01 August 2018 Posted By : Baystreet Staff

Loblaws CEO Says Canadians Will Face Higher Grocery Prices Due To Trade War

The chief executive officer of Canada’s largest grocery store chain says that Canadians will likely see higher prices for food items in the coming months due to the impact of tariffs imposed in an ongoing trade war with the United States.

Galen G. Weston, CEO of Loblaw Companies Ltd. (TSX: L), made the comments Wednesday during a conference call with analysts. He pointed to new tariffs imposed by the Canadian federal government as of July 1 on $16.6 billion of U.S. imports. The targets include a number of food products, such as yogurt, coffee, soya sauce and mayonnaise.

"We see a very strong possibility of an accelerating retail price inflation in the market," said Weston. It's unclear what the financial impact of these tariffs will be, he added, and the outcome will depend on how both suppliers and Canadians respond.

Higher transportation costs and a low Canadian dollar add further pressure on the grocery and pharmacy retailer, which indicated it expects to see upward pressure in prices.

"We don't think it's going to be meaningful, you know, super significant," said Weston. "But it certainly will be higher than what it is today."

The comments came after the company released its second-quarter financial results. The grocer's adjusted earnings outpaced analyst estimates, but it also recorded an 86.1% decline in net profit due to a number of unfavourable items including an acquisition expense at its Choice Properties division. Net profit available to common shareholders dropped to $50 million or 13 cents per share for the 12 weeks ended June 16, from $359 million or 90 cents per share a year earlier, the company said.

Analysts had estimated $1.09 per share of adjusted earnings, according to Thomson Reuters Eikon.

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