January Grocery CPI in Canada decelerates (LBLCF) – Short Loblaw
Canada’s CPI rose 2.9% YOY in January, decelerating from 3.4% in December. Grocery prices increased 3.4% YOY, decelerating from 4.7% in December. Restaurant prices were up 5.1% in comparison. Food inflation in Canada has been a top political issue, which has resulted in the CEOs of the major chains being summoned by government leaders to commit to lowering prices. The combination of wage pressure and a focus on lowering prices is an adverse environment compared to the first two years of the pandemic. January’s report lowers the heat on the companies but also lowers the price tailwind. Loblaw is on our short list.
Online grocery shift (KR, WMT) – Buy WMT
Online grocery sales in January increased by 1.8%. The number of households ordering online grew, but order frequency decreased, and the average basket was flat. Ship to home was the only online segment to grow, with sales up 7.8% YOY. Delivery sales decreased by 0.5%, driven by a decline in volumes. Pickup sales were the largest online segment, but sales fell by 1.9%. The mass channel grew its MAU base by 10%, while supermarket MAUs decreased by 5%. Online’s share of total grocery spending increased by 120bps to 13.4%. Walmart and Sam’s Club both had strong e-commerce sales that contributed ~2% to SSS in FQ4. Mass is gaining share in online groceries.
