Release Date: September 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The North West Co Inc (NNWWF, Financial) reported a strong top-line growth with consolidated sales up 4.6% and gross profit up 7.5% for the quarter.
- Sales in Canadian operations increased by 5.6% for the quarter, with a 6.8% rise on a same-store basis, driven by strong food sales.
- The company experienced increased consumer demand due to First Nations Drinking Settlement payments and programs like Jordan's Principle, which are expected to continue into 2025.
- The gross profit rate improved by 91 basis points, attributed to a shift in sales mix and improved execution in fresh departments.
- The North West Co Inc (NNWWF) received the Canadian Grocer Impact Award in the Diversity, Equity, and Inclusion category for its indigenous procurement strategy.
Negative Points
- Earnings from the investment in Transport Nanuk were down $1.8 million due to higher investment repairs, affecting the bottom line.
- A $1.8 million net increase in expenses was reported due to non-comparable expenses, including higher share-based compensation costs.
- The implementation of the global minimum tax resulted in a $1 million increase in tax expense for the quarter.
- International operations faced a challenging economic environment, with only a 0.8% increase in sales, impacted by weaker conditions in tourism-dependent markets.
- Expenses increased by 10.1% during the quarter, driven by inflationary headwinds, labor costs, and foreign exchange impacts.
Q & A Highlights
Q: Regarding the higher same-store sales in Canada, particularly on the food side, is this part of the $48 billion child welfare reform, or is it something separate?
A: Daniel McConnell, CEO: It is more aligned with Jordan's Principle, focusing on providing healthier living options in Northern Canada. It's not entirely clear if it's part of the settlement, but it aligns with the overall initiative of Jordan's Principle.
Q: Are the benefits of increased access to nutritious foods in certain communities sustainable, or are they one-time in nature?
A: Daniel McConnell, CEO: We believe it's sustainable as it aligns with Jordan's Principle. The benefits are expected to continue into the third quarter.
Q: How large should we expect the one-time charges to be, and will they be backed out of adjusted earnings?
A: Daniel McConnell, CEO: We will provide more information as these charges come in. It's too early to disclose the size, but they will be removed from adjusted earnings.
Q: Did the delay in the sealift shipping season due to vessel repairs affect your inventory levels in the North?
A: Daniel McConnell, CEO: We managed to get the inventory into the North as planned, so there should be no additional impact from this event in the coming quarters.
Q: How are the competitive dynamics in the Canadian market given the flow-through of benefits and expectations?
A: Daniel McConnell, CEO: We haven't observed significant changes in competitor approaches. We are focusing on operational excellence through The Next 100 program to ensure we capture our share of the market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
