An emphasis on discount stores continues to pay off for Loblaw Cos. Ltd. as shoppers search for affordable groceries amid intensifying economic headwinds.

"The ongoing outperformance of our hard-discount banners — Maxi and No Frills — was a key driver of (the) success, reinforcing their vital role in helping Canadians manage affordability," chief executive Per Bank told financial analysts on Wednesday after the retailer reported its first-quarter results. 

The earnings report noted that the discount grocery banners outperformed for the owner of Loblaws and Shoppers Drug Mart, while its drugstore business saw growth in prescription drugs, particularly in sales of GLP-1 drugs such as Ozempic.

Loblaw also raised its quarterly dividend by 10 per cent to 15.5 cents per common share.

The grocer began an aggressive expansion of its discount banners in 2023, at a time when consumers grappled with decades-high food inflation coming out of the pandemic. 

Affordability has once again been top of mind for shoppers as gas prices have soared since the outbreak of the war in the Middle East in late February — sending shocks to global oil prices.

As a result, Loblaw said several grocery suppliers have been pushing for price increases as freight costs surge.

"We are fighting back on the price increases from our suppliers," Bank said. "So far, we're not seeing any price increases due to that reason."

Loblaw chief financial officer Richard Dufresne said the high oil prices didn't affect the company's results for its first quarter, which ended March 28. Looking ahead to the second quarter, he's seeing "a slight change, but not material." 

Loblaw's profit attributable to common shareholders of $594 million or 50 cents per diluted share for the 12-week period ended March 28, up from $503 million or 42 cents per diluted share a year earlier.

Same-store sales for the company's grocery stores were up 2.4 per cent, but Dufresne noted that same-store sales at 28 new discount stores that the retailer has opened since 2023 were up by double digits.

Earlier this year, Loblaw announced a $2.4-billion investment to set up 70 new discount banners and Shoppers Drug Mart stores. The grocer opened five new discount stores in the first quarter and plans to have 30 new stores in total this year, he said. 

Same-store sales at Shoppers Drug Mart gained 4.1 per cent, with pharmacy and health-care services up 6.7 per cent and front-store gaining one per cent.

GLP-1 drug sales were up 40 per cent, a tailwind to the drugstore sales, Bank said. And with the recent approval of generic GLP-1 drugs, Loblaw is also anticipating a further boost to its drugstore sales and margins in the coming months.

"This is really, really good for Canadians because they're getting this drug for much, much cheaper," Bank said.

He expects the cost of the generic drug to be a third of the current price of GLP-1, which is about $350, depending on the doses.

On an adjusted basis, Loblaw said it earned 52 cents per diluted share in its latest quarter, up from an adjusted profit of 47 cents per diluted share in the first quarter of 2025.

Revenue, including both its retail operations and the PC Financial business which is being sold to EQB Inc., totalled $14.72 billion, up from $14.14 billion in the first quarter of 2025.

The company's deal to sell its PC Financial business cleared its final regulatory hurdle this week with approval from the federal finance minister. The green light followed clearance from the federal banking regulator and the Competition Bureau for the deal first announced by the companies in December.

EQ Bank now expects the deal, which will see Loblaw acquire a 16 per cent stake in the bank, to close this summer.

This report by The Canadian Press was first published May 6, 2026.

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© 2026 The Canadian Press, source Canadian Press DataFile