North West Company’s unassailable competitive moat in underserved markets represents the foundation of our investment conviction. The firm’s market position faces virtually no direct competition due to logistics complexity, low population density, and first-mover advantages developed over decades. Recent investments in private label products through partnerships, e-commerce capabilities, and a key modernization program further entrench competitive advantages.
Equally attractive for us is the combination of attractive valuation, fortress-like cash generation, and sustainable dividend growth.
All in all, this firm represents an attractive mix of income and potential capital appreciation. It’s a solid pick for your long-term buying.
NORTH WEST COMPANY (Toronto symbol NWC; www.northwest.ca) sells food, and everyday products and services through 230 stores. Those locations are mainly in northern communities across Canada and Alaska. Through your shares, you also tap the company’s operations in remote regions of Hawaii, the wider South Pacific and the Caribbean.
North West’s food offerings consist of perishable and non-perishable products including groceries, dairy, produce, meat, convenience foods, food service, home meal replacement, health and beauty aids, paper products and cleaning supplies. Its general merchandise assortment is broad, and includes family apparel, housewares, sporting goods, toys, furniture, appliances, home entertainment, snowmobiles, all-terrain vehicles (ATVs), boats and outboard motors. The company also offers other everyday products and services such as gasoline, pharmacy and financial services like cheque cashing, ATMs and prepaid card products.
North West owns North Star Air Ltd., a Thunder Bay-based airline. North Star provides cargo and passenger services in the following regions of Canada: northwestern Ontario, northern Manitoba and Nunavut. Its operational hubs are in Pickle Lake, Red Lake, Sioux Lookout and Kapuskasing, Ontario, and Thompson, Manitoba. North Star lets North West provide faster, more consistent delivery of merchandise to its stores in northern Canada that are inaccessible by all-weather roads. North Star’s current fleet comprises 18 aircraft, including three Basler BT-67, seven Pilatus PC-12, five ATR 72, and three Dash 8’s.
North West’s earnings dip is temporary as the business model remains rock solid
In the quarter ended July 31, 2025, overall sales rose slightly, to $647.0 million from $646.5 million a year earlier. Same-store sales fell 1.1% in the quarter compared to last year. Same store sales for Canadian operations were negatively impacted by wildfire-related community evacuations in northern Canada and the impact of a decrease in funding to individuals from Jordan’s Principle and Inuit Child First programs. Excluding the stores impacted by wildfire-related community evacuations, adjusted same store sales increased 0.6%.
Excluding one-time items, earnings in the quarter fell 2.5%, to $39.6 million, or $0.79 a share, from $40.7 million, or $0.82. Costs rose, including for interest and income taxes, as well as due to the impact of wildfire-related community evacuations in northern Canada.
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The company faced an unprecedented challenge in 2025 when widespread wildfires swept through northern Canada, evacuating four communities entirely and partially evacuating 10 others, affecting approximately 10% of the store base. Rather than retreat, North West employees remained in communities to serve emergency personnel and residents, while management donated perishable inventory to affected populations.
Overall, the long-term outlook for the company and its investors remains positive. That’s especially so for its operations in the North, including Alaska, where the company holds a dominant market position. Meanwhile, to boost profits, as well as provide its customers with lower-priced products, North West continue to expand its private label offerings.
What’s more, the company’s “Next 100" strategic initiative continued gaining momentum through 2025, focused on operational excellence across merchandise assortment, promotional effectiveness, labor optimization, and technology investments. One-time costs associated with this transformation initiative were estimated at $1.7 million in the most recent quarter, but management is confident these will be fully offset by incremental earnings as initiatives mature through 2025-2026. Early results show promise, with improved profit margin rates from more effective data-driven promotions and better inventory management.
With the October 2025 payment, North West raised your quarterly dividend by 2.5%. Investors now receive $0.41 a share instead of $0.40. The annual rate of $1.64 yields 3.4%.
Recommendation in Dividend Advisor: North West Company is a buy.
