Loblaw Companies (L) Q4 2023 earnings summary

Executive summary

• FY2023 delivered revenue growth of 5.4%, adjusted EBITDA growth of 7.5% and adjusted diluted EPS growth of 13.6%, supported by retail sales gains and operating leverage.

• Q4 revenue rose 3.7%; adjusted EBITDA grew 9.4% and adjusted diluted EPS increased 13.6%, with value offers, traffic growth and pharmacy services supporting performance.

• Value-focused shoppers favored discount banners, private labels and personalized loyalty offers amid inflation; grocery retail gross margins were flat YoY, according to the Chairman’s message.

Financial highlights

• FY revenue was $59.529B, up 5.4%; operating income was $3.704B, up 10.8%; adjusted EBITDA was $6.647B, up 7.5%.

• FY net earnings attributable to shareholders were $2.100B; net earnings available to common shareholders were $2.088B, or $6.52 diluted EPS; adjusted common net earnings were $2.480B, or $7.75 adjusted diluted EPS.

• Q4 revenue was $14.531B, up 3.7%; operating income was $943M, up 8.3%; adjusted EBITDA was $1.633B, up 9.4%.

• Q4 net earnings available to common shareholders were $541M, or $1.72 diluted EPS; adjusted common net earnings were $630M, or $2.00 adjusted diluted EPS, up 9.6% and 13.6%, respectively.

• FY cash flows from operating activities were $5.654B and free cash flow was $1.700B; capital investments reached $2.109B.

Outlook and guidance

• FY2024 guidance: Retail earnings to grow faster than sales; adjusted net earnings per common share growth in the high single digits.

• FY2024 net capital expenditures expected at $1.8B, reflecting gross capital investments of ~$2.2B less ~$400M of property-disposal proceeds.

• Plans to allocate a significant portion of free cash flow to share repurchases while investing in the store network and distribution centres.

• 2024 priorities include retail excellence, digital and loyalty growth, supply-chain modernization, discount network expansion and connected healthcare.