By Adriano Marchese
Loblaw Cos. is scheduled to report its fourth-quarter earnings Thursday. Here is what you need to know:
REVENUE: According to analysts on FactSet, revenue is expected to rise to 14.53 billion Canadian dollars, the equivalent of $10.74 billion, up from C$14.01 billion a year earlier.
ADJUSTED EARNINGS: On an adjusted basis, analysts are expecting a rise to earnings per share of C$1.90.
In the fourth quarter, Loblaw’s stock rose nearly 11% and was recently trading down 0.2% at C$138.71.
WHAT TO WATCH:
FOOD INFLATION: Investors will be keen to know to what extent food inflation will play on both demand and earnings. National Bank of Canada analyst Vishal Shreedhar said in a report that he estimates food store inflation of 4.9% versus 7.2% in the previous quarter. “In December, inflation moderated to 4.7% and we expect further moderation, reflecting a decline in the price of major inputs and base effects,” he said.
PROMOTIONAL PENETRATION: As inflation has affected food costs particularly heavily in Canada, investors will want to know shoppers’ spending habits and how Loblaw’s discount labels have faired in the period.
GROCERY INDUSTRY CODE OF CONDUCT: Shreedhar says the proposed Grocery Industry Code of Conduct, which is being developed to support fairness and transparency in the sector, won’t contribute materially to stabilizing food prices.
Write to Adriano Marchese at adriano.marchese@wsj.com
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