BRAMPTON, ONTARIO February 25, 2021 Loblaw Companies Limited (TSX: L) (“Loblaw” or the “Company”) announced today its unaudited financial results for the fourth quarter ended January 2, 2021 and the release of its 2020 Annual Report - Financial Review (“Annual Report”). The report includes the Company’s audited financial statements and Management’s Discussion and Analysis (“MD&A”) for the fiscal year ended January 2, 2021. The Company’s 2020 Annual Report will be available in the Investors section of the Company’s website at loblaw.ca and will be filed on SEDAR and available at sedar.com.

Unless otherwise indicated, all comparisons of results for the fourth quarter of 2020 (13 weeks ended January 2, 2021) are against results for the fourth quarter of 2019 (12 weeks ended December 28, 2019) and all comparisons of results for the full year of 2020 (53 weeks ended January 2, 2021) are against the results for the full year of 2019 (52 weeks ended December 28, 2019).

“In stores and online, our network met the challenge of outsized sales growth, keeping Canadians fed and well,” said Galen G. Weston, Executive Chairman, Loblaw Companies Limited. “Our purpose – helping Canadians live life well – has inspired ongoing commitments to colleague safety, lower prices, and strategic services that matter to customers. Looking ahead, we have financial momentum, our strategy has advanced, and our core business is well positioned.”

The COVID-19 pandemic impacted the Company’s operations. In the fourth quarter, sales in the Food Retail business were positively impacted, however costs remained elevated to ensure the safety and security of customers and colleagues. Loblaw continued to deliver value in the categories that mean most to consumers, maintaining conventional, drug and beauty market share improvements earned over the course of the pandemic, and improving its trajectory in discount. In Drug Retail, strength in convenience categories supported front store sales while the pandemic negatively impacted higher margin categories. Looking ahead, the COVID-19 pandemic has accelerated certain longer-term trends, enabling the Company to advance its strategic growth areas of Everyday Digital Retail, Connected Healthcare Network, and Payments and Rewards.

Unless otherwise indicated, the following fourth quarter highlights include the impacts of the consolidation of franchises, and COVID-19 and are presented on a comparable⁴ 12 week basis.

2020 FOURTH QUARTER HIGHLIGHTS

• Revenue was $12,408 million. This represented an increase of $818 million, or 7.1% when compared to the fourth quarter of 2019.

• Retail segment sales were $12,165 million. This represented an increase of $844 million, or 7.5% when compared to the fourth quarter of 2019.

  • Food Retail (Loblaw) same-stores sales growth⁴ was 8.6%, continuing at elevated levels, with the Company’s Market division delivering strong growth of 10.6% and the Discount division delivering 7.4% growth.

  • Drug Retail (Shoppers Drug Mart) same-store sales growth⁴ was 3.7%, with pharmacy same-store sales growth of 5.0% and front store same-store sales growth⁴ of 2.8%.

• The Company’s e-commerce sales increased 160% compared to the fourth quarter of 2019.

• The Company incurred approximately $42 million in COVID-19 related costs to ensure the safety and security of customers and colleagues.

• Operating income was $635 million. This represented an increase of $94 million, or 17.4% when compared to the fourth quarter of 2019.

• Adjusted EBITDA² was $1,265 million. This represented an increase of $60 million, or 5.0% when compared to the fourth quarter of 2019.

• Adjusted EBITDA margin² was 10.2%. This represented a decrease of 20 bps when compared to the fourth quarter of 2019.

• Net earnings available to common shareholders of the Company were $310 million. This represented an increase of $56 million, or 22.0% when compared to the fourth quarter of 2019. Diluted net earnings per common share were $0.88. This represented an increase of $0.18, or 25.7% when compared to the fourth quarter of 2019.

• Adjusted net earnings available to common shareholders of the Company² were $410 million. This represented an increase of $15 million, or 3.8% when compared to the fourth quarter of 2019.

• Adjusted diluted net earnings per common share² were $1.16. This represented an increase of $0.07, or 6.4% when compared to the fourth quarter of 2019.

• The Company repurchased, for cancellation, 5.5 million common shares at a cost of $350 million.

• The Company invested $418 million in capital expenditures and generated $606 million of free cash flow².

• The Company recorded approximately $10 million of restructuring and other related charges, primarily related to Process and Efficiency initiatives.

Note: This is an excerpt from the full release. To view the complete document, please download the full Q4 2020 news release(Open in a new tab).

¹ This News Release contains forward-looking information. See “Forward-Looking Statements” section of this News Release and the Company’s 2020 Annual Report for a discussion of material factors that could cause actual results to differ materially from the forecasts and projections herein and of the material factors and assumptions that were used when making these statements. This News Release should be read in conjunction with Loblaw Companies Limited’s filings with securities regulators made from time to time, all of which can be found at sedar.com and at loblaw.ca.

² See Section 17 “Non-GAAP Financial Measures” of the Company’s 2020 Annual Report, which includes the reconciliation of such non-GAAP measures to the most directly comparable GAAP measures.

³ To be read in conjunction with the “Forward-Looking Statements” section of this News Release and the Company’s 2020 Annual Report to Shareholders.

⁴ Results are presented on a comparable number of week basis. Comparable number of weeks would be 12 weeks versus 12 weeks or 52 weeks versus 52 weeks.

⁵ Certain figures have been restated to conform with current year presentation.