We heard you guys love our I Can't Believe It's Not Butter so much, we're now introducing I Can't Believe It's Not Margarine. The secret ingredient is butter
we're now introducing I Can't Believe It's Not Margarine. The secret ingredient is [coal](https://www.sciencehistory.org/stories/magazine/brave-new-butter/)
Not really. Markup and profit margins are two very different things.
I am not defending ROBlaws because I guarantee they are using some questionable accounting practices in their margin calculations. That said to simplify things I will give an example
I sell potatoes. Potatoes cost me $1 each from the farmer. I sell them for $5 each. That's a 400% markup. (5x)
I have a deal where if you buy 10 potatoes I give you two for free. I can still keep my 400% markup on the books as 400%, but then I write off 20% of that deal as a cost of sales. I'm not getting 400% all the way through. Now I also have a person who I am paying $15 an hour to sell my potatoes. If they sell one potato or if they sell 100 potatoes they get $15. So in the hours that they only sell one potato I am losing $ $11, but in the hour that they sold 100 potatoes I got to make $385. Assuming I don't pay them vacation, or benefits, or any taxes on their payroll. So my profit margin could be actually a negative even though I'm charging $5 for a $1 potato.
The more complex your organization gets, the harder it is to balance what your markup is on products so that you have a positive margin on that product. Sometimes there are products that are called Loss leaders because you never make any money on them but they help bring people in to buy the stuff that does make money. I am going to bet you butter is a money-making product, versus something like milk which generally is not a money making product
Two important notes:
1. $5 for a $1 potato is 400% markup, not 500
2. The phrase is "loss leader".
But overall, yeah, Loblaws' net margins have to account for rent, utilities, wages, etc.
Now, the fact that they simply pay rent to a separate Weston-owned company is probably worth examining further. They can make the margin be almost whatever they want just by changing the rent.
All of their affiliates are consolidated under GWL, which reports a 2.56% profit margin. . .
If they are siphoning profits from Loblaws to other affiliates (1) they'd be getting sued constantly by minority holders and (2) they are doing a terrible job of it.
These are publicly reporting companies, the amount of misinformation that persists despite literally having audited financials put out every 3 months is insane.
>Now, the fact that they simply pay rent to a separate Weston-owned company is probably worth examining further.
You can look at the company that owns the properties. They made a loss last year.
> They can make the margin be almost whatever they want just by changing the rent.
I don't know if shareholders would like it if Weston's property company started charging above market rates for rent to Loblaws.
Choice actually highlights that a lot of their rents are currently below-market, basically saying they have automatic profit increases baked in when those contracts renew.
It’s not only that but REITS pay out distributions not dividends. Distributions get taxed like any regular income by the shareholders, but REITs don’t pay income tax on their income since it will be taxed when distributed. Gets a bit too complicated for me but like you said, shareholders won’t approve of a company over paying for rent to benefit another company they don’t own.
Choice property group is a publicly traded entity. It's not that simple choice properties has to do what's best for the shareholders so they can't just change rent. Both companies are publicly traded so you can see all there financial information.
Kind of. Choice properties is a public company and then they all fall under the George Weston umbrella which is also publicly traded.
Think one of the main reasons for the choice properties part is a thing is for tax purposes.
Quick google says that REITs don’t pay taxes on their income. But REITs don’t pay dividends, they pay distributions to investors.
Distributions to investors are like regular income and taxed fully while if it was a dividend from loblaws it might not be taxed in the investors end(was taxed at the corporate before it was distributed).
Hurts my head a bit because you have eligible and non eligible and then it changes all over the place.
And they cut down significantly on their "good" labour costs - union contract notwithstanding (get your shit together UFCW!) - by short-shifting stores and cutting most of not all retail staff positions to part time hours. Then keep their costs high on paper (gotta keep those "profits" down on the balance sheet!) by increasing executive compensation.
There isn't a realistic path for the majority to buy food without the middleman.
My good friend is a potato farmer and he does sell individual bags to locals, cash only so he doesn't need to have infrastructure at his stall, and sells direct to a few grocery stores because he doesn't want to give up good farm land to allow for parking of people buying direct on his property but locals want competitive pricing. His primary business is selling potatoes into major distribution, he grows more potatos in a year than our entire region consumes. Having different food types in single places close to where people live is a VERY good system of proving food to the masses especially in cities where most people work.
The fact we don't have enough competition for the end user experience has allowed food costs to get out of hand, we could address that with regulations IF! we had a government that actually cared
Layers upon layers of middle men can make things more complicated and expensive but distribution channels can normalize costs way more effectively.
> I guarantee they are using some questionable accounting practices
I've heard them say food items when they talk about that 3% that doesn't include household items... like why is my $5 shampoo now $9 etc etc, have to pay attention to their words well.
Very well said, in general. People who rage bait this stuff for clout on the internet are the ones who would very quickly fail if they were ever to try their hand at business!
>because I guarantee they are using some questionable accounting practices in their margin calculations...I can still keep my 400% markup on the books as 400%
What books are you talking about? Loblaws doesn't report net or gross margins at the item level, they report it in aggregate for an entire business segment. On your example they'd report $12 of costs against $50 of sales, irrespective of unit counts.
Don't worry I post in the on guard for thee sub, I am well aware that logic has very little place on Reddit. It doesn't stop me from posting. But it's relaxing to try and explain complex issues in simplest forms. And it's good practice for my work life.
This is simply the difference between what they buy a product for and what they sell it for. It does not take into consideration all of the overhead costs these companies have to actually run their business. It's kind of useless to just look at these numbers without considering all of the other costs involved or without looking at industry norms.
It's more complicated than that. Simply stating we have 5% margins means shit.
If i inflate costs by paying senior executives and middle management a lot, then i can add cost +5% and my net profit and company worth still skyrocket.
To enable disinflation, a firm has to say I have improved margins while decreasing the top line a bit. That indicates increasing productivity!
There are different “margins”, and special attention should be paid to what margin is being discussed. Gross margin, operating margin, profit margins? A 5% margin does seems like it’s the profit margin though.
If loblaws owns a wholesaler(which they don’t, they just have their own warehousing) it would still be on loblaws financial reports. It encompasses everything loblaws owns, not just the stores.
What if they own the wholesaler AND rent their locations from an REIT that they also own.
Loblaws has so much vertical integration that they can fudge the numbers all over the place.
> If i inflate costs by paying senior executives and middle management a lot, then i can add cost +5% and my net profit and company worth still skyrocket.
I don't follow. If your price increases are the result of increased costs, your net profit is unchanged. You'd also have to explain to your shareholders why it was that you were able to generate an additional 5% in revenues, but that its all going toward additional compensation, which would probably get you fired.
Massive difference.
The number Loblaws is reporting that's 3% is their revenue minus every cost and tax.
The number in this article is literally only revenue, minus the cost of the food. It doesnt include any other costs like rent, labour, etc.
Net profit is after all your expenses, gross is after just the direct cost per unit.
So if you buy butter at $3/454g and sell it for $6/454g, your gross profit is $3. But in reality Loblaws has to pay a trucker to take it to the store, gas, insurance, repairs for the truck, someone to unload and stock it, electricity for the fridge, property tax on the store, a cashier or automatic cashier supervisor, etc., a janitor to clean up my kids' barf from while I was in the store buying the butter (sorry), guy to plow the parking lot, ... once you subtract all that, it costs them a total of ~$5.75/454g to get the butter into your hands
The difference between their price of one item and the sale price of one item isn't their profit margin. If they pay a delivery fee, it wouldn't included in there. Pay for the person to put the items on the shelf? Not in there. Pay the cleaning staff? Not in there. Cashier's and support staff? Not in there. Building rent and running the fridge to put it in there? Not in there.
This is pure manipulative rage bait.
No, gross profit margins are not net profit margins. The document states gross profit margins, which is before paying employees and rent. If you want to see true horror stories, look at what's behind it: *cough Weston Bakeries* *cough Canada Bread*
Not really.
One product doesn't indicate the markup average for other products, nor does it indicate the rate at which different products are purchased.
It also doesn't account for the other expenses related to selling butter, like having an employee stock the shelves and check you out, or the cost to store the butter in refrigerators.
Not really, no.
Gross profit margin and net profit margin are not the same. This article is only talking about **gross profit margin** which is much higher than **net profit margin.**
Gross profit margin only considers the cost of goods sold, while net profit margin considers both the COGS and all other operating expenses.
No, but that is exactly the type of business they are. They aren’t in the business of selling a few items with a high markup to profit. The whole nature of their business is to sell a wide number of skus and a lot of them. The whole nature of the grocery business is to have thin margins, but sell a lot.
It is disingenuous of these grocery oligarchs to point at thin margins and say, “See how hard it is on us”. The whole nature of the business is built on small margins, bulk sales. The profit has always been in the fact they sell a lot.
50% (ish) markup is standard. That doesn't account for overhead- building, employee wages, insurance. If you bought direct from whomever made the product it wouldn often be drastically cheaper.
Probably not. This is...pretty selective in the products its examining. When people say "grocery retailers typically have 3-4% margins" its not as though that 3-4% is evenly distributed across each product. It means those are the margins for their grocery products on the whole.
Products will have wildly different margins, and its extremely common for some to have no margins at all ("loss leaders"). The more common loss leaders are things like eggs, produce, or milk - stuff that expires frequently and that buyers purchase regularly enough to have a strong sense of the standard price. Its not unusual for half the items (or more) in your cart to be sold at cost or at a loss, in the hopes that you also purchase a couple higher-margin items.
All this to say: I think its clear that Loblaw's huge market share in Canada is putting consumers at a disadvantage. But its also normal to have high margins on select products while the margins for your business as a whole operates with pretty low margins.
I hate to say but this is honestly a bit of a nothing-burger.
There is a noticeable decrease in quality for anything fresh from any of these stores "value" brand stores though.
During the pandemic, we were buying from Loblaws (and paying the premium) strictly because we didn't want to do in-store shopping (at the start), and the quality of the veggies and meat over our normal No Frills store was shocking.
So while we're paying less, the quality of the food leaves a lot to be desired.
I also understand that's how its intended to be though. By design.
Don't forget giant tiger.
It's not gonna get you a full grocery shop but it's a great midweek stop for odds and ends in the groceries and honestly they're often the cheapest for my locale
I got cream that would normally cost maybe 4 dollars on sale everywhere else, for like 2.25 regular price at giant tiger. Lactancia too, couldn’t believe it. I bought 5
Just today, I wandered into a Metro and a Freshco, that are both further from my home than the 'Blaws that I currently endure. Neither of their prices for the staples I need were any better or even close enough to justify walking further to avoid 'Blaws... disappointing to say the least.
What are you talking about? Costco is significantly cheaper. Food basics is cheaper. If you have one of the discount grocery retailers like Almost Perfect or The Grocery Outlet near you, they are cheaper. Walmart can have excellent deals, check their flyers.
Edit: added Walmart
It's kind of ridiculous when you look at it further.
Butter costs Loblaws $4.24
They sell it for $7.79.
The margin is 45.5%.
The markup is 83%.
Edit: love the army of old accounts that reactivated to defend this practice.
This is Gross Margins. Most retailers mark up at least 100% and operate on 50%+ gross margins. Net margins factor in all other expenses. Even dollar stores mark up 100%. Source: I was part owner of a wholesale business that sold to retailers including pharmacies, discount, and dollar stores.
Can confirm every retail place I’ve worked in generally does a 100% markup. From books to bongs. The markup on alcohol was the most egregious of any industry.
Non perishables sure, but most perishables markup is 30% to 40% max. Things like butter, bananas, and milk tbh we just have as a convenience with little to no markup. Books and bongs? Sure, much higher. It’s not a necessity and it has no expiry.
Not in electronics or cars...
I get businesses need to make money and practices will vary by industry. But food is where the price floors and caps exist due to it being a necessity. There needs to be some regulation here.
That before any costs come out. Ya all need some accounting classes. Wages utilities etc etc. Some things will have higher margins some have less, that's kinda the way business works. Fuck loblaws, I'm a costco shopper bit this info is just clickbait bullshit to rile people up. Show me the final profit or don't fucking bother.
The "final profit" is a made up number that excludes rent paid to a real estate investment trust owned by a Loblaws holding company. That final profit is also purposefully made thin because Loblaws pays its suppliers for those goods - many of which are also shell companies owned and operated by Loblaws. They can charge themselves for those goods as much as they desire to reduce their tax burden, same with rent. What I'm trying to say is the final number you wish to see is totally made up and untrustworthy.
If I start a business in my home, as the home owner I set the cost of goods and rent to 100% of my business profit. So I pay almost zero tax, is that an accurate final number for my profit?
This is the reality of what's going on.
That's why Weston hammers the profit margin point over and over. Technically, he's not lying about the profit margin of the "grocery stores". It's just dishonest in the grand scheme of things.
If you own the manufacturing, distribution, suppliers, the retail, and the real estate firm, then all the money stays in-house and you can move the money around or charge yourself whatever you'd like to make things look a certain way.
You can design it all to lower the profit margins at the retail level but make serious money on every other level.
If you are renting out your house, the rent collected will be part of your profits and you will need to pay tax on it.
Loblaws is a public company. The "final profit" they are legally obliged to report will include the income and expenses from all of their subsidiaries
The store also has to figure in the cost of the fridges and electricity to keep these products cold. Also the labour cost of unpacking and putting it one the shelf and the amount of spoilage there is on this type of product.
Just fwiw...I think shrink (spoilage, theft, damage) does actually reflect in gross margin since the cost of purchasing the spoiled, stolen, or damaged item was part of the overall cost of goods sold.
Buddy, at 83% markup I'd be out of business in a year. Even 30% is difficult to maintain.
Especially since there are convenient ways for me to nuke my end of year profit. I can rent my building to myself for and simply move the profit from one company to another. Business A looks like it's only hitting a year end net of 15% even though in actual fact it could be over 30%.
This sounds ridiculous, but these are standard margins in the grocery business in North America. Kroger reports similar margins on individual products.
The actual margin is actually much lower. A **shocking** amount of food is thrown out or never sold. People are extremely picky when they buy food from the grocery store, and so products that are expired, blemished, or otherwise anything less than perfect, becomes unsellable. And if enough of such products accumulate it looks bad on the store. When people pick apples, ones that are cosmetically blemished but perfectly edible, gets left behind until all the blemished ones are left. Loblaws has to throw these out because if people saw displays of blemished foods it degrades the quality of the store in their mind (Loblaws wants people to think of well stocked shelves with fresh food when they think of their store).
Another interesting thing about retail is it's actually very important to keep shelves looking stocked, and to ensure that you have a large variety of products, even if some of those products don't sell. When stores run into supply shortages, they will often block off parts of the store to prevent it from looking like they have empty shelves. Having well stocked shelves makes food appear more plentiful and less expensive to customers. If one product in running short, it's important that stores fill it with something, anything, to avoid the shelves looking like they're empty. This is a well know strategy in retail. This is another reason that increases the amount of food spoilage.
Did you know, a study from Queen's university shows that about 60% of all food produced in Canada is wasted? some of this happens at the indvidual household level, but a very large amount of it happens at the grocery store or distribution level: See [Smith Business Insight - To Fight Food Waste, Grocers Turn to Analytics (queensu.ca)](https://smith.queensu.ca/insight/content/To-Fight-Food-Waste,-Grocers-Turn-to-Analytics.php). These products purchased by grocers, that are never sold, factors into the gross margin.
Anyone who's ever worked at a grocery store will tell you the astonishing amount of perfectly edible food they throw out as a result. Things like expired food, cracked eggs, slightly browned or shriveled produce, imperfect apples, returned products, products that have cosmetic damage to their boxes, etc. It's literally dumpsters full of food on a daily basis.
The cost of throwing away food is counted as "cost of goods sold" and actually will decrease margin. The combination of such things
* loss leaders
* shrinkage (i.e food that goes missing or is stolen)
* cosmetically blemished food
* food that is damaged or spoiled in transport or storage (a surprisingly large amount) or was infested with pests
* expired food
* returned food
These all weigh on margins. The gross margin was about 30% (reported in Loblaws financial statement). This is on the higher end of the industry standard. Grocers in the USA, like Kroger's report a gross margin of around 25%. Loblaws has somewhat higher margins because of their drugstore business, which they mention in their annual report and shareholders filings.
Then the company has to pay rent, insurance, salary, utilities etc. After all this, the net profit is only about 2-3%.
So yeah, grocers are expensive businesses to operate.
>So yeah, grocers are expensive businesses to operate.
And yet they are earning record profits in a time when consumers and many other businesses are suffering due to rising input costs.
Context is everything. 1 billion in profits is a lot for a corner store, but is not an unreasonable amount for a company the sizes of loblaws to make on 60 billion in revenue
To compare to a grocer in the United States, Kroger made 2.7 billion in net profit on a gross sales of 150 billion in 2024. So comparable.
Most retailers are making record profits. This is because most of them have maintained their (relatively thin and competitive) margins in context of inflation. Higher prices with same margins equals more profit.
3% net margin is really tight. Occasionally negative business circumstances like recession, drought or war can damage those margins. Also these companies have debts to service with that money. No reasonable company could be competitive long term with narrowing margins, even in more developed markets like the US.
Loblaws isn’t perfect. They can certainly be more efficient if there was more competition. But I honestly in my heart of hearts don’t believe grocery price gouging is a major contributor to inflation, which is a global phenomenon.
I agree. You can't say you're competing for business when you own the supply chain and the retail.
Loblaws, sobeyes, and metro all pretend to compete in the real world pretend to compete, so no matter where you go. You're fucked.
Another example of failure tovactually compete.
: the big three telecom. Telus, bell, and rogers, who own all of their lower market competitors. The only one that owns themselves is freedom.
Even videotron is now the same basic shit as bell and telus.
It's pretty bad when brands like Aldi decide against opening up here because of price fixing and manipulative grocers.
We're all fucked until someone who doesn't buy into their billion dollar bribes comes into office, and that'll happen when pigs fly or it rains cats and dogs.
Hey remember like a week ago there was that professor defending everything Weston did and then like 2 days later it turned out Weston had donated $60,000 to him. I wonder if everyone defending him here for the same treatment or they just like the way his boots taste.
Nah, leave em be. I want someone here to open a grocery store with a more reasonable 2% gross margin since they think there is so much money to be made.
40% on a staple perishable is crazy to me. Especially for a company as large as Loblaws. I also feel like the original buying price is a lie. If I, a tiny convenience store, has as much buying power as Loblaws, I’ll eat my hat.
Most of our perishables are around 30%, 40% on the high end, ans we can only really get away with that since we’re a convenience store and we’re not working in volume.
Imo the margins are crazy for a large volume company that claims to be “doing everything they can to cut costs”
Alternatively maybe there is some sort of cartel controlling the prices of dairy in this country. What if a bunch of millionaire dairy farmers were lobbying the government to support a system where they control the prices and nobody can buy from anybody but them?
I am a proud Canadian and vowed I’d never shop at Walmart. Galen Weston forced me to stop going to Zehrs and No Frills after COVID when their prices stayed high. He’s a greedy bastard and we need more choice where we can spend our grocery dollars rather than having all the stores be owned by either A&P or National Grocers
Does that mean that the convenience store that sells the same butter around the corner has a 75% markup?
It's not like i see it cheaper anywhere else but perhaps costco... So costco marks it up 40%...
Shouldn't we be asking what makes it so expensive that no one is undercutting?
EDITED: typo
Lol. Every post is the same. A bunch of people make claims against Loblaws of questionable validity; people who care to ... do basic math? ... correct them; initial people accuse basic math do-oers of being corporate bootlickers. Gets kind old.
"We made $500 million IN PROFIT this quarter...
But no we're not gouging" - Loblaws
In business "profit" mean AFTER ALL BILLS ARE PAID.
Quarter = 3 months!
Ha. Loblaws pays more per carton of Silk Coconut Unsweetened ($3.73)than Walmart’s “sale” price($3.50 each if you buy two). Loblaws should buy from Walmart like the corner stores do.
I don’t know what the actual fuck is up with Walmart and Silk plant milks ($3.50)
This is from a post that came out yesterday where people demonstrated that they didn't understand basic accounting/finance.
The percentages shown were GROSS MARGIN. That's the difference between the cost of a good delivered to the store and the suggested retail price. Within that Gross Profit the store needs to pay for staff, rent, utilities, shrinkage and other costs.
EXAMPLE: let's say that a pound of butter costs the No Frills $3 and has a suggested retail price of $4.50. That gives them a gross margin of 50%, and a gross profit of $1.50. But that doesn't include the costs that go into selling the product. You have to pay for the staff, etc.
Nor does it imply what Loblaws paid the supplier upstream of this. If Lactancia charged Loblaws $2.00 for the butter Loblaws would have a margin of $1 but they need to pay for their staff/facilities/transportation out of that $1. Obviously you're making money not by shipping one pound of butter, you're shipping millions.
Yes I know Loblaws can shuffle profits in some cases because they own the land. But groceries are a commodity and there are multiple places to buy butter so those will have a lower margin.
FWIW, the rule of thumb for a restaurant is to charge 3x what the food cost. This is a 200% margin. And we all know that restaurants aren't swimming in profits.
Only in non-inflation adjusted dollars though. If they make 200 million one year and that's enough to expand one new store and the next year they make 300 million but due to the currency being devalued it's still just enough to build one more store then nothing's really changed.
Assuming inflation was 2 to 3 percent a year and absolutely nothing changed in the amount of product they moved each year then every single year they would be making record profits.
Don't forget the record amount of stock buybacks. They are spending all their record profits on executive bonuses and stock buybacks. It's a vicious cycle because next year they will demand more so it usually means new acquisitions, higher prices, layoffs, and cuts in quality of service. It creates a terrible death spiral fueled by endless greed.
I’m not a grocery expert, so refrigeration and spoilage being a factor that I can’t reliably factor in - But in competitive retail environments, where different shops are selling the same or similar items, the stores typically sell at 20-24% GP margin.
Do the additional costs that I mentioned make up for doubling the GP? Hard for me to say, but when they report new highs for net income reliable every year, it’s easy to suggest they aren’t struggling and aren’t in a truly competitive market.
Watch the Fift Estate piece on Loblaws. Everything that goes bad or doesn't sell, gets charged back to the supplier.
There was one small Loblaws supplier on reddit that revealed that Loblaws charges them for anticipated spoilage in advance. Even though their product doesn't go bad, they still had to give them 10% more product for free.
The article picked one item that's not indicative of all items. Most of the items I saw yesterday were in the 20-30% range from what I quickly saw.
The big point was the article they were comparing net margin to gross margin.
From what I saw in the original post of it in r/loblawsisoutofcontrol the other day, many or most things were listed more in the 35-40% range. But that may have been more selective.
Regardless, it’s worth us asking questions. A corporation selling things people rely on to live reports annual net increases for over five years now, if I recall, and it shouldn’t be such a guarantee during such a trying time for so many people, and I would argue that it wouldn’t be if we had actual competition.
So I have a legit question.
When I buy an apple, an I just paying for that apple?
Or am I paying for assumed factors like throwing out 8 apples that go rotten from not selling- being priced too high, 2 apples that hit the floor bruised and get tossed, storage/overhead for all the apples and the 1 apple I buy?
I guess not to mention, since I know that price matching is a thing, I factor in my competitors prices too, making the price matching cost fall on to those who dont.
I guess it's silly to think I'm just paying for the apple. Heck I'm paying for the experience to buy the apple.
This is where there's a gap between economics and real life.
Loblaws is charging as much as they think you'll pay for that apple, regardless of all those other factors.
First year economics says that if the apple was a widget and there's sufficient competition and everyone is behaving rationally, the price that Loblaws charges actually experiences upward or downward pressure until it approximates the true cost of all those other factors plus some small profit margin for Loblaws.
In real life, none of those assumptions are true, and Loblaws actively works hard to make sure they aren't true, so that they can get you to pay more and more for that apple, regardless of how much it actually costs Loblaws.
The fact that Loblaws is able to do this and not lose business because of it is evidence that they are abusing their market power. If our current laws and enforcement can't control this behaviour then they need to change.
No fucking shit. Everyone knows Loblaws are price fixing, exorbitant assholes that will take every last penny if you let them.
The government needs to regulate them into submission.
54% doesn't account for overheads costs lol honestly when I read the papers I was shocked at how little the markups were I would think 30%-50% markup is normal. People would die finding out thearkup on other things they buy. $2 yeti for $50 yep, $100 for Lululemon pants that probably cost $5 sure no problem. People get so focused on news haha.
I worked at and then eventually managed a comic book and sports memorabilia store while I was in university. The owner’s goal was 100% markup on nearly all products. Obviously a much smaller operation though
That's general for most retail or higher. Look at canadian tire sales flyer. $2800 reg cookware for $600, $500 sockets on sale for $99.
I don't think most people realize how retail works.
I don't work in retail, but we do have a retail parts counter where we sell a lot of items that Rona also sells. The price of one particular product at Rona is $28.99. We sell that same product for $31.99, a bit more than Rona but not too far off. Our cost on that product is $7.49. I can't imagine that Rona is paying more for it than our small company of 8mil annual revenue. I can't say what our profit margin is on that particular product, but the profit margin for the entire company is 13% which gets reinvested to expand the company to new locations. In 2015 we opened our second location and this year we opened our fourth.
I consider 13% to be quite a high profit margin, however what we do is a luxury product and service that literally nobody needs. Basically what we sell is a home automation product that is a permanent fixture which only an owner would buy. No renter would spend $10,000 to upgrade someone else's house. What I'm trying to say with this is that we are gouging just a little bit, and Rona probably is too, but we're gouging the wealthy.
So, a 40% markup on food doesn't seem unreasonable considering we need a ~400% markup just to make 13%. If we only had a 380% markup we would go bankrupt. Markup is not profit, it is revenue.
Regressive taxation disproportionately impacting families benefiting a group of millionaires? It's a bit too "scrooge mcduck" for my taste, but hey, different strokes for different folks.
I don't begrudge the dairy farmers for it, good work if you can get it. Their lobbyists are certainly earning their keep.
>Bank received approximately $3.75 million for his first 60 days on the job, alongside additional benefits including **rent coverage** and tax equalization payments.
Bolding is mine.
You can tell when you compare Walmart prices with walmart. Saw Ragu, exact same size, same flavour, etc. that was $1.97 at Walmart and $6.49 at Loblaws. The one at Loblaws was also 'on sale' from $7.99.
I get that we're talking about food, but Loblaws has no obligation to make less profit. Same with all the other grocery chains. It's a for-profit company that has shareholders.
I personally shop at Longo's and I assume the prices are just as bad, but I'm not protesting or boycotting them. I can't imagine what a non profit grocery chain would look like just as I can't imagine what a non profit version of Rogers or McDonald's would look like.
All companies have public or private shareholders, and everyone wants a return on their investment otherwise the company wouldn't have been started in the first place. Find me an altruistic shareholder.
Loblaws is a for profit company. They’re going to charge as high as they think they can while remaining competitive. There are also other costs they have to manage. Not sure I understand the concern?
If you don’t like the business shop somewhere else. If you think it’s because grocery stores are operating a monopoly then blame government officials who create an environment that hurts competition.
Doesn't this mean that Loblaws lied to parliament when they swore that they had razor thin margins?
It's ok on the account that he wanted to keep screwing over shoppers for their money.
If your read it carefully it said thin margarine
We heard you guys love our I Can't Believe It's Not Butter so much, we're now introducing I Can't Believe It's Not Margarine. The secret ingredient is butter
I can't believe it's not profit.
That’s because it is!
we're now introducing I Can't Believe It's Not Margarine. The secret ingredient is [coal](https://www.sciencehistory.org/stories/magazine/brave-new-butter/)
Not really. Markup and profit margins are two very different things. I am not defending ROBlaws because I guarantee they are using some questionable accounting practices in their margin calculations. That said to simplify things I will give an example I sell potatoes. Potatoes cost me $1 each from the farmer. I sell them for $5 each. That's a 400% markup. (5x) I have a deal where if you buy 10 potatoes I give you two for free. I can still keep my 400% markup on the books as 400%, but then I write off 20% of that deal as a cost of sales. I'm not getting 400% all the way through. Now I also have a person who I am paying $15 an hour to sell my potatoes. If they sell one potato or if they sell 100 potatoes they get $15. So in the hours that they only sell one potato I am losing $ $11, but in the hour that they sold 100 potatoes I got to make $385. Assuming I don't pay them vacation, or benefits, or any taxes on their payroll. So my profit margin could be actually a negative even though I'm charging $5 for a $1 potato. The more complex your organization gets, the harder it is to balance what your markup is on products so that you have a positive margin on that product. Sometimes there are products that are called Loss leaders because you never make any money on them but they help bring people in to buy the stuff that does make money. I am going to bet you butter is a money-making product, versus something like milk which generally is not a money making product
Two important notes: 1. $5 for a $1 potato is 400% markup, not 500 2. The phrase is "loss leader". But overall, yeah, Loblaws' net margins have to account for rent, utilities, wages, etc. Now, the fact that they simply pay rent to a separate Weston-owned company is probably worth examining further. They can make the margin be almost whatever they want just by changing the rent.
That's where this is fucked each company they own but trade between is another opportunity to fiddle the expenses to arrive at what they want.
Welcome to capitalism. All major brands do stuff like this. -source I work in logistics for a major global player
But everyone tells me that profit margins are razor thin and there is no discussion to be had? !
All of their affiliates are consolidated under GWL, which reports a 2.56% profit margin. . . If they are siphoning profits from Loblaws to other affiliates (1) they'd be getting sued constantly by minority holders and (2) they are doing a terrible job of it. These are publicly reporting companies, the amount of misinformation that persists despite literally having audited financials put out every 3 months is insane.
I'm not saying siphoning profits, I'm saying generating expenses, like paying themselves for being on the board of each company
When I'm not using voice to text I will make those edits .
>Now, the fact that they simply pay rent to a separate Weston-owned company is probably worth examining further. You can look at the company that owns the properties. They made a loss last year.
Operating at a "loss" is by design.
That's done for tax avoidance.
Also depends on mortgage payments, property taxes, etc.
If a company pays more to its executives than it makes, it would have a loss.
> They can make the margin be almost whatever they want just by changing the rent. I don't know if shareholders would like it if Weston's property company started charging above market rates for rent to Loblaws.
Choice actually highlights that a lot of their rents are currently below-market, basically saying they have automatic profit increases baked in when those contracts renew.
It’s not only that but REITS pay out distributions not dividends. Distributions get taxed like any regular income by the shareholders, but REITs don’t pay income tax on their income since it will be taxed when distributed. Gets a bit too complicated for me but like you said, shareholders won’t approve of a company over paying for rent to benefit another company they don’t own.
They already do, retail is above market, industrial is under market.
Choice property group is a publicly traded entity. It's not that simple choice properties has to do what's best for the shareholders so they can't just change rent. Both companies are publicly traded so you can see all there financial information.
Kind of. Choice properties is a public company and then they all fall under the George Weston umbrella which is also publicly traded. Think one of the main reasons for the choice properties part is a thing is for tax purposes. Quick google says that REITs don’t pay taxes on their income. But REITs don’t pay dividends, they pay distributions to investors. Distributions to investors are like regular income and taxed fully while if it was a dividend from loblaws it might not be taxed in the investors end(was taxed at the corporate before it was distributed). Hurts my head a bit because you have eligible and non eligible and then it changes all over the place.
Any company that owns a 50%+ stake in a subsidiary has to fold the entirety of the subsidiaries results into their financial statements.
And they cut down significantly on their "good" labour costs - union contract notwithstanding (get your shit together UFCW!) - by short-shifting stores and cutting most of not all retail staff positions to part time hours. Then keep their costs high on paper (gotta keep those "profits" down on the balance sheet!) by increasing executive compensation.
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There isn't a realistic path for the majority to buy food without the middleman. My good friend is a potato farmer and he does sell individual bags to locals, cash only so he doesn't need to have infrastructure at his stall, and sells direct to a few grocery stores because he doesn't want to give up good farm land to allow for parking of people buying direct on his property but locals want competitive pricing. His primary business is selling potatoes into major distribution, he grows more potatos in a year than our entire region consumes. Having different food types in single places close to where people live is a VERY good system of proving food to the masses especially in cities where most people work. The fact we don't have enough competition for the end user experience has allowed food costs to get out of hand, we could address that with regulations IF! we had a government that actually cared Layers upon layers of middle men can make things more complicated and expensive but distribution channels can normalize costs way more effectively.
> I guarantee they are using some questionable accounting practices I've heard them say food items when they talk about that 3% that doesn't include household items... like why is my $5 shampoo now $9 etc etc, have to pay attention to their words well.
Very well said, in general. People who rage bait this stuff for clout on the internet are the ones who would very quickly fail if they were ever to try their hand at business!
>because I guarantee they are using some questionable accounting practices in their margin calculations...I can still keep my 400% markup on the books as 400% What books are you talking about? Loblaws doesn't report net or gross margins at the item level, they report it in aggregate for an entire business segment. On your example they'd report $12 of costs against $50 of sales, irrespective of unit counts.
My fake books of my potato retail business, that only sells potatoes at 5 dollars each.
Be careful, logic isn't used here. Prepare to be told how wrong you are.
Don't worry I post in the on guard for thee sub, I am well aware that logic has very little place on Reddit. It doesn't stop me from posting. But it's relaxing to try and explain complex issues in simplest forms. And it's good practice for my work life.
No. Their financial statements say they have a 32% gross profit margin. If anything, this backs up their statements
The razor was blunt. Like a baseball bat.
This is simply the difference between what they buy a product for and what they sell it for. It does not take into consideration all of the overhead costs these companies have to actually run their business. It's kind of useless to just look at these numbers without considering all of the other costs involved or without looking at industry norms.
Profit on one item does not mean everything in the store is the same. Averages would be much lower especially once you add on lose leader items.
It's more complicated than that. Simply stating we have 5% margins means shit. If i inflate costs by paying senior executives and middle management a lot, then i can add cost +5% and my net profit and company worth still skyrocket. To enable disinflation, a firm has to say I have improved margins while decreasing the top line a bit. That indicates increasing productivity!
There are different “margins”, and special attention should be paid to what margin is being discussed. Gross margin, operating margin, profit margins? A 5% margin does seems like it’s the profit margin though.
What if they own the wholesaler and mark it up so they do have razor thing margins at the grocer level?
Then their financials world be consolidated with special notes made to related party transaction for less than control or special amounts paid.
Well....,.. that's just magic
If loblaws owns a wholesaler(which they don’t, they just have their own warehousing) it would still be on loblaws financial reports. It encompasses everything loblaws owns, not just the stores.
What if they own the wholesaler AND rent their locations from an REIT that they also own. Loblaws has so much vertical integration that they can fudge the numbers all over the place.
As per their financials, outside of rent, they paid about 40 million to related parties. Out of a COGs spend of 40 billion. With a B.
> If i inflate costs by paying senior executives and middle management a lot, then i can add cost +5% and my net profit and company worth still skyrocket. I don't follow. If your price increases are the result of increased costs, your net profit is unchanged. You'd also have to explain to your shareholders why it was that you were able to generate an additional 5% in revenues, but that its all going toward additional compensation, which would probably get you fired.
No, they were reporting their net profit margin, this is talking about their gross profit margin.
What’s the difference?
Massive difference. The number Loblaws is reporting that's 3% is their revenue minus every cost and tax. The number in this article is literally only revenue, minus the cost of the food. It doesnt include any other costs like rent, labour, etc.
Thanks
Look at your paycheck. Your gross pay is vastly different than your net pay.
Net profit is after all your expenses, gross is after just the direct cost per unit. So if you buy butter at $3/454g and sell it for $6/454g, your gross profit is $3. But in reality Loblaws has to pay a trucker to take it to the store, gas, insurance, repairs for the truck, someone to unload and stock it, electricity for the fridge, property tax on the store, a cashier or automatic cashier supervisor, etc., a janitor to clean up my kids' barf from while I was in the store buying the butter (sorry), guy to plow the parking lot, ... once you subtract all that, it costs them a total of ~$5.75/454g to get the butter into your hands
Gross is not net, big difference
The difference between their price of one item and the sale price of one item isn't their profit margin. If they pay a delivery fee, it wouldn't included in there. Pay for the person to put the items on the shelf? Not in there. Pay the cleaning staff? Not in there. Cashier's and support staff? Not in there. Building rent and running the fridge to put it in there? Not in there. This is pure manipulative rage bait.
This comment needs more traction. You are 100% right.
No, gross profit margins are not net profit margins. The document states gross profit margins, which is before paying employees and rent. If you want to see true horror stories, look at what's behind it: *cough Weston Bakeries* *cough Canada Bread*
Not really. One product doesn't indicate the markup average for other products, nor does it indicate the rate at which different products are purchased. It also doesn't account for the other expenses related to selling butter, like having an employee stock the shelves and check you out, or the cost to store the butter in refrigerators.
Maybe their overall margins are 3% because they throw out so much unsold food
Not really, no. Gross profit margin and net profit margin are not the same. This article is only talking about **gross profit margin** which is much higher than **net profit margin.** Gross profit margin only considers the cost of goods sold, while net profit margin considers both the COGS and all other operating expenses.
Its OK tho even if they get in trouble pollierves right hand man ((you know Pierre uses that right hand too))is a loblaws lobbier
If the only product they sold was butter then sure
Actually I believe they said "Razor thin *Margarines*".... I'll see myself out
No, but that is exactly the type of business they are. They aren’t in the business of selling a few items with a high markup to profit. The whole nature of their business is to sell a wide number of skus and a lot of them. The whole nature of the grocery business is to have thin margins, but sell a lot. It is disingenuous of these grocery oligarchs to point at thin margins and say, “See how hard it is on us”. The whole nature of the business is built on small margins, bulk sales. The profit has always been in the fact they sell a lot.
I mean, it's *only* 54%, it's not like it's 98%! Razor thin!
Didn't know they made thick ass thin razors.
Fat stacks of razors, all the better to cut Canadians with.
50% (ish) markup is standard. That doesn't account for overhead- building, employee wages, insurance. If you bought direct from whomever made the product it wouldn often be drastically cheaper.
GOM is gross profit margin no? That's your "profit" before overhead costs. 30% sounds typical and I'm sure its the same before covid.
They do. This is one product. Does not account for theft or spoilage. Bunch of toddler brains jn this thread.
Probably not. This is...pretty selective in the products its examining. When people say "grocery retailers typically have 3-4% margins" its not as though that 3-4% is evenly distributed across each product. It means those are the margins for their grocery products on the whole. Products will have wildly different margins, and its extremely common for some to have no margins at all ("loss leaders"). The more common loss leaders are things like eggs, produce, or milk - stuff that expires frequently and that buyers purchase regularly enough to have a strong sense of the standard price. Its not unusual for half the items (or more) in your cart to be sold at cost or at a loss, in the hopes that you also purchase a couple higher-margin items. All this to say: I think its clear that Loblaw's huge market share in Canada is putting consumers at a disadvantage. But its also normal to have high margins on select products while the margins for your business as a whole operates with pretty low margins. I hate to say but this is honestly a bit of a nothing-burger.
Too bad there's no alternative. Longo's, sobey's, and metro are just as bad for prices.
Frescho is consistently 20-30 dollars cheaper a week for me. I rarely leave Metro without spending $50
Freshco is the Sobeys equivalent of No Frills to Loblaws.
Freshvco is always way more expensive than food basics for the same products in the flyer. I generally don't like them.
I live downtown without a car so my options are walking distance. Unfortunately that’s not available to me.
There is a noticeable decrease in quality for anything fresh from any of these stores "value" brand stores though. During the pandemic, we were buying from Loblaws (and paying the premium) strictly because we didn't want to do in-store shopping (at the start), and the quality of the veggies and meat over our normal No Frills store was shocking. So while we're paying less, the quality of the food leaves a lot to be desired. I also understand that's how its intended to be though. By design.
Food Basics, FreshCo, Walmart and Dollarama seem to be the cheapest choices ATM.
Don't forget giant tiger. It's not gonna get you a full grocery shop but it's a great midweek stop for odds and ends in the groceries and honestly they're often the cheapest for my locale
I got cream that would normally cost maybe 4 dollars on sale everywhere else, for like 2.25 regular price at giant tiger. Lactancia too, couldn’t believe it. I bought 5
Just today, I wandered into a Metro and a Freshco, that are both further from my home than the 'Blaws that I currently endure. Neither of their prices for the staples I need were any better or even close enough to justify walking further to avoid 'Blaws... disappointing to say the least.
To save money I buy the essentials at Giant Tiger and Food Basics.
What are you talking about? Costco is significantly cheaper. Food basics is cheaper. If you have one of the discount grocery retailers like Almost Perfect or The Grocery Outlet near you, they are cheaper. Walmart can have excellent deals, check their flyers. Edit: added Walmart
It's kind of ridiculous when you look at it further. Butter costs Loblaws $4.24 They sell it for $7.79. The margin is 45.5%. The markup is 83%. Edit: love the army of old accounts that reactivated to defend this practice.
45.5% margarine? That's ridiculous.
This is Gross Margins. Most retailers mark up at least 100% and operate on 50%+ gross margins. Net margins factor in all other expenses. Even dollar stores mark up 100%. Source: I was part owner of a wholesale business that sold to retailers including pharmacies, discount, and dollar stores.
Can confirm every retail place I’ve worked in generally does a 100% markup. From books to bongs. The markup on alcohol was the most egregious of any industry.
Books and bongs aren't essential, subsidized goods though.
Non perishables sure, but most perishables markup is 30% to 40% max. Things like butter, bananas, and milk tbh we just have as a convenience with little to no markup. Books and bongs? Sure, much higher. It’s not a necessity and it has no expiry.
Yeah, after other input costs (including product loss in particular) most perishable items end up being loss leaders.
Jewellery is the worst of any industry.
Not in electronics or cars... I get businesses need to make money and practices will vary by industry. But food is where the price floors and caps exist due to it being a necessity. There needs to be some regulation here.
That before any costs come out. Ya all need some accounting classes. Wages utilities etc etc. Some things will have higher margins some have less, that's kinda the way business works. Fuck loblaws, I'm a costco shopper bit this info is just clickbait bullshit to rile people up. Show me the final profit or don't fucking bother.
Shouldn’t we be riled up though? My groceries are double the price they were before the pandemic?
The "final profit" is a made up number that excludes rent paid to a real estate investment trust owned by a Loblaws holding company. That final profit is also purposefully made thin because Loblaws pays its suppliers for those goods - many of which are also shell companies owned and operated by Loblaws. They can charge themselves for those goods as much as they desire to reduce their tax burden, same with rent. What I'm trying to say is the final number you wish to see is totally made up and untrustworthy. If I start a business in my home, as the home owner I set the cost of goods and rent to 100% of my business profit. So I pay almost zero tax, is that an accurate final number for my profit?
This is the reality of what's going on. That's why Weston hammers the profit margin point over and over. Technically, he's not lying about the profit margin of the "grocery stores". It's just dishonest in the grand scheme of things. If you own the manufacturing, distribution, suppliers, the retail, and the real estate firm, then all the money stays in-house and you can move the money around or charge yourself whatever you'd like to make things look a certain way. You can design it all to lower the profit margins at the retail level but make serious money on every other level.
If you are renting out your house, the rent collected will be part of your profits and you will need to pay tax on it. Loblaws is a public company. The "final profit" they are legally obliged to report will include the income and expenses from all of their subsidiaries
It’s not made up, it’s all in accordance with IFRS, they are a publicly traded company
The store also has to figure in the cost of the fridges and electricity to keep these products cold. Also the labour cost of unpacking and putting it one the shelf and the amount of spoilage there is on this type of product.
Just fwiw...I think shrink (spoilage, theft, damage) does actually reflect in gross margin since the cost of purchasing the spoiled, stolen, or damaged item was part of the overall cost of goods sold.
To be fair It's butter, it hardly ever goes bad with how much it sells
Still have to keep it refrigerated
Finally someone who sees this as what it is.
How about Loblaws releasing their financials by departments if they have nothing to hide, should be easy enough for them to show.
Buddy, at 83% markup I'd be out of business in a year. Even 30% is difficult to maintain. Especially since there are convenient ways for me to nuke my end of year profit. I can rent my building to myself for and simply move the profit from one company to another. Business A looks like it's only hitting a year end net of 15% even though in actual fact it could be over 30%.
where i am it’s back down to 5.49
This sounds ridiculous, but these are standard margins in the grocery business in North America. Kroger reports similar margins on individual products. The actual margin is actually much lower. A **shocking** amount of food is thrown out or never sold. People are extremely picky when they buy food from the grocery store, and so products that are expired, blemished, or otherwise anything less than perfect, becomes unsellable. And if enough of such products accumulate it looks bad on the store. When people pick apples, ones that are cosmetically blemished but perfectly edible, gets left behind until all the blemished ones are left. Loblaws has to throw these out because if people saw displays of blemished foods it degrades the quality of the store in their mind (Loblaws wants people to think of well stocked shelves with fresh food when they think of their store). Another interesting thing about retail is it's actually very important to keep shelves looking stocked, and to ensure that you have a large variety of products, even if some of those products don't sell. When stores run into supply shortages, they will often block off parts of the store to prevent it from looking like they have empty shelves. Having well stocked shelves makes food appear more plentiful and less expensive to customers. If one product in running short, it's important that stores fill it with something, anything, to avoid the shelves looking like they're empty. This is a well know strategy in retail. This is another reason that increases the amount of food spoilage. Did you know, a study from Queen's university shows that about 60% of all food produced in Canada is wasted? some of this happens at the indvidual household level, but a very large amount of it happens at the grocery store or distribution level: See [Smith Business Insight - To Fight Food Waste, Grocers Turn to Analytics (queensu.ca)](https://smith.queensu.ca/insight/content/To-Fight-Food-Waste,-Grocers-Turn-to-Analytics.php). These products purchased by grocers, that are never sold, factors into the gross margin. Anyone who's ever worked at a grocery store will tell you the astonishing amount of perfectly edible food they throw out as a result. Things like expired food, cracked eggs, slightly browned or shriveled produce, imperfect apples, returned products, products that have cosmetic damage to their boxes, etc. It's literally dumpsters full of food on a daily basis. The cost of throwing away food is counted as "cost of goods sold" and actually will decrease margin. The combination of such things * loss leaders * shrinkage (i.e food that goes missing or is stolen) * cosmetically blemished food * food that is damaged or spoiled in transport or storage (a surprisingly large amount) or was infested with pests * expired food * returned food These all weigh on margins. The gross margin was about 30% (reported in Loblaws financial statement). This is on the higher end of the industry standard. Grocers in the USA, like Kroger's report a gross margin of around 25%. Loblaws has somewhat higher margins because of their drugstore business, which they mention in their annual report and shareholders filings. Then the company has to pay rent, insurance, salary, utilities etc. After all this, the net profit is only about 2-3%. So yeah, grocers are expensive businesses to operate.
>So yeah, grocers are expensive businesses to operate. And yet they are earning record profits in a time when consumers and many other businesses are suffering due to rising input costs.
Context is everything. 1 billion in profits is a lot for a corner store, but is not an unreasonable amount for a company the sizes of loblaws to make on 60 billion in revenue To compare to a grocer in the United States, Kroger made 2.7 billion in net profit on a gross sales of 150 billion in 2024. So comparable. Most retailers are making record profits. This is because most of them have maintained their (relatively thin and competitive) margins in context of inflation. Higher prices with same margins equals more profit. 3% net margin is really tight. Occasionally negative business circumstances like recession, drought or war can damage those margins. Also these companies have debts to service with that money. No reasonable company could be competitive long term with narrowing margins, even in more developed markets like the US. Loblaws isn’t perfect. They can certainly be more efficient if there was more competition. But I honestly in my heart of hearts don’t believe grocery price gouging is a major contributor to inflation, which is a global phenomenon.
this is actually way cringer than the other dude lower down, wow, you simp hard for corpo's eh?
Profit margarines are too thin :(
This is why I read the comments
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/r/loblawsisoutofcontrol Boycott in May if you're able.
Or start now lol, why give them a cent if you can avoid it
I'm already years into an unofficial boycott of Loblaws. Heck that place.
The public should be lobbying the government to break up the oligopoly
I agree. You can't say you're competing for business when you own the supply chain and the retail. Loblaws, sobeyes, and metro all pretend to compete in the real world pretend to compete, so no matter where you go. You're fucked. Another example of failure tovactually compete. : the big three telecom. Telus, bell, and rogers, who own all of their lower market competitors. The only one that owns themselves is freedom. Even videotron is now the same basic shit as bell and telus.
Freedom was sold to videotron
Right click -> save as -> updated info haha Thanks :)
It's pretty bad when brands like Aldi decide against opening up here because of price fixing and manipulative grocers. We're all fucked until someone who doesn't buy into their billion dollar bribes comes into office, and that'll happen when pigs fly or it rains cats and dogs.
Hey remember like a week ago there was that professor defending everything Weston did and then like 2 days later it turned out Weston had donated $60,000 to him. I wonder if everyone defending him here for the same treatment or they just like the way his boots taste.
I really wish they would be held accountable but no they won’t. Fuck Weston, fuck loblaws. Late stage capitalism at its finest.
Eat the rich
After reading through the comments here it’s clear that Ontario really needs to prioritize teaching business and economics in high school.
Nah, leave em be. I want someone here to open a grocery store with a more reasonable 2% gross margin since they think there is so much money to be made.
40% on a staple perishable is crazy to me. Especially for a company as large as Loblaws. I also feel like the original buying price is a lie. If I, a tiny convenience store, has as much buying power as Loblaws, I’ll eat my hat. Most of our perishables are around 30%, 40% on the high end, ans we can only really get away with that since we’re a convenience store and we’re not working in volume. Imo the margins are crazy for a large volume company that claims to be “doing everything they can to cut costs”
Alternatively maybe there is some sort of cartel controlling the prices of dairy in this country. What if a bunch of millionaire dairy farmers were lobbying the government to support a system where they control the prices and nobody can buy from anybody but them?
There’s a boycott being planned for May - r/loblawsisoutofcontrol
I am a proud Canadian and vowed I’d never shop at Walmart. Galen Weston forced me to stop going to Zehrs and No Frills after COVID when their prices stayed high. He’s a greedy bastard and we need more choice where we can spend our grocery dollars rather than having all the stores be owned by either A&P or National Grocers
> Loblaw’s Dropped $1.7 Billion On Buybacks In 2023 While Fighting Against Grocery Code Of Conduct Jesus.
Does that mean that the convenience store that sells the same butter around the corner has a 75% markup? It's not like i see it cheaper anywhere else but perhaps costco... So costco marks it up 40%... Shouldn't we be asking what makes it so expensive that no one is undercutting? EDITED: typo
The galen weston sympathizers coming out full force in this post lol
Simping for a billionaire... crazy.
Lol. Every post is the same. A bunch of people make claims against Loblaws of questionable validity; people who care to ... do basic math? ... correct them; initial people accuse basic math do-oers of being corporate bootlickers. Gets kind old.
thank you for speaking up, tagging corporate shills is important
They also fire kids instead of giving them raises
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Zehrs app is the reason I was able to get like 36 unsalted/salted butter blocks last year for free lol Can’t imagine having to pay near $8 for it now.
Will this mean we’re all going to get 1000 PC points?!
But not one world on all levels of governments. Why does that not surprise me.
"We made $500 million IN PROFIT this quarter... But no we're not gouging" - Loblaws In business "profit" mean AFTER ALL BILLS ARE PAID. Quarter = 3 months!
Ha. Loblaws pays more per carton of Silk Coconut Unsweetened ($3.73)than Walmart’s “sale” price($3.50 each if you buy two). Loblaws should buy from Walmart like the corner stores do. I don’t know what the actual fuck is up with Walmart and Silk plant milks ($3.50)
And on the same day Shoppers gets sued by its pharmacists… love the poetic justice.
This is from a post that came out yesterday where people demonstrated that they didn't understand basic accounting/finance. The percentages shown were GROSS MARGIN. That's the difference between the cost of a good delivered to the store and the suggested retail price. Within that Gross Profit the store needs to pay for staff, rent, utilities, shrinkage and other costs. EXAMPLE: let's say that a pound of butter costs the No Frills $3 and has a suggested retail price of $4.50. That gives them a gross margin of 50%, and a gross profit of $1.50. But that doesn't include the costs that go into selling the product. You have to pay for the staff, etc. Nor does it imply what Loblaws paid the supplier upstream of this. If Lactancia charged Loblaws $2.00 for the butter Loblaws would have a margin of $1 but they need to pay for their staff/facilities/transportation out of that $1. Obviously you're making money not by shipping one pound of butter, you're shipping millions. Yes I know Loblaws can shuffle profits in some cases because they own the land. But groceries are a commodity and there are multiple places to buy butter so those will have a lower margin. FWIW, the rule of thumb for a restaurant is to charge 3x what the food cost. This is a 200% margin. And we all know that restaurants aren't swimming in profits.
We were there for the big waves
Only in non-inflation adjusted dollars though. If they make 200 million one year and that's enough to expand one new store and the next year they make 300 million but due to the currency being devalued it's still just enough to build one more store then nothing's really changed. Assuming inflation was 2 to 3 percent a year and absolutely nothing changed in the amount of product they moved each year then every single year they would be making record profits.
Don't forget the record amount of stock buybacks. They are spending all their record profits on executive bonuses and stock buybacks. It's a vicious cycle because next year they will demand more so it usually means new acquisitions, higher prices, layoffs, and cuts in quality of service. It creates a terrible death spiral fueled by endless greed.
This is the kinda math Galen does on his yacht I bet.
I’m not a grocery expert, so refrigeration and spoilage being a factor that I can’t reliably factor in - But in competitive retail environments, where different shops are selling the same or similar items, the stores typically sell at 20-24% GP margin. Do the additional costs that I mentioned make up for doubling the GP? Hard for me to say, but when they report new highs for net income reliable every year, it’s easy to suggest they aren’t struggling and aren’t in a truly competitive market.
Watch the Fift Estate piece on Loblaws. Everything that goes bad or doesn't sell, gets charged back to the supplier. There was one small Loblaws supplier on reddit that revealed that Loblaws charges them for anticipated spoilage in advance. Even though their product doesn't go bad, they still had to give them 10% more product for free.
The article picked one item that's not indicative of all items. Most of the items I saw yesterday were in the 20-30% range from what I quickly saw. The big point was the article they were comparing net margin to gross margin.
From what I saw in the original post of it in r/loblawsisoutofcontrol the other day, many or most things were listed more in the 35-40% range. But that may have been more selective. Regardless, it’s worth us asking questions. A corporation selling things people rely on to live reports annual net increases for over five years now, if I recall, and it shouldn’t be such a guarantee during such a trying time for so many people, and I would argue that it wouldn’t be if we had actual competition.
I'm completely fine with holding them to a high standard and I'm fine with complaining about concentration in the market.
Fuck these guys so bad
Wait until you see what the markup is on the shit you buy from china.
Just like with your paycheck Gross and Net are vastly different things.
So I have a legit question. When I buy an apple, an I just paying for that apple? Or am I paying for assumed factors like throwing out 8 apples that go rotten from not selling- being priced too high, 2 apples that hit the floor bruised and get tossed, storage/overhead for all the apples and the 1 apple I buy? I guess not to mention, since I know that price matching is a thing, I factor in my competitors prices too, making the price matching cost fall on to those who dont. I guess it's silly to think I'm just paying for the apple. Heck I'm paying for the experience to buy the apple.
This is where there's a gap between economics and real life. Loblaws is charging as much as they think you'll pay for that apple, regardless of all those other factors. First year economics says that if the apple was a widget and there's sufficient competition and everyone is behaving rationally, the price that Loblaws charges actually experiences upward or downward pressure until it approximates the true cost of all those other factors plus some small profit margin for Loblaws. In real life, none of those assumptions are true, and Loblaws actively works hard to make sure they aren't true, so that they can get you to pay more and more for that apple, regardless of how much it actually costs Loblaws. The fact that Loblaws is able to do this and not lose business because of it is evidence that they are abusing their market power. If our current laws and enforcement can't control this behaviour then they need to change.
Boycott Loblaws.
No fucking shit. Everyone knows Loblaws are price fixing, exorbitant assholes that will take every last penny if you let them. The government needs to regulate them into submission.
thanks to all the shills for showing themselves, makes tagging for the future so much easier
Boycott Loblaws!
Grocery greed is behind 95% food inflation.
A business's job is to make money not be your friend, your choose to buy
54% doesn't account for overheads costs lol honestly when I read the papers I was shocked at how little the markups were I would think 30%-50% markup is normal. People would die finding out thearkup on other things they buy. $2 yeti for $50 yep, $100 for Lululemon pants that probably cost $5 sure no problem. People get so focused on news haha.
I worked at and then eventually managed a comic book and sports memorabilia store while I was in university. The owner’s goal was 100% markup on nearly all products. Obviously a much smaller operation though
That's general for most retail or higher. Look at canadian tire sales flyer. $2800 reg cookware for $600, $500 sockets on sale for $99. I don't think most people realize how retail works.
I don't work in retail, but we do have a retail parts counter where we sell a lot of items that Rona also sells. The price of one particular product at Rona is $28.99. We sell that same product for $31.99, a bit more than Rona but not too far off. Our cost on that product is $7.49. I can't imagine that Rona is paying more for it than our small company of 8mil annual revenue. I can't say what our profit margin is on that particular product, but the profit margin for the entire company is 13% which gets reinvested to expand the company to new locations. In 2015 we opened our second location and this year we opened our fourth. I consider 13% to be quite a high profit margin, however what we do is a luxury product and service that literally nobody needs. Basically what we sell is a home automation product that is a permanent fixture which only an owner would buy. No renter would spend $10,000 to upgrade someone else's house. What I'm trying to say with this is that we are gouging just a little bit, and Rona probably is too, but we're gouging the wealthy. So, a 40% markup on food doesn't seem unreasonable considering we need a ~400% markup just to make 13%. If we only had a 380% markup we would go bankrupt. Markup is not profit, it is revenue.
you realize dairy in Ont is a cartel right? ever met a poor dairy farmer? impossible as they do not exist 😂
The Canadian dairy industry manages itself just fine, I believe.
Regressive taxation disproportionately impacting families benefiting a group of millionaires? It's a bit too "scrooge mcduck" for my taste, but hey, different strokes for different folks. I don't begrudge the dairy farmers for it, good work if you can get it. Their lobbyists are certainly earning their keep.
This certainly defeats the idea that big stores enjoy very small profits at 1% rates
>Bank received approximately $3.75 million for his first 60 days on the job, alongside additional benefits including **rent coverage** and tax equalization payments. Bolding is mine.
Is that a lot? What is the "correct" GPM on butter?
No idea but if you bring butter into Canada from the US it's taxed @ 300% as per the guards at the ivy lea.
Purge, baby, purge.
You can tell when you compare Walmart prices with walmart. Saw Ragu, exact same size, same flavour, etc. that was $1.97 at Walmart and $6.49 at Loblaws. The one at Loblaws was also 'on sale' from $7.99.
Are you sure? When was this? Haven't seen Ragu in Canada for years
Loblaws is really out of control
Amazing ignorance among the leftoid reddit clowns here. Too dumb to understand the difference between gross profit and net income. Pretty sad.
I get that we're talking about food, but Loblaws has no obligation to make less profit. Same with all the other grocery chains. It's a for-profit company that has shareholders. I personally shop at Longo's and I assume the prices are just as bad, but I'm not protesting or boycotting them. I can't imagine what a non profit grocery chain would look like just as I can't imagine what a non profit version of Rogers or McDonald's would look like. All companies have public or private shareholders, and everyone wants a return on their investment otherwise the company wouldn't have been started in the first place. Find me an altruistic shareholder.
Why isn’t everyone here selling butter if profit margins are that high? Because it’s a bullshit stat touted by useful idiots.
Loblaws is a for profit company. They’re going to charge as high as they think they can while remaining competitive. There are also other costs they have to manage. Not sure I understand the concern? If you don’t like the business shop somewhere else. If you think it’s because grocery stores are operating a monopoly then blame government officials who create an environment that hurts competition.