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Loblaw Companies Ltd L

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Morningstar’s Analysis

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No-Moat Loblaw Handling Increasing Inflation and Ongoing Promotional Environment Pressures Well

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

No-moat Loblaw is executing well in an environment of emerging inflationary pressures and an ongoing aggressive promotion. We plan to lift our CAD 80 fair value estimate by a mid-single-digit percentage to account for stronger execution, but this will still leave the shares overvalued.

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Company Profile

Business Description

Loblaw is one of Canada’s largest grocery, pharmacy, and general merchandise retailers, operating the most expansive store footprint in Ontario and maintaining sizable presences in provinces like Quebec and British Columbia. Key grocery banners include Loblaws, No Frills, and Maxi, while its pharmaceutical operations are the product of its 2014 acquisition of Shoppers Drug Mart. The firm carries a robust private-label assortment, with top sellers like President’s Choice and No Name. In addition to its retail operations, Loblaw oversees a financial-services business, which provides credit card services and guaranteed investment certificates, and also operates its PC Optimum loyalty program. The firm’s controlling shareholder is George Weston Limited, which owns 52% of the equity.

1 President’s Choice Circle
Brampton, ON, L6Y 5S5, Canada
T +1 416 965-5209
Sector Consumer Defensive
Industry Grocery Stores
Most Recent Earnings Sep 30, 2021
Fiscal Year End Jan 1, 2022
Stock Type
Employees 220,000