Sales of products that Loblaw Cos. Ltd. has labelled in-store as being affected by tariffs have declined by more than 15 per cent in recent weeks and the trend is accelerating, the grocer’s chief executive said during an earnings call with analysts on Thursday.

Loblaw has added a “T” symbol on its shelves to identify items, particularly products coming into Canada from the U.S., that are directly subject to

retaliatory tariffs , impacting their price. Chief executive Per Bank said the initiative is unique to Loblaw.

“It has been successful on several levels, as intended, to help our customers by clearly identifying tariff items, supporting Canada and saving money behind the scenes,” he said, adding that it is also incentivizing suppliers to mitigate the tariff impact, to avoid the T label designations.

The move follows a previous initiative in which the grocer labelled Canadian products to help customers easily identify them. Bank said the company’s data shows that Canadians are responding positively to these initiatives.

Bank said the retailer has doubled down on its efforts to support Canadian products, adding more than 100 new Canadian vendors.

“Adding 130 new Canadian vendors into our ecosystem this year to strengthen our local

supply chain … brings even more choice to our shelves, further strengthening our base of Canadian suppliers that remains so important to us,” he said.

Bank said it is a misconception that U.S. tariffs are no longer a factor in groceries, adding that “nothing could actually be further from the truth.”

He said tariff countermeasures remain in place and about a third of all supplier submissions for cost increases have been tariff-related.

On Thursday, the company reported increased revenues in the second quarter, attributing the growth to higher customer traffic and unit sales.

For the quarter ended June 14, Loblaw reported $14.67 billion in revenue, a 5.2 per cent increase from the prior year.

Retail sales also increased by 5.4 per cent to $14.39 billion as it opened new locations including 10 new stores and 12 pharmacy clinics during the quarter.

“More Canadians are shopping in our stores. Actually, traffic is up, unit sales are up and basket growth was positive in the quarter,” Bank said during the earnings call.

He said this drove market share gains overall, and both hard discount and supermarket banners grew market shares within their segments.

Bank said the global shift toward discount retail appears to be a long-term trend, as Loblaw opened its 500th hard discount store in May in Alberta.

The company’s operating income was up 42.7 per cent to $1.24 billion in the quarter, while adjusted EBIDTA was up 7.4 per cent to $1.84 billion.

Net earnings available to common shareholders were up 56.2 per cent to $714 million. On an adjusted basis, net earnings were $721 million, an 8.6 per cent increase.

Diluted net earnings were $2.37 per share for the quarter, up 60.1 per cent, an increase it said was driven by lower costs to certain assets associated with its acquisition of

  • Loblaw pulls Folgers coffee from shelves over ‘unjustified’ cost increases
  • Prices on thousands of grocery items to rise despite tariff break, says Loblaw

Shoppers Drug Mart in 2014. On an adjusted basis, diluted net earnings per common share were $2.40, an increase of 11.6 per cent.

Loblaw also separately announced a 4-for-1 common share stock split that will be implemented by way of a stock dividend. It said this would ensure its common shares remain accessible to retail investors and its thousands of employees who participate in the company’s employee share ownership program.

• Email: dpaglinawan@postmedia.com Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.