Loblaw boycott explanation | Financial post

The Canadian supermarket giant’s investors appear largely unfazed as share prices hit new highs

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Now the boycott of Loblaw Cos. Ltd. entering its third week of a month, the Canadian supermarket giant’s investors appear largely unfazed. While the movement continues to see a rise in followers, evidence of its impact remains largely anecdotal. And Loblaw’s stock hasn’t suffered; they hit an all-time high of $156.76 a week after the boycott began and have remained in positive territory this month. The Financial Post’s Denise Paglinawan explains where things stand.

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Who is behind the boycott and how many supporters does it have?

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The nationwide boycott stemmed from a Reddit group called “r/loblawsisoutofcontrol” (LobIaws is out of control). The group has about 77,000 members, up from 56,000 on May 1, the start of the boycott. Emily Johnson created the subreddit page in November and was then joined by eight other organizers from across Canada to urge consumers to include all Loblaw subsidiaries (Loblaws, No Frills, Real Canadian Superstore and Shoppers Drug Mart/Pharmaprix) for the month of May to be avoided. . According to organizers, the Reddit page has been viewed 4.5 million times to date, while the group’s eponymous Instagram account has grown to more than 10,600 followers.

In an interview with the Financial Post, Phoenix (Vince) Geisler, an organizer working with Johnson, said the boycott gained momentum from week two. He said data, based on Google Maps, shows strong participation in eastern regions such as Ontario, Nova Scotia and Newfoundland, as well as in Alberta. The group’s figures have not been verified by the Financial Post and Loblaw did not respond to questions about the impact of the boycott.

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What do they hope to achieve with the boycott?

Motivated by what organizers describe as “the ridiculous cost of living in Canada,” shoppers participating in the boycott are vowing to spend their grocery dollars at stores not owned by Loblaw. In some communities, this is easier said than done, given the company’s substantial market share, estimated at 27 percent nationally, and the fact that Loblaw stores are often the only store in town, or at least nearby. In an interview with the Canadian Press, Johnson said that while the boycott’s primary goal is to have a financial impact on the company, she also hopes to raise awareness, educate consumers and get government attention.

Geisler told the Financial Post that one of the main goals of the boycott is to get the company to sign the Code of Conduct for Grocers. Loblaw has said this is bad for business and will drive up food prices for customers. Other demands from the protesters include no further retail-led price increases until 2024, no further increases in dividends and greater cost transparency in identifying items that have undergone “shrinkflation,” Geisler said. Organizers also hope Loblaw will commit to affordable prices through price caps on essential items and a commitment to “end price gouging.”

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What happened during the meeting between the boycott organizers and Loblaw’s CEO?

Lead organizer Emily Johnson met with the grocer’s CEO, Per Bank, on May 2 at the company’s request. Based on a transcript of the meeting obtained by the Financial Post, Johnson shared shoppers’ concerns and questions with Bank, who then discussed some of the things the grocer is doing to help customers struggling with the high cost of living. such as removing ‘multi-buy’ promotions – where customers get a better price per unit if they buy more than one item. Boycott organizers said the meeting with Loblaw yielded no concrete commitments, and while “the dialogue is positive,” they said the boycott would continue, according to Geisler.

How has Loblaw responded?

At the company’s annual general meeting on May 2, executive chairman and former CEO Galen Weston Jr. back on what he and Per Bank called ‘misplaced criticism’ of the company. “As a well-known company and Canada’s largest grocer, it makes sense that Loblaw would be chosen as a focal point for the media and government, and of course, consumer frustrations,” Weston said.

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What’s the bottom line for Loblaw?

On the same day the boycott was launched, the company announced its first-quarter earnings results and increased its dividend by 15 percent, after reporting a nearly 10 percent increase in profits. Loblaw said the increase in profits and sales was due to an increase in customer traffic, as prices in its stores rose less than the overall level of food inflation tracked by the consumer price index. The company’s revenue was $13.58 billion in the quarter ended March 23, an increase of $586 million compared to the first quarter of 2023. Net income rose 9.8 percent to $459 million, while earnings per diluted common share rose 14 percent to $1.47.

Loblaw did not respond to requests for comment.

— With files from Canadian Press

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