North West Q1 2027 Earnings Report

North West EPS Results

• Actual EPS: C$0.56
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

North West Revenue Results

• Actual Revenue: $631.63 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

North West Announcement Details

• Quarter: Q1 2027
• Date: 6/9/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, June 10, 2026
• Conference Call Time: 9:30AM ET

The North West (TSE:NWC) Co Inc is a Canada-based company that is principally engaged in retail business in underserved rural communities and urban neighborhoods. The company provides food, family apparel, housewares, appliances, and outdoor products, with food products accounting for the majority of the company's revenue. The company also offers services, including post offices, income tax return preparation, money transfers, commercial business sales, and others. Its geographical segment includes Canada and International. The company generates maximum revenue from Canada.

North West Q1 2027 Earnings Call Transcript

Key Takeaways

• Neutral Sentiment: Consolidated sales fell 1.5% in the quarter, as stronger international same-store sales were offset by foreign exchange pressure and weaker Canadian sales tied to reduced “money in market.”
• Positive Sentiment: Net earnings rose 5.4%, helped by a higher gross profit rate, a CAD 3.8 million asset disposition gain, and lower share-based compensation expenses.
• Positive Sentiment: International operations were a bright spot, with same-store sales up 4.3% and general merchandise same-store sales up 8.7% on strong Caribbean tourism and market share gains in Alaska.
• Negative Sentiment: Canadian sales were weaker, with same-store sales down 0.9% as customers shifted spending toward food and away from discretionary general merchandise amid lower government/settlement-related funds in market.
• Neutral Sentiment: Management expects ongoing headwinds and future upside from slower-than-expected First Nations child and family services settlement payments, higher fuel and freight costs, and continued execution of the Next 100 program, including private label expansion and automation initiatives.

Presentation

[Operator]

Welcome to The North West Company Inc. First Quarter Results Conference Call. I would now like to turn the meeting over to Mr. Dan McConnell, President and Chief Executive Officer. Mr. McConnell, please go ahead.

[Dan McConnell, President and CEO at The North West Company]

Good morning, everyone, thank you for that, operator. We are experiencing a bit of some headwinds, you could argue, today in head office, given the major severe storms that were in the area last night. I'm not sure if you guys kept up with it, but there was numerous tornadoes and pretty significant winds and rainfall. As a result, our head office is out of power, we're on the day of the AGM and the conference call, nonetheless, the resilient crew is definitely all kicking into action, we're in the dark right now, with technology, we don't expect any further glitches. With that, I would like to welcome you for the first quarter conference call, joining me today, of course, are John King, our Chief Financial Officer, and Alexis Cloutier, our VP, Legal and Corporate Secretary.

[Dan McConnell, President and CEO at The North West Company]

Alexis is going to start with our disclosure statement.

[Alexis Cloutier, VP of Legal and Corporate Secretary at The North West Company]

Thank you, Dan. Before we begin today, I remind you that certain information presented may constitute forward-looking statements. Such statements reflect North West's current expectations, estimates, projections, and assumptions. These forward-looking statements are not guarantees of future performance and are subject to certain risks, which could cause actual performance and financial results in the future to vary materially from those contemplated in the forward-looking statements. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future results, or otherwise, other than what's required by law. For additional information on these risks, please see North West's annual information form and its MD&A under the heading Risk Factors.

[Dan McConnell, President and CEO at The North West Company]

Okay. Thank you, Alexis. I will start with an overview of our results for the quarter, and then I'm going to wrap things up with some comments on our outlook in the Next 100 program before I then open it up for some questions. Overall, I would say our results for this quarter definitely reflect the resilience of our business and our ability to adapt and deliver performance within a challenging and shifting economic environment. Consolidated sales decreased 1.5% in the quarter as solid same-store sales gains in our international operation were more than offset by the impact of foreign exchange and lower sales in our Canadian operations from reduced money in market. Our Next 100 work continues to drive gross profit rate improvements through refinements in merchandising assortments, including expanding our private label offering that are delivering value to customers within a rising fuel cost environment.

[Dan McConnell, President and CEO at The North West Company]

Expenses decreased 1% due to a CAD 3.8 million asset disposition gain and lower share-based compensation expenses, partially offset by higher staff costs and other inflation-related increases in the expenses. The combined effect of these factors resulted in a 5.4% increase in net earnings in the quarter. Let me expand on the key factors that impacted our performance in the quarter, beginning with the sales. We are pleased with the sales performance in our international operations, which delivered a 4.3% increase in same-store sales on top of a 2.8% increase in the first quarter last year. General merchandise same-store sales led the way with an 8.7% increase on top of a 5.2% increase last year. These sales gains were supported by a solid tourism season in the Caribbean and market share gains in Alaska, including the opening of a second store in Utqiagvik at the end of October last year.

[Dan McConnell, President and CEO at The North West Company]

These sales gains were partially offset by the sale of our Cost-U-Less Chalan Pago store earlier in the quarter, ahead of the expected opening of a new Cost-U-Less store in Agana, Guam, scheduled for the third quarter of this year. In our Canadian operations, sales decreased 2.2%, with same-store sales down 0.9%, compared to a solid 4% increase in Q1 last year. A couple of factors that explain this. First, we discussed in previous quarters there was less money in market this quarter as we lapped the elimination of the Inuit Child First Initiative food voucher program, reduced funding for Jordan's Principle, and lower water settlement payments compared to last year. General merchandise same-store sales decreased 7.5% as consumers shifted more of their spending on food and reduced discretionary spending amid lower money in market.

[Dan McConnell, President and CEO at The North West Company]

These factors were partially offset by increased consumer demand from child and care settlement payments, which were non-comp to Q1 last year. That said, the pace of child and care settlement payments distribution has been slower than we anticipated. I'll provide some further comments on settlement payments when I discuss the outlook. First, I will briefly comment on consolidated gross profit and expenses. Gross profit increased 0.6% for the quarter due to a 72 basis point increase in rate. The increase in gross profit rate reflects the positive impact from our Next 100 initiatives, including merchandise assortment refinements, procurement improvements, and the expansion of private label products. These changes are providing value to customers, particularly within this increasing fuel and inflationary cost environment. Changes in sales mix, including lower wholesale food costs, were also a factor.

[Dan McConnell, President and CEO at The North West Company]

These gains were partially offset by higher markdowns and inventory shrink compared to last year due to challenging weather conditions in northern markets, which contributed to transportation delays. Expenses decreased 1% in the quarter due to a CAD 3.8 million gain on the sale of our Cost-U-Less Chalan Pago store and lower share-based compensation costs compared to last year.

[Dan McConnell, President and CEO at The North West Company]

These factors were partially offset by inflationary cost increases and other factors such as high utility costs due to the unseasonably cold weather in our Canadian operations. The net impacts of all these factors resulted in a 5.4% increase in net earnings for the quarter. With that brief overview of the key drivers of our financial performance in the quarter, I am now going to transition to talk to you a little bit about our outlook and provide a few comments on the Next 100 program. We continue to expect our Canadian operations to be impacted by an increased consumer demand arising from the First Nations Child and Family Services settlement payments. As I mentioned earlier, the ramp-up in the distribution of these settlement payments has been slower than anticipated. The claims administrator reported that approximately 110,000 claims have been submitted in the removed child class.

[Dan McConnell, President and CEO at The North West Company]

Based on the payment distribution activity observed to date, individuals in 50 of the 63 impacted communities that we serve have received funds. However, the number of payments distributed is very low. Based on the activity that we have observed, the sales capture and customer spending patterns are broadly consistent with our expectations. Overall, we expect the distribution of the child and care settlement payments to continue into 2026 and extend for a number of years based on the requirement for individuals in the removed child class to reach the majority age before payments are issued, combined with the anticipated opening of the application process and distribution of settlement payments for the other eight classes. However, the timing of these settlement payments is uncertain.

[Dan McConnell, President and CEO at The North West Company]

In addition to the child and care settlement payments, we also noted in our report to shareholders that the approval of the agreement on the long-term reform of First Nations Child and Family Services between the Government of Canada, First Nation chiefs in Ontario, and Nishnawbe Aski Nation will benefit indigenous peoples and communities that the company serves. These benefits will continue to come directly through programs and indirectly through investments in infrastructure and local employment. However, the timing of these benefits is again uncertain. We also continue to monitor macroeconomic conditions, particularly the impacts of higher oil prices and fuel costs, which will result in higher freight costs to deliver merchandise to the stores and increases in fuel-related utility costs. Later in the quarter, we started to experience fuel surcharges from freight carriers.

[Dan McConnell, President and CEO at The North West Company]

Due to a longer, more complicated logistic network, the impacts of these fuel increases are more significant when operating in remote northern communities when compared to urban retail. Higher oil prices are also expected to have a downstream impact on inflation and the cost of products from suppliers. The pressures from high oil prices and fuel-related costs are expected to continue in the near term, although the duration and magnitude remain uncertain. Regarding the Next 100 program, we remain focused on execution and finding cost efficiencies. This includes the ongoing refinement of our merchandise assortment and procurement strategy with a focus on the expansion of our private label offering. The continued implementation of store-based inventory forecasting, replenishment technology, and implementation of a new warehouse management system are expected to improve on-shelf availability, streamline ordering processes for store and warehouse teams, and reduce shrink and markdowns.

[Dan McConnell, President and CEO at The North West Company]

The Next 100 program is expected to continue to help mitigate some of the external headwinds affecting the business while building capabilities that deliver value to our customers and support a sustainable financial performance for our shareholders. With that, I'm going to open up the call for any questions.

[Operator]

Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Ty Collin of CIBC. Your line is open.

[Ty Collin, Analyst at CIBC]

Hey, good morning, Dan and John. Thanks for taking my question, and hope you guys get your power up and running soon over there. Maybe just to start off, wondering if you could provide a little more detail on the increase in labor costs that you called out in the quarter. Obviously, labor utilization has been an area of focus for you guys with your Next 100 initiatives. Just want to get a bit of an understanding of what was driving that labor inflation in the quarter and to what extent you think you can offset that as we move through the year.

[Dan McConnell, President and CEO at The North West Company]

Good question, Ty. The good news is we do intend to offset it. There was definitely the colder weather. Not only was it colder in northern Canada and with records amounts of snow, it was also a record-breaker in Alaska as far as the amount of effort that takes just to be able to operate the business in the extreme weather conditions. There's also some fine pointing with some of the inflation, in just the algorithms that we use and the new tools that we have, we've had some significant savings in our labor efficiency and productivity. The gaps that we had and some of the downfalls was our fault, but there was definitely some weather elements that were contributing to it as well.

[Dan McConnell, President and CEO at The North West Company]

The point that you should take away from it is that we expect to get it back in line for the remainder of the year.

[Ty Collin, Analyst at CIBC]

Okay, great. That's helpful. Just touching on fuel prices, which you alluded to, can you maybe just help us understand the magnitude of the fuel surcharges that you guys have seen so far and just help us frame the impact so far to your cost structure and margins. I'm also wondering if you've started to pass along any price in response to that as of today.

[Dan McConnell, President and CEO at The North West Company]

Yes, we have started to pass through some of the cost inflation for sure. I would say that obviously coming into the summer season it won't be as severe impact given from the heating perspective, obviously most of our communities are heated through heating oil and diesel-generated power. That is definitely not going to be as heavy as it would've been in some of the winter months. It's definitely something that we're going to pass through and it's a TBD as to how long this thing is going to go on for. That is the plan. It's going to have to get passed through strategically on to the customers, unfortunately.

[Dan McConnell, President and CEO at The North West Company]

We're hoping with some of the support that's been given now onto urban Canada, it obviously has extended into some of the northern communities, we hope that there'll be some consideration for the significant ripple effect or impact in some of the northern households given the fuel surcharge, as I indicated, has a considerable compounding factor, because it doesn't only hit you on the distribution, but it hits you on the everyday living through heating utilities and just the mode of which product gets there, the jet fuel and the like. It has a lot more impact on northern customers than it would in the urban. We hope the Government recognizes that and steps up as they have for urban Canada.

[Ty Collin, Analyst at CIBC]

Okay. Just following up on those comments, what are you sort of seeing in terms of consumer behavior across your markets? I guess throughout Q1 and so far into Q2, have you seen any change in response to those kind of higher fuel and oil and heating costs?

[Dan McConnell, President and CEO at The North West Company]

Yeah, we have. We've seen the shift in consumer spend away from general merchandise in Canada and over to food, where in the international markets that's not the case. There's seems to be more spending capacity in the international markets for the reason that I mentioned, new stores, market share gains, and also typically the higher fuel, as I've talked about, higher fuel costs are typically favorable to Alaska per se, not as much in the Caribbean. We are seeing some sales tailwinds in the international division. In the Canadian division, especially overlapping the tough quarter last year there was some headwinds there. We anticipate now rounding the bend and lapping the strong quarter we had last year in the Inuit Child First Initiative. We expect for our sales to start to on a somewhat of a different trajectory for the next number of quarters.

[Dan McConnell, President and CEO at The North West Company]

However, in saying that, some of our plans was also we anticipated that we would have more benefit payments in market. As I indicated earlier, it has been slower than we anticipated even the number of markets. We haven't hit all of our markets with checks as of yet, and the markets that did receive checks on the most part, it's been very few of them. Very few of the individuals within the markets to get those checks, like very few. We're optimistic. We think that there's some tailwinds and when they're going to hit, obviously we always think we're conservative in these estimates, we thought that there would've been a lot more money in market at this point. Nonetheless, it is what it is. The good news is we're set up for it.

[Dan McConnell, President and CEO at The North West Company]

As I also mentioned, as far as sales drivers some of the work with the Next 100 and with the Ontario settlement and First Nation chiefs, well, Ontario, sorry, and the Government of Canada settlement we expect that there's going to be more activity in the Ontario markets in the near future. We don't know when. Obviously, we're keeping a close ear just to understand what that infrastructure spend's going to be. We know that when they're prior to the stop, if you recall, there was some reasonable momentum in markets with spending and improving infrastructure, we expect that that'll continue now that there's a green light for them to commence in Ontario. We hope not too long after that the rest of the regions will also get on track and follow suit.

[Dan McConnell, President and CEO at The North West Company]

Short term, yeah, definitely we would've liked to seen more sales momentum in the Canadian markets. We have got some good sales momentum in the Alaska markets. We realized that there was a few challenges with some of the expense controls. We're comfortable that we're going to get that under control for the next number of quarters to, especially for the rest of the year. We're expecting that we're going to have stronger sales comps in Canada for the rest of the year as well. Is that thorough enough?

[Ty Collin, Analyst at CIBC]

Okay, thanks. Yeah, that's great.

[Dan McConnell, President and CEO at The North West Company]

Thanks.

[Ty Collin, Analyst at CIBC]

Yeah. Thanks.

[Dan McConnell, President and CEO at The North West Company]

Okay.

[Ty Collin, Analyst at CIBC]

Thanks for the comments. All the best, guys.

[Dan McConnell, President and CEO at The North West Company]

Okay, thanks. Bye. Yep.

[Operator]

Thank you. Our next question comes from Stephen MacLeod of BMO Capital Markets. Your line is open.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Thank you. Good morning, guys.

[Dan McConnell, President and CEO at The North West Company]

Good morning.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Similarly, hope you get your power back soon and hopefully not too much damage for you guys. Just wanted to follow up on a couple things. Just with respect to the settlement payments, obviously you gave a lot of color around sort of how the payments or timing of payments were less than expected in the quarter. Did you see any change as you worked through the quarter? Did it accelerate or decelerate or pretty stable?

[Dan McConnell, President and CEO at The North West Company]

May was really slow, and I think there was some acceleration after May. What we're summarizing, we think that they're processing these checks once a month. You try to triangulate as much information just like you guys do, to see when we can expect more money. We haven't really figured out the algorithm yet, but we think that they process them once a month. As I said, there's been 110,000 submitted. We think, yeah, we don't know when they're going to come, but we think that's probably how they're processing them. No, we haven't seen a ramp up. We did see definitely a drop in May and then a pickup after that.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah. Okay

[Dan McConnell, President and CEO at The North West Company]

that's really. Yeah. May would've been the down spot, but why that is, Steve, I have no idea.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yep. Understood. Okay, great. Then just on the approved agreement in Ontario, can you give a sense about how many communities of yours that might impact?

[Dan McConnell, President and CEO at The North West Company]

Well, we're going to get back to you on that.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Okay.

[Dan McConnell, President and CEO at The North West Company]

I just wanted to make sure I'm accurate on it, just because I know last time I mentioned the number of communities impacted with the benefit, I was off by a few. Let me make sure that I'm on it.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Okay.

[Dan McConnell, President and CEO at The North West Company]

I'll respond to you. I'll get that number to you.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yep. That's great. Thanks, Dan. Maybe just finally, you talked a little bit about the outlook in both the Canadian business and international to a degree as well. Is your view that the positive trends we've seen in international will continue through the balance of the year? Is there anything on the horizon that makes you think that trajectory might change? I guess along those lines, the new store that you're opening in Guam and the one you closed, is there any material top-line impact that we should be thinking about for the model?

[Dan McConnell, President and CEO at The North West Company]

Well, we've closed a smaller, we called it an express store, and we're opening up, and then we're going to be closing another. It's consolidation of two into one. We're going to be opening up a 55,000 sq ft store. The anticipation in the fourth quarter, we expect to have a nice sales jump at that point. Yeah. I guess that's probably what I would take it away. Yeah, we expect to see a sales increase in the fourth quarter-

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah

[Dan McConnell, President and CEO at The North West Company]

as a result of the opening of this operation.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Okay. Then just in terms of the underlying momentum you're seeing in international, all those trends continue to remain intact with respect to tourism and some of the other positive demand drivers?

[Dan McConnell, President and CEO at The North West Company]

Yeah.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah.

[Dan McConnell, President and CEO at The North West Company]

I don't anticipate them not staying in spot. For everything we know today, as much as the world changes.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah

[Dan McConnell, President and CEO at The North West Company]

Pretty quick. Yeah, for what we know today, I would expect that it would continue on for the remainder of the year.

[Stephen MacLeod, Analyst at BMO Capital Markets]

Yeah. Okay. That's great. Thanks for the color, Dan. Appreciate it.

[Dan McConnell, President and CEO at The North West Company]

Of course. Yep.

[Operator]

Thank you. As a reminder, if you have a question, please press star one one. Our next question comes from Cheryl Zhang of TD Cowen. Your line is open.

[Cheryl Zhang, Analyst at TD Cowen]

Hey. Good morning, Daniel. This is Cheryl from TD Cowen. Thanks for taking our questions. I hope you get your power back soon.

[Dan McConnell, President and CEO at The North West Company]

Thanks.

[Cheryl Zhang, Analyst at TD Cowen]

Just a follow-up on previous questions, one on the settlement payment. I'm curious if you could help us maybe quantify the impact on sales in Q1. Understand that it might not be a lot, and wonder if you have any insights as to why the payments have been ramping up slower than everyone has anticipated.

[Dan McConnell, President and CEO at The North West Company]

I'll answer your second question. You know what, I really don't know. We've been down this road, obviously, a lot of time, and some of the programs come quite reasonable in time as far as expected, and some are considerably delayed. This is falling into the latter. We realistically thought this was going to come fourth quarter last year. Thought that might've been conservative. I think we indicated to the market maybe a little later. I really don't know. I know that there's, as I indicated, 110,000 submissions. I don't think they're as complex as the drinking water settlement applications, because there was a pretty significant drag on those as well. I can't comment really as to why this is extended longer than what we originally anticipated. I know it's not a matter of if.

[Cheryl Zhang, Analyst at TD Cowen]

Yeah

[Dan McConnell, President and CEO at The North West Company]

The good news is it's not a matter of if it's coming, it's just a matter of when. I don't anticipate. We haven't seen the traction or the amounts come in that we would like, obviously.

[Cheryl Zhang, Analyst at TD Cowen]

Okay, understood. On the fuel costs, I'm wondering if you're seeing any impact on your international markets in terms of the operating costs and maybe in the Caribbean market as well.

[Dan McConnell, President and CEO at The North West Company]

Yeah. We definitely have. We have said the same token. We've been able to pass those on. Some of the sales gains, just to let you know, our volumes are up, our market shares are up. It's not all inflation, but we have been able to pass on the escalated cost to the customers in the international market. Yes, costs have been up, and we've been able to pass them on so far.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. That's great to hear. Just one more before I queue. Is there any noticeable change in consumer behavior because of the higher fuel costs, in terms of more people shopping in community versus going out?

[Dan McConnell, President and CEO at The North West Company]

Well, the switchover in Canada particularly, it's moved away from general merchandise purchases and into food. That would be yes. There was an extended winter road season this year in Canada. That typically has people out of market longer than usual. That would've had an impact looking backwards. Looking forwards, no, our value offer is competitive, we don't see money shifting from in-market purchases to out-of-market purchases, if I understood your question correctly.

[Cheryl Zhang, Analyst at TD Cowen]

Okay. That's very helpful. Thank you.

[Dan McConnell, President and CEO at The North West Company]

Thanks.

[Operator]

Thank you. I'm showing no further questions at this time. I'd like to turn it back to Daniel McConnell for closing remarks.

[Dan McConnell, President and CEO at The North West Company]

Okay. Well, thank you, operator, and I appreciate the questions, and we'll look forward to speaking to you over in September.

[Operator]

This concludes today's conference call. Thank you for participating, and you may now disconnect.

[Dan McConnell, President and CEO at The North West Company]

Thank you.

[Operator]

You're welcome.

Participants

Executives

• Alexis Cloutier, VP of Legal and Corporate Secretary
• Dan McConnell, President and CEO

Analysts

• Cheryl Zhang, Analyst at TD Cowen
• Stephen MacLeod, Analyst at BMO Capital Markets
• Ty Collin, Analyst at CIBC