Evidence of meeting #52 for Agriculture and Agri-Food in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was profits.
A video is available from Parliament.
President and Chief Executive Officer, Empire Company Limited
Let me talk about that for a second. It's a great question.
We at Empire, as you may recall—not everybody knows, perhaps—in 2017 were in dire straits. We were making almost no money. We couldn't support our people, our stores and our communities. Over the last six years, through Project Sunrise and Project Horizon, we have started to turn around our company.
We have one of the lowest profit margins in the world, certainly one of the lowest in this country. As somebody said here in their opening statement, it would take almost nothing in terms of changing our sales or our margins to tip us into a position of having no profitability or less than that.
We have done everything we can. We're doing everything we can promotionally. We're not passing on every price increase. We're fighting against price increases. Our flyers are stronger. Our pack sizes are bigger. We're growing our private-label business. We're doing everything we can to help Canadians.
Liberal
The Chair Liberal Kody Blois
We're going to have to leave it at that, gentlemen.
Thank you, Mr. Medline.
Thank you, Mr. Turnbull.
Mr. Perron, you have six minutes.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
Thank you, Mr. Chair.
Thank you, witnesses, for being here with us today. We really appreciate it.
I will try to be quick, and I would ask that you keep your answers short so that we can make good use of my time.
Mr. Weston, you just told Mr. Turnbull that you cannot publish your financial statements because they are competitively sensitive, and we understand that.
Like Mr. Singh, we, too, have a lot of interactions with people. Sometimes people see the overall figures that you publish with all the profits added up. We were already told the bit about the pharmacy sales at a previous meeting.
Don't you think it would be better to be more transparent so that people are able to believe that you truly do have a 2% profit margin? Is there no way to make those figures public without compromising your competitiveness?
If you cannot share those figures individually, could you send them to the committee members so that we can at least get an aggregate number or could you even send them to the law clerk of the House who could compile them and provide the committee members with an average for all the retailers?
That would be reassuring for us and it would give us the information that we need. It could help direct us so that we can make the best possible recommendations to the government.
Chairman and President, Loblaw Companies Limited
We do publish our financial statements as I mentioned, on a quarterly basis, and they are fully audited by an external auditor. That includes our statements publicly when we release our results where it's our responsibility to explain in our documentation and in our analyst calls exactly what has driven the financial performance of the business. In those statements we are very clear and explicit about what is driving the improved performance in the business, and those are real. You can trust them. You can believe in them. They've been audited.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
I understand what you are saying and that you have commented on that.
However, when the committee asks why your profits are up, almost every grocery retailer is telling us that their profits are being boosted by pharmacy sales rather than food sales. However, the committee does not have any details or numbers. We need that data. I think that we are reasonable people and that we can be trusted to treat that information with care and to respect its sensitive nature.
I am asking this question to all of the witnesses. Is there no way to put all of that data together and provide it to the committee so that we don't see the numbers for each company but just the numbers for all of the companies combined? Then, the committee members could evaluate it as parliamentarians in their role of protecting the public and information.
Would you be open to that idea?
Chairman and President, Loblaw Companies Limited
I think the Competition Bureau is studying this. I don't know who requested it. As I mentioned in my answer to the prior question, we have provided all of that appropriate information, so hopefully the output of that study will satisfy the committee. But let me take it away, and look and see. If it isn't appropriately...or sufficient for this committee, we'll try to find another way to provide the disclosure.
I would emphasize that we're obligated through the securities commission to speak the truth about these things. You can take what we say as the truth.
Chairman and President, Loblaw Companies Limited
There's maybe just one other thing I would say. If we are asked to disclose the origins of our financial results at that level of detail, then I would urge us to ask all others to do the same, whether it's Walmart, Costco or anybody else.
Thank you.
President and Chief Executive Officer, Empire Company Limited
You said all three. Do you want me to answer?
President and Chief Executive Officer, Empire Company Limited
We're very different at Empire Company. We have a very small pharmacy business. When you look at our numbers, you're seeing 90% grocery, so you can take those figures and figure out what we're doing in terms of sales margin profits.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
You get the idea. If, as Mr. Weston said, you three CEOs can find a way to provide the maximum amount of information to the committee, that would be helpful.
Mr. La Flèche, I want to change subjects and talk about the 2% profit margin. Ms. Rood went into detail about the fees imposed. I will not go back over all those details because that is not how I want to spend my time.
Do you include the fees imposed on suppliers for delays, unsold merchandise and so on in that 2% profit margin?
President and Chief Executive Officer, Metro Inc.
It's not me that's turning off the sound. I think it's the clerk.
To answer your question, Mr. Perron, yes, the profit margins include all the fees. I will state very clearly that there are no hidden fees at Metro. Our fees are transparent and negotiated in advance with our suppliers. There are no hidden fees. All of the fees are part of our revenue.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
Okay.
During the meeting, your two colleagues committed to adopting a code of conduct. I would imagine that you are on the same page as them?
President and Chief Executive Officer, Metro Inc.
Yes, we are. We are actively working on developing a code of conduct that will be led and managed by the industry, stakeholders, suppliers and retailers. We think that such a code of conduct could work. There is still some work to be done, but we are actively involved in preparing a code of conduct and we will support it.
Bloc
Yves Perron Bloc Berthier—Maskinongé, QC
There's something I and a number of other committee members are concerned about when it comes to the code.
You can appreciate that the committee has no information on how the talks are going, so the worry is that you'll adopt a code that is merely symbolic. The players will be able to claim that they are playing nice and being fair because they've adopted this code, and that we'll need to believe them going forward. I don't say that to be disparaging, I assure you.
Will the code deal with the infamous fees as well, or are you open to the idea, at least? When you negotiate prices with suppliers, those who produce perishable items don't have much room to manoeuvre. As Ms. Rood pointed out, they have very little bargaining power. It could even be said that you're in a position of dominance. I'm not accusing anyone of anything. All the committee is doing today is asking questions.
Do you think the code should address those fees to restore some order in the industry?
Liberal
The Chair Liberal Kody Blois
Unfortunately, you're out of time, Mr. Perron.
I'll let you answer, Mr. La Flèche, if you can keep it to 30 or 40 seconds.
President and Chief Executive Officer, Metro Inc.
What I would say is that the spirit behind the code is precisely to have more transparency in the negotiations and dealings between retailers and suppliers. That is the direction we are moving in, so it should help.
Liberal
The Chair Liberal Kody Blois
We now have Mr. Singh subbing in on behalf of Mr. MacGregor, and let me go on the record saying, Mr. Singh, that you've got big shoes to fill. Mr. MacGregor is one of our good parliamentarians.
We'll go over to you for up to six minutes.
NDP
Jagmeet Singh NDP Burnaby South, BC
Thank you, Mr. Chair.
I want to set the stage, and my question goes directly to Mr. Weston.
Right now, we're going through an unprecedented period of a cost-of-living crisis. We have families going into your stores looking at the price of items, looking at them and putting them back because they can't afford them. We have families who are struggling to buy food for their kids in this country, in a G7 country, and they look at you, and they see you making record profits. How can you justify that when families are struggling to put food on the table for their kids?
Chairman and President, Loblaw Companies Limited
We understand that 95% of Canadians are concerned about food prices, but grocery chain profits are not the reason for food inflation and, as I mentioned—
