By Adriano Marchese

Loblaw on Wednesday said profit rose by nearly 12% in the third quarter thanks to stronger-than-expected revenue as more shoppers look for value amid rising costs of groceries in Canada.

The Canadian grocery retail giant posted higher net income of 624 million Canadian dollars ($455.7 million), or C$1.95 a share, up from C$559 million, or C$1.69 a share, in the comparable quarter a year ago.

Adjusted earnings were C$2.26 a share. According to FactSet, analysts were expecting C$2.24 a share.

Revenue rose to C$18.27 billion from C$17.39 billion. Analysts expected a rise to C$18.21 billion.

Behind the rise was a 4.5% increase in same-store food retail segment sales, and a 4.6% rise in same-store sales at its drug retail business.

Loblaw said its discount stores benefited from higher traffic in the period as customers look for value in their groceries, and that it continues to invest in opening new discount stores.

Meanwhile, retail gross margin declined in both its food and drug segments as a result of promotional investments and increased shrink. Higher sales and ongoing cost control initiatives drove adjusted net earnings growth in the quarter.

The high cost of living in Canada has been increasingly an issue, in large part due to the rising cost of food. According to the Canadian consumer price index, grocery inflation was rising at a rate of 5.8% year-over-year in September, a drop from 6.9% in August.

Loblaw said it has increased investments to lower food prices which were reflected in the company's internal food inflation, which was lower than Canada's food CPI.

Write to Adriano Marchese at

(END) Dow Jones Newswires

11-15-23 0714ET