Loblaw chair Galen G. Weston says “we know we all need to do more to help” as he and the head of Walmart Canada appeared back to Ottawa to explain their plans to stabilize food prices.
The researchers estimate food prices will increase by 2.5 to 4.5 per cent in 2024. This translates to a family of four spending $16,297.20 on groceries, according to the report, amounting to an increase of about $701.79 compared to last year.
Weston stressed Loblaw is working to ease the prices on items including bread, milk, butter and chicken. He says these make up 10 per cent of grocery sales at Loblaw stores. Weston reiterated a point from an earlier committee appearance that Loblaw only sees $1 in profit for every $25 sold.
“Food prices are definitely stabilizing, and we expect that to continue, but we are concerned the grocery code of conduct could slow down this momentum,” Weston told the committee in his opening statement.
The code is reportedly nearing completion and aims to be an industry-led document, with the goal of increasing “fair and ethical dealing” across the grocery supply chain in Canada.
Weston added that Loblaw is committed to signing the code, but says it is opposed to the current version due to the company’s estimate that it could add up to $1 billion to the cost of food through means like administrative fees and penalties.
Where are cost increases coming from?
Ontario Conservative Lianne Rood said she’s a proponent of the code and asked Weston where he sees the increased cost of food coming from.
“This idea that grocers are the problem has shifted the conversation to the wrong place,” Weston replied.
The Loblaw chair went on to say larger food manufacturers they work with have posted strong quarterly results linked to price increase and listed Pepsi, Nestle, Procter and Gamble plus Kraft/Heinz.
B.C. NDP MP Alistair MacGregor honed in on Loblaw’s own profits, which came in at $621 million in the company’s third quarter – up from $556 million the year before. In response, Weston said that it’s the primary goal of a business to grow and increase profits annually.
“I do understand that Canadians are feeling this pressure, and they look at these big numbers and they think to themselves ‘gosh if that company would not make so much profit our food prices would go down’ but that’s not the way that it actually works,” Weston said.
When asked about his own compensation, $11.7 million in 2022, Weston acknowledged that it’s “a big number” but “reasonable in the context of other executives.” He added he is “empathetic” to people struggling with cost of living, and said Loblaw has put $438 million into lowering prices over the last 12 weeks.
Rick Barichello is professor at the University of British Columbia who specializes in food economics. He says that a lot of the costs at the check-out line originate from farther down on the supply line. However, he adds that it is very difficult to get a full picture of what the key price driver is.
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“We’ve tried to look at some of these issues in our work, and it’s very, very hard to draw a conclusion. Sometimes you can find some results [in] one direction, sometimes you can find results in others,” Barichello said.
“But people who would argue that there should be more competition in the grocery sector, that’s of course, a valid argument. A very valid argument.”
Ontario Conservative Dave Epp asked Weston about the impact of the federal carbon price on grocery prices, and Weston said he did not have specific information as Loblaw stores don’t deal with it directly, but added that anything putting cost pressure on the system should be looked at.
The Conservatives have been using the carbon price, often referred to as “carbon tax”, to attack the Liberals on the increasing cost of food, arguing it increases production, manufacturing and shipping costs.
Shortly after, Manitoba Liberal Ben Carr asked about the price impact of climate change. While he didn’t provide a specific figure, Weston said there are “meaningful impacts” that are encountered on a weekly basis.
On this front, Barichello says that he and his colleagues’ research finds that energy prices are not a “significant driver” of the overall cost of food.
“You’re talking about a factor that’s a small percentage of costs and you’re talking about a small percentage added by the carbon tax. So when you multiply two small percentages it’s a trivial component,” he said.
Barichello added that climate change will have more long-term food price implications, but he does not see them having a significant impact on this shorter term price inflation.
While there are many factors at play in what determines grocery prices, global market prices do play a role. Barichello says these can be influenced by many unpredictable events, such as Russia’s invasion of Ukraine driving up grain prices, but globally prices are stabilizing.
“These prices internationally vary a lot. And and also they’ve been falling on on average, except for maybe sugar and rice more recently. And that’s not from climate change. That’s from [Indian] export bans,” he said.
‘We’re doing ‘everything we can’: Walmart Canada CEO
Prior to Weston’s appearance, Walmart Canada CEO Gonzalo Gebara appeared remotely before the committee.
When pushed on his company’s concern with the upcoming grocery code of conduct, Gebara said he believes it is already following through in spirit by maintaining strong relationships with suppliers.
In response to that, Ontario Liberal MP Leah Taylor Roy asked Gebara what else Walmart can do to ease affordability challenges.
“I hope you trust me when I tell you that we’re doing everything that we can do to run the tightest operation possible so that we can continue to offer the lowest prices in the market,” Gebara replied.
Gebara maintained that he sees the Canadian grocery market as competitive and told the committee the code will increase bureaucracy and the cost of doing business.
Loblaw has also said it cannot endorse the code in its current draft form, arguing it would further drive food inflation. The claim has been made several times by grocers, but there’s been no clear evidence presented by grocers on this.
In the lead-up to Thanksgiving, Innovation Minister François-Philippe Champagne called on Canada’s major grocers to do more to stabilize prices by the holiday or else the government would take action.
This could include reforms to the Competition Act, which are in progress, and potential tax measures.
At the end of October, MacGregor led a motion at the committee to call the grocery heads back to committee to show them what their plans are and testify again.
Specifics of the plans are expected to be withheld due to competition implications, but committee members are allowed to view them privately.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
