Loblaw president and executive chairman Galen Weston said “the idea that grocers are causing food inflation is not only false, it’s impossible.” (THE CANADIAN PRESS/Spencer Colby)
The top executives from Canada’s biggest grocery stores say they are not causing or profiting from food inflation, pointing to higher supplier and input costs as key factors driving rising prices.
The CEOs and presidents from Loblaw (L.TO), Empire (EMP-A.TO) and Metro (MRU.TO) testified before the House of Commons agriculture committee on Wednesday as part of an investigation into food inflation.
All three leaders said grocers were not responsible for soaring food prices, noting that this period of high food inflation is a global phenomenon.
“For those who say grocers are profiteering, the math just doesn’t add up,” Loblaw president and executive chairman Galen Weston said, adding that food prices have increased 25 times faster than profit has. He says the company earns $1 in profit in a $25 grocery basket, which means that while the total basket price has increased by $4 since inflation took off 18 months ago, Loblaw’s profit margin has gone up by 15 cents.
“At Loblaw, none of those profits came from higher food margins. Our retail prices have not risen faster than our costs,” Weston said.
“So no matter how many times you read it on Twitter, the idea that grocers are causing food inflation is not only false, it’s impossible.”
The cost of groceries has soared in the past year, increasing at rates not seen in more than four decades. Food inflation has persisted, even as the broader Consumer Price Index has decelerated from the peak reached in June last year. Canada’s inflation rate eased to 5.9 per cent in January, but the cost of food purchased from grocery stores increased 11.4 per cent, up from the prior month.
The persistently high prices have led to increased pressure and scrutiny on grocery retailers. In addition to the agriculture committee’s study on food inflation, the Competition Bureau announced last October that it would examine grocery competition in the country and whether it has driven food prices higher.
How much profit is too much profit?Jagmeet Singh, leader of the New Democratic Party
Members of Parliament grilled executives on Wednesday about the increase in profitability at Canada’s biggest grocery chains amid rising prices. They also asked about whether the grocers would commit to a grocery Code of Conduct, something currently in the works that aims to enhance “transparency, predictability and fair dealing” in the food supply chain.
NDP leader Jagmeet Singh, who has accused the grocers of “greedflation”, subbed in for the party’s agriculture critic and directed his questions to Weston.
“We have families that are struggling to buy food for their kids in this country, a G7 country, and they look at you and they see you making record profits. How can you justify that when families are struggling to put food on the table for their kids?” Singh said. “How much profit is too much profit?”
Weston said that “reasonable profitability is an important part of operating a business,” repeatedly referring to Loblaw’s $1 in profit for every $25 of groceries sold.
“We at Empire are not profiting from inflation. It doesn’t matter how many times you say it, write it, or tweet it, it is simply not true,” Michael Medline said, pointing to geopolitical events, rising input costs, extreme weather, soaring energy prices and labour shortages as factors contributing to rising prices.
“The truth is we are at the end of a very long food supply chain that has economic inputs at every step and stage.”
Eric La Flèche also says Metro grappled with an “unprecedented number” of price increases from its suppliers through 2022. He says the company received more than 27,000 price increase requests last year, with the hikes averaging more than 10 per cent.
“This year, we continue to receive a large number of price increase requests from our suppliers,” he said.
“I hope all members of the committee recognize that the entire supply chain is in an unprecedented period of prolonged stress. Focusing on grocers will not solve the problem of food inflation, because we are not causing it and we are not benefiting from it.”
Senior executives from Loblaw and Empire had previously testified before the same committee in December, but at the time MPs questioned why the chief executive officers of Canada’s largest grocers did not appear before the committee. Senior executives told the committee in December that rising supplier costs were to blame for soaring food prices and that retailers are not taking advantage of inflation to boost profit.
On Wednesday, all three executives referred to the absence of executives from U.S. companies that operate and sell groceries in Canada, such as Walmart and Costco.
“We compete against some of the toughest food retailers in the world including Walmart, Amazon and Costco, as well as a lot of other competition. That does not sound like an oligopoly to me,” Medline said.
“This is not a problem with too little competition. The problem is that there is a global product cost inflation.”
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
