NDP Leader Jagmeet Singh holding a press conference after grilling grocery CEOs on food inflation.
NDP Leader Jagmeet Singh holding a press conference after grilling grocery CEOs on food inflation. Credit: CPAC Credit: CPAC

Jagmeet Singh was tough when he grilled Loblaw CEO Galen Weston III on Wednesday March 8. 

But the New Democratic leader allowed Weston to slip away from one key accusation, to wit, that Loblaw made excess profits of a million dollars per day in 2022.

The key word here is excess. Singh said he got the word and the figure of $1,000,000 from the work of “a professor.” 

Weston pushed back. He “disagreed” with “the professor.” And that was that.

Loblaw’s Weston was appearing before a House of Commons committee to answer questions on food inflation. 

The committee had invited Weston and the heads of two other companies, Empire (which owns the Sobeys chain among other properties) and Metro, to answer questions about food inflation. 

Together with Loblaw, the three corporations dominate the food retail market in Canada.

Members of parliament on the committee suspect those dominant players have driven food costs for Canadian consumers beyond the increases wrought by supply chain disruptions and other factors outside their control. 

Singh sat in for the NDP’s member of the committee, British Columbia MP Alistair McLeod, and chose to focus his attention exclusively on Weston. 

Loblaw is the largest and most profitable of the three companies.

The New Democratic leader kept asking Weston how much profit was “enough,” at a time when many Canadians have trouble paying inflated prices for food.

The Loblaw chief insisted his company’s big profits are not, mostly, a result of food prices. Rather, he argued, Loblaw owes its handsome profits to a spike in prices for pharmaceutical products and other goods and services it offers, such as banking. 

Moreover, Weston added, the profit on what he called a $25-dollar basket of groceries is a mere $1. 

A buck out of $25 doesn’t sound like much, when you put it that way. But it sounds like a lot more when you re-define that one dollar as a four-per-cent profit margin.

Four per cent is not too shabby for a high-volume industry such as grocery retail. 

One economist told this writer he was surprised to learn Loblaw’s profit margin is so high. He had thought it was more in the one-per-cent range.

READ MORE: Economist debunks supermarkets’ claim they’re not profiting from food inflation

Research by respected, non-partisan experts

The unnamed professor to whom Jagmeet Singh referred when questioning Weston is Sylvain Charlebois, an oft-quoted expert who heads the Agri-Food Laboratory at Dalhousie University in Halifax.

And the million-dollar-per-day excess profit number the New Democratic leader cited comes from a study Charlebois co-authored with his colleague Samantha Taylor: “Canadian Grocers – Measuring Greed in the Era of Consumer Distrust.”

The two authors point out that all three grocery chains earned record profits in the first half of 2022, but Loblaw’s were by far the biggest: $436 million. That profit outperformed Loblaw’s best profit of the past five years by a considerable margin, $180 million. 

There are just about 180 days in a half-year period. And so, Charlebois and Taylor were accurate when they concluded the profit-in-excess-of-the-previous-high Loblaw realized in 2022 amounted to, wait for it – $1 million per day.

The Dalhousie researchers note that Loblaw’s quarterly total revenue for 2022 was a whopping $12.9 billion. In that light, a mere million per day in excess profit might not sound like much. 

Weston made allusion to his company’s high volume and total sales in his verbal fencing match with Jagmeet Singh, until he switched gears in frustration and decided to dispute the NDP leader’s figures.

In their study, Charlebois and Taylor also deal with Weston’s claim that his company’s profits are mostly from non-food items and services, by examining Loblaw’s financial statements.

The two authors point out that in Canada publicly listed companies such as Loblaw must report their finances according to a set of rules known as the International Financial Reporting Standards (IFRS). 

IFRS rule 8.2 states that in their reports companies may lump together their various activities as long as those “operating segments” have “similar economic characteristics”. 

The IFRS definition of similar, Charlebois and Taylor explain, isn’t vague and open-ended. It is narrow and strict. 

The IFRS stipulates that the various segments of a company must be similar in all respects, which include “the nature of the products, services and production processes, as well as the methods used to distribute the products or provide the services.”

Loblaw chooses to report financial results for all of the products and services it sells in aggregate or bundled form. The company does not report food profits separately from cosmetic or other non-food profits.

Charlebois and Taylor are dubious about this practice, which, they say, quite likely defies IFRS rules:

“We find it interesting that Loblaws can justify food and non-food (healthy, beauty, apparel, and other general merchandise) as a combined operating segment … It is unclear how food retail and drug retail are similar in nature, sales or production.”

Over to the Competition Bureau

So far, no government agency has required of Loblaw that it more scrupulously respect financial reporting standards. The federal Competition Bureau is now looking into multiple aspects of the retail food industry and it might impose such a requirement in the future.

The Bureau will also be interested in the degree to which the three retail behemoths, which sell 80 per cent of grocery products in Canada, collude to control the market. 

One MP on the House committee noted that all three companies had decided on the very same day to end so-called hero pay for employees who had worked through the darkest days of pandemic restrictions.

That looked like collusion to the MP, but the CEOs all said they had reached that decision independently. The Competition Bureau will no doubt take note.

As for food prices, Charlebois and Taylor conclude that they simply lack adequate data to determine the precise extent to which Canadians are paying more for food as a result of the retail giants’ – especially Loblaw’s – excess profits. 

Here’s how the two experts put it: 

“We based our analysis on publicly available data, aggregated such that we will likely never be able to prove or disprove Greedflation amongst Canadian grocers. This will remain the case until they are willing to open their books for additional analysis … We conclude that based on the performance of their gross profit, Loblaw Companies Limited are outperforming even their best gross profit performance in recent years. At the same time, many Canadians face tremendous financial hardship attempting to satisfy their basic needs of heat, shelter, and food.”

It is a pity NDP leader Singh did not haul out this report when Loblaw’s Weston tried to gaslight him and his fellow MPs by dismissing the accurate numbers the NDPer had cited.

Karl Nerenberg

Karl Nerenberg joined rabble in 2011 to cover Canadian politics. He has worked as a journalist and filmmaker for many decades, including two and a half decades at CBC/Radio-Canada. Among his career highlights...