Tariffs won’t impact T&T Supermarket’s U.S. expansion: Loblaw CEO
Loblaw Companies Ltd. said trade tensions aren’t likely to throw a wrench in T&T Supermarket’s plans to grow its network stateside.
Per Bank, Loblaw’s CEO, said earlier this year the Asian grocery chain was the company’s fastest-growing format.
T&T opened its flagship U.S. store in Bellevue, Washington late 2024.
Four other locations are planned for Washington and California, with opening dates this year and next.
Bank said Loblaw agreed to a seven-store pilot for T&T in America, and those plans haven’t changed even as U.S. President Donald Trump’s global trade war escalates.
“We had a good discussion with [T&T CEO Tina Lee], and it won't have any impact,” Bank told analysts Wednesday (April 30).
“The [amount of] product that we are buying from China and selling in our stores [is] around 15%... it's a level playing field. Our T&T division in the U.S. is so different from any of the other Asian grocers there. It’s just amazing how good a job that Tina and the team have done in the U.S. A very, very good start.”
T&T is also adding new stores in Canada. The grocer opened its second store in downtown Toronto in February, with another location planned for Burnaby, B.C. this year.
Across all its Canadian banners, Loblaw said tariff-related price increases are only just recently trickling down to store shelves. Affected products are identifiable by the grocer’s “T” symbol.
“We are working diligently to keep prices as low," Bank said on Loblaw’s first quarter earnings call. "We are actually collaborating with our suppliers to mitigate the impact of these tariffs wherever possible.”
Bank said Loblaw is onboarding 30 new Canadian suppliers this year. It also joined a European buying group to lower purchasing costs on some commodities and control brand products.
“I was down in the test kitchen, and I was observing that they're testing a lot of new products… to help mitigate this situation, so we can buy less from he U.S.," Bank said.
Those efforts are paying off, particularly for its e-commerce platform PC Express.
The app’s new "swap" feature which, when selected, suggests Canadian-made alternatives, is driving higher e-commerce sales for homegrown goods.
“The penetration of Canadian products is more than double than in stores because it's so much easier to navigate with the tools that we have,” Bank said.
But the chief executive added he doesn’t expect the trend to stick around long-term.
“We would hope it was something that would persist. But, using my experience, maybe a third of it will stick,” he said. “It might stick a little bit more, because we are onboarding [more Canadian suppliers]... At least that's good for something with the tariffs. Probably the only thing it's good for.”
No Frills, Maxi continue to grow
Loblaw reported net earnings of $503 million for the first quarter of fiscal 2025, an increase of 9.6%.
Revenue was up 4.1% to $14.14 billion.
Retail segment sales were $13.84 billion. Food same-store sales rose 2.2%, while drug retail same-store sales increased by 3.8%.
“Our efforts are resonating with our customer base, as evidenced by higher tonnage and basket sizes and stable traffic, all contributing to growing market share,” Bank told investors.
In the first quarter, Loblaw opened hard discount stores in five new communities, with plans to open a total of 50 this year.
“For us, it's important that we go where the customers want us to go,” Bank said.
The company’s Quebec-based discount chain, Maxi, recently announced plans to open its first store outside the province, in Caraquet, N.B.
Chief financial officer Richard Dufresne said the decision is part of Loblaw’s strategy to meet customer needs.
“When you look at the mix of the population there, it's very much French speaking, and so they associate themselves more with Maxi… There's no plans to [expand] Maxi all over the Atlantic, but in this instance, it made sense,” he said.
While 50 may seem like a big number, executives cautioned that Loblaw’s square footage growth is measured.
“Trust me, if the new stores weren’t working, then I would not open one more store,” Bank said. “The moment that we see that it won't work, then of course, we will stop building new stores. But trust me, that will work the next five years because customers are asking for lower prices, they're asking for hard discounts.”
