Loblaw parent company George Weston Limited has shared that its pockets were hit hard by the bread price-fixing settlement in its second-quarter earnings results.
The report, released on Tuesday, reflected the impact of the settlement in the 2017 bread price-fixing class-action lawsuits.
Last week, Loblaw and George Weston agreed to settle the nationwide class actions against them relating to their involvement in what they called “an industry-wide price-fixing arrangement… involving certain packaged bread products.”
Piotr Swat/Shutterstock
George Weston agreed to pay $247.5 million in cash, and Loblaw will pay $252.5 million—$156.5 million in cash and credit for $96 million previously paid to customers by the grocery giant under the Loblaw Card program. This amounts to a total settlement of $500 million.
According to the parent company’s latest earnings report, this settlement “negatively impacted” its net earnings by $253 million.
Due to this, George Weston’s net earnings available to common shareholders were $400 million, a decrease of $98 million.
In addition, the company continues to earn cash, reporting revenue of $14,091 million, an increase of $207 million in the quarter.
The results say Loblaw delivered strong operational performance in the quarter, driving sales growth and maintaining a careful focus on cost control.
The report states, “Pharmacy sales growth rates returned to more normal levels, reflecting ongoing momentum in new healthcare services. Food sales growth was led by the ongoing strength of Loblaw’s Maxi and NoFrills hard discount stores.”
According to the report, after operating expenses, the grocer profited $1,711 million in this quarter, an increase of $73 million from last year.
It added that Loblaw’s internal inflation rate has also decreased.
While it’s unclear whether the May-long Loblaw boycott had anything to do with the impact on the company’s net earnings, the fight continues between frustrated shoppers and grocery giants.
A Canadian artist recently commented on Loblaw’s bread price-fixing settlement, illustrating the parallels between bread prices and the grocery chain’s profits on posters around Vancouver.