proven in that our internal inflation is lower than the external inflation.

[Richard Dufresne, CFO at Loblaw Companies]

Yeah, the only thing I'd add, Irene, is like definitely not we saw not-nothing in Q1, 'cause actually, when you look at gas prices, though, it's definitely more in Q2. Q2, we see a slight change, but not material. But we, as the example that Per mentioning are what we're starting to see now, but like, the trajectory of our business continues to be going in the same direction.

[Irene Nattel, Managing Director at RBC Capital Markets]

Thank you.

[Operator]

Your next question comes from the line of Chris Li with Desjardins. Your line is open.

[Chris Li, Managing Director of Equity Research at Desjardins]

Good morning, everyone. Maybe two questions on the front store sales performance. I was wondering, in addition to the factors you mentioned, was that also impacted by any pricing adjustments you might have made to further enhance the value proposition to consumers and Shoppers? Thanks.

[Per Bank, President and CEO at Loblaw Companies]

Our Q1 front-store sales were impacted by a number of events and not the one that you mentioned at all. On the positive side, we had a prestige continue to do well. There was some Easter shift that drove a bit of sales, while the cough and cold timing, inclement weather, and slower food sales in some regions moderated our performance. There was more of the negative than the positive in the quarter. I stay very confident on the Shoppers front-store performance going forward.

[Chris Li, Managing Director of Equity Research at Desjardins]

Okay, perfect. Maybe just a follow-up here. I know you mentioned before you've been doing some testing on the new food concept at some of the Shoppers stores. I'm wondering if you can provide us an update on how those pilots are performing so far?

[Per Bank, President and CEO at Loblaw Companies]

What we are doing, we are adding about 1,500 products into the mix of Shoppers front store where we're doing a relay. What we have done now, we have finished the first three tests. It's only three, we have agreed to do another 40. I'm sure that by the end of next quarter, we will be able to give you some insight on the 40. If that goes well, then we are ready to deploy that to a significant number of stores. If it goes well, it will give us an uplift.

[Chris Li, Managing Director of Equity Research at Desjardins]

Great. Thanks, and all the best.

[Per Bank, President and CEO at Loblaw Companies]

Thanks.

[Operator]

Your next question comes from the line of Mark Carden with UBS. Your line is open.

[Matthew Rothway, Analyst at UBS]

Hi, this is Matthew Rothway on for Mark Carden. Thank you for taking our questions. I was hoping you could touch on the drivers of gross margin a little bit. You called out drug retail mix as a headwind. Can you just detail a little bit more about what the driver was there?

[Richard Dufresne, CFO at Loblaw Companies]

Yeah. It's actually pretty clear. First of all, on food it was flat. Okay? Very flat, no difference versus last year. On the drug front, it was, I guess, twofold, what we were talking about on front store, cough and cold. If you remember, we mentioned that cough and cold was happened this year in December, whereas last year it was in January. We didn't get the same margin that we had that we had in front store this year. That was that was the other the other factor to mention.

[Matthew Rothway, Analyst at UBS]

Great. Very helpful. As a quick follow-up, on SG&A, you mentioned the timing of certain costs as a benefit in the quarter. How should we think about that impacting subsequent quarters?

[Richard Dufresne, CFO at Loblaw Companies]

Yeah. That was a one-time thing associated with the way the year ended. There were some costs that actually were booked in Q4 that were not in Q1, so therefore that improved our SG&A rate. The bulk of the benefit came from operating leverage from higher sales.

[Matthew Rothway, Analyst at UBS]

Great. Thanks so much.

[Operator]

Your next question comes from the line of Michael Van Aelst with TD Cowen. Your line is open.

[Michael Van Aelst, Managing Director, Consumer and Retail Analyst at TD Cowen]

Hi, good morning. You talked about the ramp-up on the new store growth, it's been pretty strong for about the last six quarters. We know that there's always that drag particularly in the first year on the new stores. Where do you think you are in that cycle, where do you see this effort to increase your square footage growth rate becoming more neutral to earnings, maybe even positive?

[Per Bank, President and CEO at Loblaw Companies]

First of all, we have built a little bit fewer stores this year than last year, but it's more of the same. Those from last year, they are now in the base, so it's not dragging us down further. Normally, a new store in discount would be profitable within 3, 4, 5 years, depending on the location. About the new store growth, we're confident that we continue to build about, I don't know, 30-40 new No Frills and Maxis per year and about 70 total, including the Shoppers Drug Mart.

[Per Bank, President and CEO at Loblaw Companies]

What we are, what we're looking at, what we're doing, and that's why we believe so much in our plan, is that we are building in underserved areas. I can take as an example. In the beginning of 2025, we only had one No Frills in Vancouver Island. At the end of this year, we have four, and we have planned and approved another three, so that'll be eight. Another one is, when I started in September 2023, I visited Sudbury, of all places, with 166,000 inhabitants. We had zero No Frills there. Today, we have two, and they're doing very well. It's really working for us. Yeah. Financially, Michael, like, you're right.

[Richard Dufresne, CFO at Loblaw Companies]

Like, the drag on new stores is no longer a factor. That's actually not, that's not what's dragging. Like, what's dragging now is essentially a ramp-up of East Gwillimbury, which is gonna be completed like, let's say around Q3, and T&T US. That's still dragging. What's not yet contributing is like, as you know, like a grocery store takes, I don't know, three years before it starts to contribute to earnings, and that's probably gonna start a year or two from now. When these new stores start to contribute to earnings, like this less drag is gonna become a positive. We expect to see that over the next 24 months.

[Michael Van Aelst, Managing Director, Consumer and Retail Analyst at TD Cowen]

Great. That, yeah, that's what I was looking for. Thank you. Then just clearly, just to be clear on the DC side, when do you see that turning from a drag to a positive?

[Richard Dufresne, CFO at Loblaw Companies]

It's gonna be a positive in the H2 of the year. The drag on EPS of both T&T US and East Gwillimbury this year in our plan is about 1%, slightly more than 1% EPS growth. That will be gone next year.

[Michael Van Aelst, Managing Director, Consumer and Retail Analyst at TD Cowen]

When the new the second DC ramps up, is that just going to replace the drag that?

[Michael Van Aelst, Managing Director, Consumer and Retail Analyst at TD Cowen]

Yeah

[Michael Van Aelst, Managing Director, Consumer and Retail Analyst at TD Cowen]

-seeing?

[Richard Dufresne, CFO at Loblaw Companies]

Yeah. In 2027 you're gonna get a year of calm, and in 2028 you're gonna have the same thing we live with with the first one. By that time, hopefully, like, our new stores are starting to drive up earnings and the drag of T&T will be behind us. So it should be a better position than we are in right now.

[Michael Van Aelst, Managing Director, Consumer and Retail Analyst at TD Cowen]

Perfect. Thank you.

[Operator]

Your next question comes from the line of Vishal Shreedhar with National Bank. Your line is open.

[Vishal Shreedhar, Analyst at National Bank]

Thanks for taking my questions. With respect to the buyback, you suggested that some of the CAD 600 million would be used for buyback. You know, relative to the CAD 1.9, how much of that CAD 600 million do we put in, and what should we anticipate the cadence being, given that you were stronger than usual in Q1?

[Richard Dufresne, CFO at Loblaw Companies]

Yeah. I'd say, Vishal, like, we haven't landed yet, but, like, 2.1 is probably as good a number for you to put in your model right now.

[Vishal Shreedhar, Analyst at National Bank]

Okay. Thank you for that. With respect to genericization of GLP-1 molecules and the developments that have happened, can you just quantify any updated thinking in terms of the impact to same-store sales growth and when that may begin, and the impact across the P&L and how you see that unfolding to the extent you're getting better info now?

[Richard Dufresne, CFO at Loblaw Companies]

It's too early to tell. Like, what I think what we know today, two manufacturers have been approved. We told you that we thought it would be in P8, which is August, but we should be getting supply. That may come a few weeks before. The truth of the matter is when we release Q2, we'll know a lot. We'll be able to give you a more specific guidance. We won't be able to give you a trajectory of how it's gonna get adopted by the market, but we'll have a better sense. Having said all that, like, clearly what's gonna happen mathematically is you're gonna have an impact on same-store sales, but you're also gonna have an impact on margin.

[Richard Dufresne, CFO at Loblaw Companies]

Like, we talked about the drag on gross margin of Shoppers because of sales mixes, because, like, GLP-1 drugs right now are accelerating, but when the price is gonna fall, it's gonna go the other way. So it's too hard right now to pinpoint it other than to say that we feel good about our gross margins, we feel good about our SG&A rate, and your guess is as good as mine as to what's gonna be the impact on top line of generic drugs when they do, they do become available.

[Per Bank, President and CEO at Loblaw Companies]

Yeah, I would say this is really, really good for Canadians because they're getting this drug much, much cheaper. It's about CAD 350, depending on the doses today, we don't know yet, but maybe the cost gonna be a third. It's definitely gonna be a tailwind for us. It is growing about 40% year-to-date, which is a lot, think about the growth when the price is going to be much, much cheaper. Again, as Richard said, you know, we can only be guessing right now, for sure it's gonna increase. Again, looking forward to inform you more in the next quarter.

[Vishal Shreedhar, Analyst at National Bank]

Okay. Thank you for that.

[Operator]

Your next question comes from the line of Mark Petrie with CIBC. Your line is open.

[Mark Petrie, Analyst at CIBC]

Yeah, thanks. Good morning. I just wanted to ask about, actually just follow up on the line of questioning that Michael had around store investment costs. I know you've been working to get efficiencies on the upfront investments. I think you mentioned that with the new format No Frills store. Just hoping you could potentially quantify any of that. How does that affect the economics and the payback?

[Richard Dufresne, CFO at Loblaw Companies]

Well, the way it's very simple. For every dollar that we reduce our construction cost, it just drives up our IRR. We've been working hard on this, as we've told you in the past, like, construction costs are a number that have been moving up a lot over the last 10 years. Like, the areas that are big for us are refrigeration, and we found ways to cut costs on refrigeration. We're trying to find ways to build store faster with semi-assembled panels, which reduce the time, therefore reducing the cost. We're also testing a bunch of other initiatives where we can reduce it even further. The point I want to leave you with is this is a relentless focus on, like, we're not happy where we are, but we're not satisfied.

[Richard Dufresne, CFO at Loblaw Companies]

We keep working on it, and we wanna find ways to reduce it even more so that we can just drive more IRRs and allow us to have stores that deliver great return with a lower sales threshold to start with.

[Per Bank, President and CEO at Loblaw Companies]

Yeah. Think about it that if we and when we get the cost down to build and what we have done, and which the team have done that until now, we can get into smaller towns with a catchment area that's significantly lower than today and still make the same IRR. Meaning that the accessibility to these stores across the country will increase, and that's just basically solidifying our strategy.

[Richard Dufresne, CFO at Loblaw Companies]

I think we're very happy.

[Per Bank, President and CEO at Loblaw Companies]

Yeah, I understand.

[Richard Dufresne, CFO at Loblaw Companies]

We're very happy, Mark, with, like, our performance of our new stores. Like, we said we opened a bunch since the beginning of the year, and all of the ones we've opened are doing really well. For us, like, we just keep on going here.

[Mark Petrie, Analyst at CIBC]

Yeah. Okay. More about expanding the markets that you can get into as opposed to necessarily improving or materially improving the paybacks. But are you able to quantify at all or just give us a sense ballpark about how much the construction costs have fallen with the all of your efforts so far versus, you know, I don't know, three years ago?

[Richard Dufresne, CFO at Loblaw Companies]

Well, without throwing an absolute dollar number, I'd say we've been able to reduce construction costs by 30% so far.

[Per Bank, President and CEO at Loblaw Companies]

To your other question, it's not only about expanding, it's also about, you know, improving the IR where we can get new stores. It's not only going into smaller catchments, it's also, there's also lots of places with big catchments areas where we can build more discount stores. Again, back to the example of Sudbury. We only have stores in a city with 166,000 inhabitants, and there are many, many places similar to that.

[Mark Petrie, Analyst at CIBC]

Yeah. Understood. Okay. Appreciate all that. All the best.

[Per Bank, President and CEO at Loblaw Companies]

Thank you.

[Operator]

Your next question comes from the line of Tamy Chen with BMO Capital Markets. Your line is open.

[Analyst at BMO Capital Markets]

Hi, good morning. This is Emily for Tamy Chen. Thanks for taking our questions. Just wanting to focus back on any differences between discount and conventional. Like, we know the discount growth is really driving sales. Are you seeing any different behaviors within each of them? Are you seeing more or less trade down within discount or conventional?

[Per Bank, President and CEO at Loblaw Companies]

It is still more of the same. We are positive both in our conventional business and in our discount business. Our discount business comp sales is significantly higher than the conventional business. Still, it's not, it's not accelerating. Customers, they are staying cautious. As I said before, maybe it's more, it's more conventional, into price point for chicken, et cetera. Free from the organic barriers might see a decline, and then the conventional barriers is increasing. It is like buying more on promotion. It's kind of the same mechanic that our customers are using, but we're not seeing it increasing. It is more of the same.

[Richard Dufresne, CFO at Loblaw Companies]

Yeah, I wanna add that our conventional business remains very healthy. Like, we look at our same store performance, our total growth, despite the fact that we're not adding much square footage, if any. That business continues to perform really well for us. That with the strong growth in our hard discount business, which because we're adding stores on top of higher same store performance, is growing really fast, is helping us deliver the results that you're seeing today.

[Analyst at BMO Capital Markets]

Okay. Just to follow up, Excuse me. How would you compare the competitive dynamics in Quebec versus other provinces? Are you seeing any better or worse contribution from the new stores in Quebec versus the other jurisdictions?

[Richard Dufresne, CFO at Loblaw Companies]

The Quebec market is as competitive as the rest of the country. We're very happy with the performance of our stores in Quebec, as we are happy with all of our stores across the country. No notable differences.

[Analyst at BMO Capital Markets]

Thank you.

[Operator]

Your next question comes from the line of John Zamparo with Scotiabank. Your line is open.

[John Zamparo, Analyst at Scotiabank]

Thank you. Good morning. I wanted to come back to the GLP-1 side of the business, and I believe you said you're seeing this accelerate and that Shoppers is taking share, and that's even before generics were announced. I wonder what you attribute that to. It's obviously a dominant player nationwide, but anything you can say about why you think share has increased so much and whether that's the result of any intentional efforts or investments from Shoppers?

[Per Bank, President and CEO at Loblaw Companies]

I don't know whether we said that we were gaining shares on GLP-1. Probably we are. We're growing by 40%, but we don't have the same Nielsen data as we have on food, so we can say something with exact knowledge. We're seeing a significant gain in GLP-1. Not gain, but a growth in sales.

[Richard Dufresne, CFO at Loblaw Companies]

I don't know why, to be honest with you. Like, just like, we were surprised when we saw the acceleration in growth in Q1. And as you said, we're not even generic yet.

[John Zamparo, Analyst at Scotiabank]

Yeah. Okay. Understood. Back to the state of the consumer and in particular trade down metrics, appreciate the color on discount versus conventional. Is there any other color you can add on promotional intensity and performance of national brands against private label?

[Per Bank, President and CEO at Loblaw Companies]

Yeah. I still see an outperformance on our own brands. They're doing really, really well, and we have an enhanced focus on our PC and our own name. We are doing well there. Customers, they like it. It's a good alternative to the brands when they wanna save money and have better quality.

[John Zamparo, Analyst at Scotiabank]

Thank you very much.

[Operator]

With no further questions in queue, I'd like to turn the conference back over to Roy MacDonald for closing remarks.

[Roy MacDonald, VP of Investor Relations at Loblaw Companies]

Great. Thanks very much, everybody, for your time this morning. If you have any follow-up questions, drop me an email or give me a call. Please mark your calendar for Thursday, July 30th, when we will be releasing our Q2 results. Have a great day.

[Operator]

This concludes today's conference call. You may now disconnect.

Participants

Executives

• Per Bank, President and CEO
• Richard Dufresne, CFO
• Roy MacDonald, VP of Investor Relations

Analysts

• Chris Li, Managing Director of Equity Research at Desjardins
• Irene Nattel, Managing Director at RBC Capital Markets
• John Zamparo, Analyst at Scotiabank
• Mark Petrie, Analyst at CIBC
• Matthew Rothway, Analyst at UBS
• Michael Van Aelst, Managing Director, Consumer and Retail Analyst at TD Cowen
• Vishal Shreedhar, Analyst at National Bank
• Analyst at BMO Capital Markets