Minimum wage hikes serving up uncertainty in food industry
This is turning into a very challenging year for the Canadian food industry.
Recent Statistics Canada numbers indicate that grocers are in trouble. Food inflation is above two per cent for the first time since April 2016. This is typically good news for grocers, increasing their margins. But given major headwinds affecting the industry, grocers need to get even more creative to reassure investors.
Loblaw Companies Ltd. has reason to be particularly worried, having just posted underwhelming fourth-quarter results. Food retail sales dropped by 1.2 per cent and total revenues slipped by 0.9 per cent.
Despite strong sales at subsidiary Shoppers Drug Mart, Loblaw executives indicated that reforms affecting the price of generic drugs will impact profits.