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“Loblaws delivered better results, in a complex quarter,” executive chairman Galen Weston said on a conference call.
The company’s net earnings were $342 million, up 3.3 per cent over last year. Loblaw said it will raise its dividend per share by two cents, or 6.3 per cent. It also spent $350 million during the third quarter to repurchase five million common shares.
But the success has not been without angst. Loblaw is in the midst of a fight with food manufacturers after the grocerincreased the fees it charges suppliers in an attempt to help cover the costs of its $6-billion upgrade to e-commerce and store infrastructure.
The strategy followed Walmart Canada, which shocked and angered the manufacturing sector this summer by charging suppliers new fees to pay for its $3.5-billion modernization plan. At the time, Food, Health and Consumer Products of Canada, the main trade association for suppliers, said Walmart had set a dangerous new precedent in the industry. It has since ramped up pressure on provincial and federal governments to impose an industry code of conduct.
In a major development late last month, Sobeys’ parent company Empire Co. Ltd.publicly criticized its competitors over the new fees and endorsed the campaign for a code of conduct.
“Taken to the extreme, some of these behaviours are just plain bad for Canada,” Empire chief executive Michael Medline said. “It’s time that we got together as an industry and had a set of very simple, value-driven ground rules so that we don’t get in this mess and that we have a very healthy food supply chain.”
