Loblaw Assemblages Ltd., Canada’s largest grocery and drug store operator, warned Wednesday that least wage increases in Ontario and Alberta threaten to harm its bottom straight and it will have to find ways to cut costs.
The company, which owns Shoppers Dope Mart and grocery chains including Loblaws and No Frills, estimates that the wage hikes commitment mean its labour expenses will balloon by about $190 million next year.
“We are waste away a significant set of financial headwinds and the organization is mobilizing all of its resources to see whether or not it can clinch that gap,” Loblaw chairman and CEO Galen G. Weston told analysts during a three-monthly earnings conference call.
“At this point, we don’t know the answer.”
The Ontario direction has proposed legislation that would boost the hourly minimum wage, which is currently set to bring into being with inflation, from $11.40 an hour to $11.60 in October, to $14 on Jan. 1 and $15 the make good year.
The provincial government has said the wage increases are intended to extension people’s purchasing power and stimulate broader economic activity. But a tons of business groups, including the Ontario Chamber of Commerce and the Canadian Association of Independent Grocers, have decried the legislation, saying it will dnouement develop in job cuts.
In 2015, Alberta announced plans to hike its minimum wage from $10.20 an hour to $15 an hour by next year.
Weston called the wage develops “the most significant in recent memory,” adding that the company is expediting rules to save money such as increasingly digitizing manual invoice assigns and rolling out more self-checkouts at its Shoppers Drug Mart locations.
“We force a lot of work ahead of us as we’re still assessing the extent to which we can mitigate these headwinds,” said Weston.
Antidepressant price changes
Loblaw said another anticipated drag on its finances inclination be Quebec’s changes to generic drug prices. Last week, the Quebec superintendence reached a five-year deal with the Canadian Generic Pharmaceutical Organization that would see the launch of new cost-saving generic prescription medicine and broke prices.
The agreement will result in lower generic drug figures beginning in the fall and is expected to save the province more than $300 million a year.
There may be myriad challenges ahead for Loblaw. Last month, U.S. e-commerce giant Amazon circulated a US$13.7-billion blockbuster deal to acquire Whole Foods, a rouse some say could upend Canada’s grocery industry.
Earlier Wednesday, Loblaw narrative a second-quarter profit attributable to shareholders of $358 million or 89 cents per lessened share, up from its profit of $158 million or 39 cents per weakened share a year ago.
Revenue for the quarter ended June 17 amounted to scarcely $11.08 billion, up from $10.73 billion in the same quarter hold out year.
Its shares declined nearly four per cent, or $2.64, to $68.85 on the Toronto Begetter Exchange in midday trading.