BRAMPTON, ON, May 1, 2024 /CNW/ - Loblaw Companies Limited (TSX:L) ("Loblaw" or the "Company") announced today its unaudited financial results for the first quarter ended March 23, 2024(1). Loblaw began 2024 with another quarter of strong operational and financial results. The focus on retail excellence continued across the Company's businesses driving sales growth, reductions in shrink, and earnings growth. The Company's market leading discount banners, private label brands, and personalized PC Optimum™ offers resonated with customers. This resulted in higher store traffic, strong market share gains in Food Retail, and revenue growth that stands out against lower internal inflation. An increase in Drug Retail sales reflected continued strength in front store beauty and cough and cold products. Canada's Consumer Price Index ("CPI") for Food Purchased From Stores in March was 1.9%, the lowest level recorded in more than two years and was below the headline CPI in the first quarter of 2024. The Company's internal food inflation remained below Canada's CPI for Food Purchased From Stores again this quarter. "We continued to deliver value, quality and service across our various banners, which led to more customers choosing our stores," said Per Bank, President and Chief Executive Officer, Loblaw Companies Limited. "Our dedicated colleagues, strategic plan and unique assets position us well to best serve the needs of Canadians today and in the future." 2024 FIRST QUARTER HIGHLIGHTS Revenue was $13,581 million, an increase of $586 million, or 4.5%. Retail segment sales were $13,290 million, an increase of $555 million, or 4.4%. Food Retail (Loblaw) same-stores sales increased by 3.4%. Drug Retail (Shoppers Drug Mart) same-store sales increased by 4.0%, with front store same-store sales growth of 0.7% and pharmacy and healthcare services same-store sales growth of 7.3%. E-commerce sales increased by 16.1%. Operating income was $861 million, an increase of $92 million, or 12.0%. Adjusted EBITDA(2) was $1,544 million, an increase of $96 million, or 6.6%. Retail segment gross profit percentage(2) was 31.6%, an increase of 30 basis points, primarily driven by improvements in Drug Retail gross margins, mainly due to sales mix, and lower shrink. Net earnings available to common shareholders of the Company were $459 million, an increase of $41 million or 9.8%. Diluted net earnings per common share were $1.47, an increase of $0.18, or 14.0%. Adjusted net earnings available to common shareholders of the Company(2) were $537 million, an increase of $32 million, or 6.3%. Adjusted diluted net earnings per common share(2) were $1.72, an increase of $0.17 or 11.0%. Net capital investments were $348 million, which reflects gross capital investments of $387 million, net of proceeds from property disposals of $39 million. Repurchased for cancellation 3.2 million common shares at a cost of $470 million. Free cash flow(2) used in the Retail segment was $359 million. Thirteenth consecutive annual increase to the quarterly common share dividend from $0.446 per common share to $0.513 per common share, an increase of 15.0%. See "News Release Endnotes" at the end of this News Release. CONSOLIDATED AND SEGMENT RESULTS OF OPERATIONS The following table provides key performance metrics for the Company by segment. 2024 2023 (12 weeks) (12 weeks) For the periods ended March 23, 2024 and March 25, 2023 Retail Financial Services Elimi-nations Total Retail Financial Services Elimi-nations Total (millions of Canadian dollars except where otherwise indicated) Revenue $  13,290 $    361 $   (70) $  13,581 $ 12,735 $   326 $  (66) $ 12,995 Gross profit(2) $    4,204 $    321 $   (70) $    4,455 $   3,980 $   293 $  (66) $   4,207 Gross profit %(2) 31.6 % N/A    — % 32.8 % 31.3 %    N/A — % 32.4 % Operating income $       782 $      79 $    — $       861 $      726 $     43 $    — $      769 Adjusted operating income(2) 889 79 — 968 844 43 — 887 Adjusted EBITDA(2) $    1,452 $      92 $    — $    1,544 $   1,390 $     58 $    — $   1,448 Adjusted EBITDA margin(2) 10.9 % N/A    — % 11.4 % 10.9 %    N/A — % 11.1 % Net interest expense and other financing charges $       159 $      35 $    — $       194 $      150 $     31 $    — $      181 Earnings before income taxes $       623 $      44 $    — $       667 $      576 $     12 $    — $      588 Income taxes $       178 $      151 Adjusted income taxes(2) 207 182 Net earnings attributable to non-controlling interests $         27 $        16 Prescribed dividends on preferred shares in share capital 3 3 Net earnings available to common shareholders of the Company $       459 $      418 Adjusted net earnings available to common shareholders of the Company(2) 537 505 Diluted net earnings per common share ($) $      1.47 $     1.29 Adjusted diluted net earnings per common share(2) ($) $      1.72 $     1.55 Diluted weighted average common shares outstanding (in millions) 311.9 324.8 The following table provides a breakdown of the Company's total and same-store sales for the Retail segment. For the periods ended March 23, 2024 and March 25, 2023 2024 2023 (millions of Canadian dollars except where otherwise indicated) (12 weeks) (12 weeks) Sales Same-store sales Sales Same-store  sales Food retail $   9,409 3.4 % $   9,011 3.1 % Drug retail 3,881 4.0 % 3,724 7.4 % Pharmacy and healthcare services 2,059 7.3 % 1,924 4.7 % Front store 1,822 0.7 % 1,800 10.3 % RETAIL SEGMENT Retail segment sales in the first quarter of 2024 were $13,290 million, an increase of $555 million, or 4.4%. Food Retail (Loblaw) sales were $9,409 million and same-store sales grew by 3.4% (2023 – 3.1%). The CPI for Food Purchased From Stores was 2.6% (2023 – 10.5%) which was higher than the Company's internal food inflation; and Food Retail traffic increased and basket size decreased. Drug Retail (Shoppers Drug Mart) sales were $3,881 million, and same-store sales grew by 4.0% (2023 – 7.4%), with pharmacy and healthcare services same-store sales growth of 7.3% (2023 – 4.7%) and front store same-store sales growth of 0.7% (2023 – 10.3%). On a same-store basis, the number of prescriptions increased by 4.0% (2023 – decreased by 1.9%) and the average prescription value increased by 2.0% (2023 – 6.0%). Operating income in the first quarter of 2024 was $782 million, an increase of $56 million, or 7.7%. Gross profit(2) in the first quarter of 2024 was $4,204 million, an increase of $224 million, or 5.6%. The gross profit percentage(2) of 31.6% increased by 30 basis points, primarily driven by improvements in Drug Retail gross margins, mainly due to sales mix, and lower shrink. Adjusted EBITDA(2) in the first quarter of 2024 was $1,452 million, an increase of $62 million, or 4.5%. The increase was driven by an increase in gross profit(2), partially offset by an increase in selling, general and administrative expenses ("SG&A"). SG&A as a percentage of sales was 20.7%, an increase of 40 basis points, primarily driven by the year-over-year impact of certain real estate activities and labour costs, and costs related to network optimization. Depreciation and amortization in the first quarter of 2024 was $677 million, an increase of $17 million or 2.6%, primarily driven by an increase in depreciation of leased assets and information technology ("IT") assets, and an increase in depreciation of fixed assets related to conversions of retail locations, partially offset by the impact of prior year accelerated depreciation due to the reassessment of the estimated useful life of certain IT assets. Included in depreciation and amortization was the amortization of intangible assets related to the acquisitions of Shoppers Drug Mart Corporation ("Shoppers Drug Mart") and Lifemark Health Group ("Lifemark") of $114 million (2023 – $114 million). FINANCIAL SERVICES SEGMENT Revenue in the first quarter of 2024 was $361 million, an increase of $35 million or 10.7%. The increase was primarily driven by higher interest income from growth in credit card receivables, and higher sales attributable to The Mobile Shop™. Earnings before income taxes in the first quarter of 2024 were $44 million, an increase of $32 million or 266.7%. The improvement was mainly driven by higher revenue as described above, and lower customer acquisition expenses and operating costs, including the marketing support funding in connection with the launch of PC Insiders World Elite Mastercard® and the benefits associated with the renewal of a long-term agreement with Mastercard. This increase was partially offset by higher contractual charge-offs and funding costs due to the current macro-economic environment, and the year-over-year unfavourable impact of the expected credit loss provision. OUTLOOK(3) Loblaw will continue to execute on retail excellence while advancing its growth initiatives with the goal of delivering consistent operational and financial results in 2024. The Company's businesses remain well positioned to meet the everyday needs of Canadians. For the full-year 2024, the Company continues to expect: its Retail business to grow earnings faster than sales; adjusted net earnings per common share(2) growth in the high single-digits; to continue investing in our store network and distribution centres by investing a net amount of $1.8 billion in capital expenditures, which reflects gross capital investments of approximately $2.2 billion, net of approximately $400 million of proceeds from property disposals; and to return capital to shareholders by allocating a significant portion of free cash flow to share repurchases. ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") This quarter, the Company released its 2023 ESG Report. The report highlights the Company's many 2023 achievements on its journey to fight climate change and advance social equity. Specifically, the Company reduced carbon emissions for its enterprise operations by 11% compared to a 2020 baseline, celebrated 100% of eligible stores actively donating food to food recovery agencies, and contributed a record $180 million in community funds to support research, charities and non-profits. In the quarter, Loblaw collected and donated 7.2 million pounds of food to local food banks in support of its Feed More Families™ pledge and commenced its 15th annual Spring Food Drive. Earlier this year, Loblaw also published its first Early Release of Priority ESG Disclosure Report for 2023 with the purpose of demonstrating its commitment to future alignment with the International Sustainability Standards Board (ISSB) and to provide timely and relevant information for stakeholders on our ESG performance. NORMAL COURSE ISSUER BID PROGRAM ("NCIB") From time to time, the Company participates in an automatic share purchase plan ("ASPP") with a broker in order to facilitate the repurchase of the Company's common shares under its NCIB. During the effective period of the ASPP, the Company's broker may purchase common shares at times when the Company would not be active in the market.  FORWARD-LOOKING STATEMENTS This News Release contains forward-looking statements about the Company's objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects, opportunities and legal and regulatory matters. Specific forward-looking statements in this News Release include, but are not limited to, statements with respect to the Company's anticipated future results, events and plans, strategic initiatives and restructuring, regulatory changes including further healthcare reform, future liquidity, planned capital investments, and the status and impact of IT systems implementations. These specific forward-looking statements are contained throughout this News Release including, without limitation, in the "Consolidated and Segment Results of Operations" and "Outlook" section of this News Release. Forward-looking statements are typically identified by words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may", "should" and similar expressions, as they relate to the Company and its management. Forward-looking statements reflect the Company's estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. The Company's estimates, beliefs and assumptions are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and, as such, are subject to change. The Company can give no assurance that such estimates, beliefs and assumptions will prove to be correct. Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward-looking statements, including those described in the Company's MD&A in the Company's 2023 Annual Report and Section 4 "Risks" of the Company's 2023 Annual Information Form for the year ended December 30, 2023. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this News Release. Except as required by law, the Company does not undertake to update or revise any forward-looking statements, whether as a result of ...