Loblaw operates an essential, recession-resilient consumer staples duopoly with unmatched scale advantages across the Canadian landscape. With over 90% of Canadians living within 10 kilometres of a store and more than 18 million active members enrolled in the PC Optimum program, the company possesses unparalleled customer stickiness, proprietary data monetization capabilities, and pricing leverage. Its multi-tier banner strategy allows the company to capture trade-down traffic through hard-discount formats like No Frills and Maxi while defending high-margin baskets in health, beauty, and pharmacy at Shoppers Drug Mart.
The stock trades at 27.0 times the company’s forward earnings forecast. That’s warranted by its superior defensive qualities, dominant market share, and steady profit expansion. And unlike pure-play grocers, this duopoly generates substantial operating profit from high-margin pharmaceutical dispensing and health/beauty merchandise.
LOBLAW COMPANIES (Toronto symbol L; www.loblaw.ca) operates 1,140 supermarkets (including 569 owned by franchisees) under several banners, including Loblaws, Zehrs, Provigo, Real Canadian Superstore and No Frills. It also operates 1,383 Shoppers Drug Mart stores across Canada.
On July 1, 2026, Loblaw completed the sale of its financial services division to EQB Inc. (Toronto symbol EQB), the parent company of Equitable Bank.
As a result, EQB now owns President’s Choice Bank, which offers no-fee banking accounts under the PC Money banner. It also sells insurance products and has over 2 million PC Financial Mastercard credit card users.
The deal excludes the PC Optimum loyalty rewards program, which has over 18 million members. However, EQB will become the exclusive financial services partner for the program.
Loblaw received $234.5 million in cash and 7.23 million EQB shares. It now owns 19.89% of EQB, and that stake is currently worth $1.21 billion.
The company now plans to increase its stake in EQB to 24.90%. That will let Loblaw shareholders benefit as EQB’s banking expertise will help PC Financial attract more customers.
As well, Loblaw can better focus on its main retailing operations. Investors tend to prefer “pure play” firms that are easier to evaluate and compare to similar firms.
The supermarket operator has teamed up with EAIGLE to use that firm’s advanced artificial intelligence (AI) tools to improve the efficiency of Loblaw distribution centres.
EAIGLE’s Vision AI system uses cameras and sensors to validate vehicles and capture freight data. That helps automate and speed up the movement of trucks through Loblaw facilities.
Innovations like this will help strengthen Loblaw’s supply chains and avoid product shortages. Better efficiency will also help it avoid raising selling prices, particularly as shoppers deal with rising costs for gasoline and other goods.
Meanwhile the company plans to increase sales at its Joe Fresh clothing boutiques inside its supermarkets by adding well-known brands such as Levi Strauss, Reebok, Champion and Nautica.
Joe Mimran, who co-founded the Club Monaco chain and helped launch the Alfred Sung brand, created the Joe Fresh line of private-label apparel, accessories and footwear in 2006. Mimran stepped down from his role with Joe Fresh in 2015.
Adding more apparel brands should help Loblaw attract more shoppers to its stores. It will also help it compete with Walmart and Costco, which also sell food and clothing.
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Loblaw’s share repurchase strategy pushes up per-share earnings
The company continues to benefit from higher customer traffic at its discount-price stores. In the quarter ended June 20, 2026, overall sales rose 4.1%, to $15.05 billion from $14.46 billion a year earlier.
Same-store sales for its supermarkets rose 1.6% from a year earlier, due to higher customer traffic and purchases per visit but also e-commerce sales growth.
Shoppers Drug Mart’s overall same-store sales rose 4.6% in the quarter, reflecting a 7.5% rise for pharmacy and healthcare services and a 1.3% increase for sales of other merchandise.
If you exclude one-time items, earnings in the latest quarter gained 8.6%, to $774 million from $713 million. Loblaw spent $571 million on share buybacks in the quarter. As a result of the fewer shares outstanding, per-share earnings rose 11.9%, to $0.66 from $0.59.
Loblaw’s shares have gained 17% in the past year. They now trade at 27.0 times the company’s projected 2026 earnings of $2.56 a share. That’s a reasonable multiple considering its high market share. The $0.6207 dividend yields 0.9%.
Recommendation in Canadian Wealth Advisor: Loblaw Companies Ltd. is a buy.
