Loblaws & Shoppers Drug Mart Posted Big Profits But Are Losing Money To 'Organized Crime'

While the high cost of groceries in Canada these days might make people feel like they're being robbed by the big box stores, grocers like Loblaws are dealing with similar problems of their own.

The company that owns and operates Loblaws and Shoppers Drug Mart is blaming professional thieves for a drop in its retail gross margins for food and drug.

Simply put? People are stealing stuff from the grocery chain enough for it to be discussed in the company's second-quarter earnings call.

"The Company faced double digit supplier cost increases that were not fully passed on to consumers," read a release from the grocer in its earnings update.

It's worth noting that overall, Loblaw Companies made an incredible amount of money in April, May, and June. Revenue was up nearly 7% to $13,738 million, while sales at Loblaws rose 6.1%, and were up 5.7% at Shoppers Drug Mart.

Still, the problems brought on by items being stolen aren't being ignored.

"There has been a substantial increase in high-value theft from retail stores in recent years," a spokesperson for Loblaw Public Relations told Narcity in an email. "This is organized crime, focused on products that are stolen to be re-sold through online marketplaces."

While specific products were not named, the spokesperson said they include, "Large amounts of cosmetics, fragrances, and baby formula," and added, "Even carts full of thousands of dollars of products [are] being pushed right out the front door."

The reality of these products being taken has led to some new measures in place at Loblaws and Shoppers Drug Mart locations, some of which you may have already noticed if you shop there often enough.

"We've had to make some changes in how our stores operate to stop this crime - adding locked cabinets, time-delay safes and security gates - while at the same time maintaining a welcoming and convenient customer experience," the spokesperson said.

"As we are working to find the right balance, we welcome our customers’ input and as always, appreciate their understanding."

News of this organized crime problem at one of Canada's largest grocery chains follows several tumultuous months for Loblaws, during which the store and its outgoing President and CEO Galen Weston Jr. have received an incredible amount of public backlash in reaction to high grocery prices nationwide.

In June, a report by Competition Bureau Canada said more competition was needed in the grocery space to bring those prices down, adding the industry is currently being dominated by Canada's grocery giants. The report identified Loblaws as the biggest giant of them all, having earned a staggering $1,994,000,000 in 2022.

In an earnings call earlier this week, according to Bloomberg, Loblaw CFO Richard Dufresne said, "Suggestions of grocer profiteering just don’t add up."

Bloomberg also spoke to some experts who suggested Loblaws' story of this organized crime problem could be a tactic to divert attention the public's attention away from all the talk of grocery prices and the barrage of negative headlines about the company lately.

This article's cover image was used for illustrative purposes only.