Loblaw Packs a Mixed Bag of Solid Profit and Weak Food Traffic in 2Q; Shares Overvalued
No-moat Loblaw reported mixed second-quarter results, with solid gross margins of 31% (up 20 basis points versus our 2019 estimate of a 60-basis-point decline) and drug retail same-store sales growth of 4% (the strongest in three years and ahead of our 2.5% estimate for 2019), mitigated by weak food retail same-store sales growth of 0.6%, down from a 2% increase last quarter (tracking near our 2019 forecast for 1% growth). We plan to increase our CAD 58 fair value estimate by CAD 2-CAD 3 to acco...Loblaw is a Canadian food distributor and provider of general merchandise, drugstore and financial products and services. Traditional food offerings remain at the core of Co.'s business. Co. operates conventional, superstore, and hard discount stores. Co. offers products through control label program with famous brands including President's Choice, no name and Joe Fresh Style. Co. also offers President's Choice Financial services and offers the PC points loyalty program.
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