While the nation’s largest grocery and drugstore chain sees “some softness” with its Joe Fresh apparel brand going forward, what it calls “general merchandise” or non-apparel sales have been “significantly down” in the most recent quarter. , said Galen Weston. “It definitely had an impact on our overall (comparable) sales results,” he told analysts during a conference call to discuss the grocery and drugstore chain’s second-quarter results. Several major US-based retailers have warned in recent months of unsold inventory as shoppers cut back spending amid rising costs. Companies like Walmart and Target have suggested profits could take a hit as they are forced to write down excess inventory. “The key in this situation is the stock. The question is how you feel about the stock and whether you have aggressive markups to make to clear that stock,” Weston said. “The answer is that we feel good about the inventory and we don’t see any significant margin risk associated with liquidating what’s left.” The company posted an increase in profits and sales in the second quarter, with drugstore sales driving an increase in overall profit margin. Pharmacy same-store sales rose 5.6%, while pharmacy and health care grew 6.1%. “Right now cough and cold (sales) … it’s like we’re in the middle of winter,” Loblaw Chief Financial Officer Richard Dufresne said during the call. Weston added: “There is tremendous power in perfumes. We wonder what people do with all these perfumes.” Meanwhile, Shoppers Drug Mart opened Canada’s first all-pharmacist clinics during the quarter, he said. “We have four consulting rooms, we have four pharmacists, and we see patients on a very, very frequent basis,” Weston said. “As provinces become more confident about expanding the scope of practice for pharmacists, we see an opportunity to have select locations that can provide a service similar to the pharmacist-delivered health clinic.” Pharmacists treat minor ailments, prescribe medications for irritation and offer treatments for strep and urinary tract infections, he said. Meanwhile, the retailer’s discount grocery division continues to post strong growth. Loblaw said its “hard discount” No Frills and Maxi banners as well as its No Name and President’s Choice brands continue to benefit from shoppers looking for value. However, there are signs that inflation has peaked or will soon, with expectations that inflation will moderate in the second half of the year, Dufresne said. “Commodity prices are coming off their highs, some freight costs are coming down and supply chain issues are normalizing – except for fuel costs, which remain high but are down from last March’s highs,” he said. The company said its net income available to common shareholders was $387 million, or $1.16 per share, up 3.2 percent from $375 million, or $1.09 per share, a year ago. Adjusted earnings were $566 million, or $1.69 per diluted share, from $464 million, or $1.35 per diluted share, in the second quarter of 2021. Revenue was $12.85 billion, an increase of $356 million, or 2.9 percent, compared to $12.49 billion in the year-ago quarter.
