BUSINESS
07/23/2020 10:05 EDT

Pandemic Pay Took Big Bite Out Of Bottom Line, Loblaw Says

The chain claims it spent $282 million on COVID-19 safety measures.

Cole Burston via Getty Images
A shopper enters a Loblaws grocery story in Toronto on April 30, 2019. Canada's largest grocer reported nearly $12 billion in revenue in the second quarter of 2020.

BRAMPTON, Ont. — Loblaw Companies Ltd. says its net income plunged in the second quarter despite surging revenues because of costs related to the COVID-19 pandemic, including a temporary pay boost for employees.

Canada’s largest grocer says its earnings attributable to shareholders fell 41 per cent to $169 million or 47 cents per diluted share from $286 million or 77 cents per share a year earlier.

Watch: A strategy expert dives into the issues surrounding pandemic pay. Story continues below.

 

Excluding one-time items, adjusted profits were $266 million or 74 cents per share, compared with $373 million or $1.01 per share in the prior year.

Revenues for the three months ended June 13 increased 7.4 per cent to nearly $12 billion, from $11.1 billion in the second quarter of 2019.

Loblaw was expected to report 71 cents per share in adjusted earnings on $11.9 billion in revenues, according to financial markets data firm Refinitiv.

The company says demand shifted during the quarter towards conventional store formats with the market division’s same-store sales increasing 18.8 per cent and the discount division up 4.9 per cent, while same-store drug division sales declined 1.1 per cent.

It spent $282 million during the quarter on safety measures for staff and customers with about $180 million in temporary pay premiums which included a one-time bonus for store and distribution centre colleagues of $25 million.

This report by The Canadian Press was first published July 23, 2020.