Canada's Loblaw Q2 profit beats on e-commerce sales growth, customer traffic

Overview

• Canada grocery and pharmacy retailer's Q2 revenue rose 4.1% but slightly missed analyst expectations

• Adjusted diluted EPS for Q2 grew 11.9%, beating analyst expectations

• Company completed sale of PC Financial and repurchased 8.8 mln shares for C$552 mln in Q2

Outlook

• Loblaw expects adjusted EPS growth in the high single-digits for 2026

• Company plans to invest about C$2.4 bln in capital expenditures in 2026

• Loblaw expects to allocate significant free cash flow to share repurchases in 2026

Result Drivers

• FOOD RETAIL GROWTH - Food retail sales rose 3.3%, driven by higher customer traffic, larger basket sizes, and e-commerce sales growth

• DRUG RETAIL STRENGTH - Drug retail sales increased 6.1%, led by specialty and chronic prescriptions and growth in beauty and OTC categories

• STORE EXPANSION - Opened 14 new food and drug stores, including discount banners and first TT location in California, contributing to sales growth

Company press release: ID:nGNX7ttzdW

Key Details

*Applies to a deviation of less than 1%; not applicable for per-share numbers.

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 9 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the food retail distribution peer group is "buy"

• Wall Street's median 12-month price target for Loblaw Companies Ltd is C$70.00, about 6% above its July 29 closing price of C$66.03

• The stock recently traded at 24 times the next 12-month earnings vs. a P/E of 24 three months ago

Reuters Recommended Reads

• July 29 - Jeronimo Martins misses profit estimates as consumers remain cautious

• July 29 - Sprouts Farmers Market Q2 sales edges past estimates on new store openings

• July 29 - Netherlands' Redcare Pharmacy Q2 revenue rises; reaffirms 2026 outlook

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)