Loblaw Companies Ltd. is seeing more participation in its popular PC Optimum loyalty program — and more points being redeemed at checkout.
Customers redeemed more than a billion dollars’ worth of Optimum points in 2024, according to Loblaw’s annual report. There are more than 17 million active Optimum users.
The strength of the program caused the grocery retailer to take a non-cash charge of $129 million in its fourth quarter that drove profits lower year over year, as the company re-evaluated the program’s liability for outstanding Optimum points to reflect the higher use.
“We increased this liability based on our expectation that more customers will redeem more of their … points going forward,” said chief financial officer Richard Durfresne on a conference call discussing the results.
“What it reflects is that more and more consumers are liking PC Optimum, are using it, and so from our perspective … we’re more than happy to do it because it reflects what’s happening in our stores.”
The parent company of Loblaws and Shoppers Drug Mart says its net earnings available to common shareholders amounted to $462 million or $1.52 per diluted share for the quarter ended Dec. 28.
The result was down from a profit of $541 million or $1.72 per diluted share in the fourth quarter of 2023.
Loblaw highlighting Canadian products
Amid a looming trade war with the U.S. that could see import tariffs on both sides of the border, Loblaw has been highlighting domestic products in its stores as shoppers look to buy Canadian. It also added a “swap and shop” feature to its loyalty app to help shoppers find Canadian products more easily.
The efforts appear to be paying off.
“As we continue to expand this feature, we are already seeing a significant uplift in sales [of] products identified as prepared in Canada,” said CEO Per Bank.
Loblaw is also monitoring how tariffs could affect prices on its U.S. products. If Trump brings in tariffs and Canada retaliates, it may have to pay more for items it brings in from south of the border, which would also put upward pressure on retail prices.
Less than 10 per cent of the company’s supply comes from the U.S., said Bank, with most of it being produce. Canada is particularly reliant on produce imports in the winter.
“If tariffs are applied on produce, there’s where we will be mostly impacted,” said Bank.
A CBC News investigation discovered some Canadian grocers were found to be overcharging customers, potentially by including the weight of the packaging in the cost of meat, which over time could add up to millions in profit. One of the grocers has apologized and all have pledged to address the issue.
The company has some plans to mitigate the effects of tariffs, but produce is the hardest thing to replace, said Bank, estimating Loblaw could mitigate the impact on about half of the U.S. produce the company buys.
“We are seeing…
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