Loblaw profits jump 23% in third quarter as Metro reports higher sales from inflation

of $556 million on revenue of $17.4 billion in the third quarter, up 29 per cent from the same quarter last year. On an adjusted basis, profit was $663 million, an increase of 22.8 per cent. Adjusted earnings per share of $2.01 beat forecasts of $1.92.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc.

Runaway inflation this year has thrust Loblaw, Metro and Sobeys’ parent Empire Co. Ltd. into a harsh public spotlight, as consumer advocates, politicians and economists question how the chains increased their profit margins while shoppers faced the worst rise in grocery bills since 1981.The news came as Statistics Canada released its latest Consumer Price Index on Wednesday, which shows that grocery prices rose by 11 per cent in October compared to last year — slightly better than 11.

This summer, Steven Salterio, a Queen’s University accounting and auditing expert who has studied the grocery sector,released by Loblaw, Empire and Metro. In August, he found all three had improved their gross and operating margins in the past year compared with their five-year averages. Loblaw had the largest margin improvement, up more than 130 basis points, or 1.3 per cent, in the period.

Loblaw’s margin of 30.8 per cent in the third quarter represented an increase of 10 basis points compared to last year, according to Wednesday’s financial update. But Loblaw said the increase wasn’t coming from the food aisles. Gross margins in that side of the business were “flat” compared to last year, said the news release. Instead, the growth comes from higher-margin categories, such as cosmetics, in Loblaw’s drug store business, which includes the Shoppers Drug Mart chain.

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