George Weston Limited: Reports Q2-2020 Results

Toronto / CA. (gwl) George Weston Limited (GWL) announced its consolidated unaudited results for the 12 weeks ended June 13, 2020. GWL’s 2020 Second Quarter Report has been filed on SEDAR and is available at sedar.com and in the Investor Centre section of the Company’s website at weston.ca.

«In a challenging environment, the fundamental strength of our market-leading businesses was evident in the quarter,» said Galen G. Weston, Chairman and Chief Executive Officer, George Weston Limited. «Our businesses in retail, real estate and consumer goods continued to take thoughtful and deliberate actions in response to the Covid-19 pandemic, delivered essential goods and services to customers, tenants and communities, all while remaining committed to our longer-term strategic priorities.»

The Covid-19 pandemic has affirmed certain longer-term trends at Loblaw Companies Limited, accelerating its strategic growth areas of Everyday Digital, Connected Healthcare, and Payments + Rewards. During the quarter, Loblaw’s sales and earnings performance were significantly affected by Covid-19. Loblaw continued to experience unprecedented demand for products across multiple categories, leading to strong top-line results. However, the growth in sales was not sufficient to offset substantial Covid-19 related costs and margin pressure driven by changes in sales mix. In addition, Loblaw’s e-commerce sales accelerated by 280 percent in the quarter, resulting in increased costs and investments. Loblaw is investing to improve expanded capacity and same-day e-commerce service while also improving the cost structure.

Choice Properties Real Estate Investment Trust results reflect the stability inherent in its high-quality income producing portfolio of properties. During the quarter, Choice Properties undertook a number of proactive measures to mitigate the effects of Covid-19 on its business, including strengthening its balance sheet by extending its weighted average term of debt through the issuance of unsecured debentures and supporting its tenants who have been negatively impacted by the pandemic through the provision of rental assistance.

Weston Foods remains committed to its strategic framework, gaining continued traction through its transformation program. In the second quarter, Weston Foods’ financial performance was negatively impacted by Covid-19. Sales were negatively impacted in certain retail categories and foodservice channels as a result of a change in retail sales merchandising practices and government mandated closures of non-essential businesses. At the onset of the crisis, many food retailers temporarily closed in-store bakeries and bakery display cases which negatively impacted retail sales. Similarly, government mandated closures of non-essential businesses including restaurants and social distancing protocols negatively impacted foodservice sales. In addition to the decline in sales, Weston Foods incurred Covid-19 costs relating to temporary employee pay premiums and pay protection safeguards and increased health and safety measures to protect its colleagues. The pandemic has required Weston Foods to act swiftly in response to challenges, however, the business remains well positioned to respond to consumer demand for quality baked goods and to advance its growth categories.

In the second quarter, each of our businesses responded well to the dynamic and unpredictable operating environment created by the pandemic. The Company incurred substantial Covid-19 related costs of approximately USD 312 million to protect and benefit colleagues, customers, tenants and other stakeholders. As a result, the impact of Covid-19 on each of our businesses negatively impacted the Company’s financial results in the second quarter of 2020.

2020 Second Quarter Highlights

George Weston Limited’s net loss available to common shareholders of the Company in the second quarter of 2020 was USD 255 million (USD 1.66 per common share) compared to net earnings available to common shareholders of the Company of USD 184 million (USD 1.19 per common share) in the same period in 2019. The decrease of USD 439 million (USD 2.85 per common share) was due to the decline of USD 121 million (USD 0.77 per common share) in the underlying operating performance of the Company and the unfavourable year-over-year net impact of adjusting items totaling USD 318 million (USD 2.08 per common share), which was primarily due to the unfavourable year-over-year impact of the fair value adjustment of the Trust Unit liability of USD 255 million (USD 1.67 per common share) as a result of the unit price increase of Choice Properties in the quarter.

Adjusted net earnings available to common shareholders of the Company(1) in the second quarter of 2020 were USD 142 million (USD 0.93 per common share). In comparison to the same period in 2019, this represented a decrease of USD 121 million (USD 0.77 per common share), or 46.0 percent, due to the decline in the underlying operating performance of the Company resulting from the impact of Covid-19 and related costs, and higher net interest expense and other financing charges.

For additional information please read the Company’s PDF file below (163 KB):

20200729-GWL-Q2-2020.