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Post-pandemic recovery favours Loblaws

It is an example of a company that continues to build on its successes of the past two years. 

Companies that benefitted from pandemic stay-at-home home trends have fared differently as the economy has reopened.

Some continue to see strong demand because the pandemic has proved to be an ongoing catalyst for their products. Others have sold off as the economy softens and consumers move discretionary spending to areas that benefit from more normal conditions such as travel and leisure.

Loblaws, Canada’s largest grocer, is an example of a company that continues to build on its successes of the past two years. 

Shares of Loblaws (TSX:L) have almost doubled from their 2020 low and to continue to trade near their 52-week high. 

Here is an update:

Background: Loblaws has annual revenues of $53 billion and has brands that include No Frills, Provigo, Valu-Mart, Fortino’s and Real Canadian. It is 47% owned by George Weston Ltd. 

Performance: The shares are up 17.1% year to-date at their current price of $121.68 and 50.5% in the past 12 months.

Recent developments:  Loblaws continues to look for ways to leverage its core businesses with new services.

It saw a spike in online ordering during the pandemic and is now building on that theme. Loblaws has formed a partnership with DoorDash Inc. (NYSE: DASH) to broaden home delivery options. The new service promises to deliver groceries as well as items ordered from Shoppers Drug Mart in 30 minutes. While not guaranteed, it indicates how consumer expectations for speed and convenience have changed with the pandemic. The service is being tested in Toronto and Winnipeg, with plans to expand across Canada. 

Groceries are a mature, thin margin business so Loblaws is always looking for ways to create new revenue streams and capture the evolution of shopping habits. Making home delivery more convenient is one way to do that.

 Dividend: Loblaws increased its dividend July 1 to 40.5 cents quarterly, its 11th consecutive annual increase.

This is an edited version of article that appeared in the Internet Wealth Builder on July 25, 2022.  For information on how to reprint this article please view this page.


Adam Mayers writes about investing and personal finance. He is a contributor to the Globe & Mail’s Globe Advisor and a contributing editor to Gordon Pape's Internet Wealth Builder newsletter. Adam was Business Editor and investment columnist at The Toronto Star and is the author of six books.

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