Inflation in Canada: Walmart CEO on Profits
Walmart Canada is not trying to profit from food inflation, president and chief executive officer Gonzalo Gebara told a congressional committee studying the matter Monday night.
Gebara told MPs that Walmart Canada’s share of gross profit for its food business fell last year, as did the company’s total operating profit in dollars. However, he declined to provide specific numbers for the private business, saying Walmart Canada has provided relevant financial information to the Competition Bureau.
MPs pressed Gebara about the fees and penalties that grocers charge suppliers. These fees are among the topics being discussed as part of efforts to create a code of conduct in the grocery store.
Gebara said Walmart Canada recently received a draft of the code of conduct and is reviewing it.
“We will support any initiative that offers better conditions and greater transparency throughout the chain,” he said.
Gebara’s comments to the committee come after the highly anticipated appearance of the leaders of Canada’s three largest grocery chains on March 8.
The CEOs and presidents of Loblaw Cos. Ltd., Metro Inc. and Empire Co. Ltd. told the committee that food inflation was not caused by profiteering and insisted their profit margins on food remained low.
Federal politicians have called for more transparency from the grocery industry because food price inflation has significantly outpaced general inflation.
Gebara said Walmart Canada tries to maintain a price gap between its products and products sold by competitors, naming other grocery giants.
He said Walmart is known for its “daily low prices” strategy: “This is not a stunt or our response to the challenging times we live in.”
Gebara said the retailer is doing everything it can to combat inflation, such as implementing measures to control operating costs, identifying improvements in its supply chain, and working to lower prices. private label products.
“The past two years have created a perfect storm of external factors that have pushed food prices up,” he said. “These inflationary pressures are transmitted through the entire supply chain.”
Grocery prices rose 10.6% in February from a year ago, while overall inflation was 5.2%.
Over the course of the past year, the Bank of Canada has repeatedly raised interest rates in an attempt to quell the fury of inflation.
Galen Weston, billionaire and chairman of Loblaw, told MPs earlier this month it was “impossible” that groceries could cause food inflation and said the company made a lot of profit. from non-food divisions of its businesses such as apparel and pharmaceuticals.
A most recent report by the Agri-Food Analytical Laboratory at Dalhousie University found that all three major grocery companies posted higher profits in the first half of 2022 than their median earnings. in the past 5 years.
The March 8 meeting had NDP Leader Jagmeet Singh repeatedly asking Weston, “How much profit is too much?”
Weston argues that “reasonable profits are an important part of running a successful business,” while previous Empire president and CEO Michael Medline took a similar view, saying, It’s crazy to assume that an unprofitable grocery business is somehow better for the customer and better for the shelf.”
At the March 8 meeting, the heads of Metro and Empire both questioned why congressmen seemed to exclude US retail giants like Walmart and Costco from their study of food inflation. The committee unanimously invited the leaders of those two retail companies in Canada to speak before them.
— With files from The Associated Press
This report by The Canadian Press was first published on March 27, 2023.