Loblaw's Steady Earnings Seen as Defensive Anchor Amid Weak Demand

what happened

National Bank of Canada analyst Vishal Shreedhar says the predictable earnings growth of Canadian grocer Loblaw is a useful asset while macroeconomic conditions remain uncertain. In a report, he expects food sales to face pressure in the third quarter, but the discount banner should prove more resilient as shoppers keep choosing deals and trading down to cheaper products.

Shreedhar expects the pharmacy arm, Shoppers Drug Mart, to perform strongly, driven mainly by specialty drugs such as GLP-1 treatments, while front-store sales should benefit from beauty products. He estimates EPS of C$0.75, up from C$0.69 a year earlier and above the C$0.74 consensus. Same-store food sales growth, however, is forecast to slow sequentially to 0.9%. Market Talk reported the analysis.

why it matters

For investors, Loblaw is viewed as a defensive stock, and steady demand for groceries and pharmacy products typically supports consumer staples shares during uncertain periods. The analyst's estimate sits above consensus, so the actual quarterly results could meaningfully move the stock on the TSX.

market impact

Canadian consumer staples: stronger expected profit and defensive profile support Loblaw shares

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