Industry Committee on July 10th, 2020

[Sarah Davis]

In some cases, yes; in some cases, no. As I mentioned, we did shut down some departments in order to focus on the essentials like food. In the case of Shoppers Drug Mart, we wouldn't have sold beauty during that time. As I mentioned, we did shut down some of our service cases. It would have had a significant impact. We would have seen decreases in apparel. We didn't close off the store, but we did focus on the food. That was the essential service.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Okay.

We do know small businesses across the entire country and in our communities were closed down because they weren't deemed essential services. Really, companies like yours would be the only place to get these types of products.

I have a question. When I look at your Q1 net earnings, they were $240 million. Even though your Q2 earnings haven't been posted yet, you did say that your costs were up. Would you say your net earnings are going to be higher this year, in 2020, compared with 2019?

[Sarah Davis]

I can't provide that information as a public company. It would be giving guidance on the earnings for the year. We've actually removed our guidance for the year because we believe it's very difficult to predict. I can't say at this time what I think the results for the year will be.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Okay. It will be interesting to look that up once they are made public.

What would your assessment be compared to Q1? In your earlier testimony you said your costs were up. Would that proportionately mean your net earnings are down for Q2?

[Sarah Davis]

I can only tell you what I've told the public, which is that in Q1 our profits were up as a result of the bulk in panic buying. In Q2, we have incremental costs that will be higher than the incremental revenue associated with the pandemic.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our last round of questions will go to MP Ehsassi.

You have the floor for five minutes.

[Ali Ehsassi, Liberal, Willowdale, ON]

Perhaps I could return to Ms. Davis. In anticipation of today's meeting, did you reach out to the management of the other two companies that are before us today to compare notes?

[Sarah Davis]

I did not. I did not speak to either Eric or Michael, or any member of their team.

[Ali Ehsassi, Liberal, Willowdale, ON]

Okay. No one in your management—

[Sarah Davis]

No one in my organization did, either.

[Ali Ehsassi, Liberal, Willowdale, ON]

You referenced the fact that there was a courtesy email on June 8, I believe.

[Sarah Davis]

No, it was on the 11th.

[Ali Ehsassi, Liberal, Willowdale, ON]

June 11...my apologies.

Prior to the one on June 11, can you think of any other courtesy emails you sent to other grocery stores this fiscal year?

[Sarah Davis]

I sent a courtesy email when we announced we were paying the two-dollar premium to the same grocers. That would be Walmart, Safeway, Sobeys and Metro.

[Ali Ehsassi, Liberal, Willowdale, ON]

The only time you'd sent courtesy emails, in recent memory, had to do with this pay premium. Is that correct?

[Sarah Davis]

That's correct.

[Ali Ehsassi, Liberal, Willowdale, ON]

Now, I suspect that before appearing today you had an opportunity to read Mr. Galen Weston's statement of June 11.

[Sarah Davis]

Which one would you be referring to?

[Ali Ehsassi, Liberal, Willowdale, ON]

June 11.

[Sarah Davis]

His note to the public...?

[Ali Ehsassi, Liberal, Willowdale, ON]

It was a released statement on June 11 by Mr. Galen Weston.

[Sarah Davis]

Yes, I generally read all of his statements. I don't know which specific one—

[Ali Ehsassi, Liberal, Willowdale, ON]

Well, you be the judge here. We have heard various explanations from you. The one you've been quite emphatic about is that the wage increase was a show of appreciation, but Mr. Weston has a very different explanation here. It says in his letter, released on June 11, “After extending the premium multiple times, we are confident our colleagues are operating safely and effectively in a new normal.” That's the explanation he's providing.

Do you see the discrepancy between the justification that you provided and what Mr. Weston says here?

[Sarah Davis]

No, I don't think so. I think what I was saying is that we paid the two dollars during those crazy times at the beginning of the pandemic, and we're now through, back to a new normal, so it seemed like an appropriate time to end it.

[Ali Ehsassi, Liberal, Willowdale, ON]

Do you mean there was never any talk about safety? You said your stores were absolutely safe, whereas Mr. Weston is saying the reason they feel comfortable removing that premium is that now you're operating safely and effectively. That's very different from the explanation we heard from you, would you agree?