EPS of 52c beat estimates of 51c; revenue of $14.7B beat estimates by 1%. Loblaw's 2026 outlook remains steady, with continued top-line momentum and modest margin expansion supported by traffic gains, hard-discount growth and pharmacy strength. Food same-store sales improved to 2.4% growth in 1Q, benefiting from higher traffic and basket size, though value-seeking behavior persists and could further temper mix. Pharmacy remains a key growth driver, with 4.1% same-store gains led by specialty drugs and healthcare services, which should provide a more stable, higher-margin revenue stream. Gross margin was broadly flat, with mix pressure from faster-growing discount banners offsetting productivity gains and shrink improvements. Management continues to expect high-single-digit adjusted EPS growth, supported by operating leverage and share repurchases. The stock has not done much but we remain comfortable with its outlook.
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