Canadian grocery store chain Loblaw Companies (TSE:L) has announced plans to invest $10 billion in its retail network over the next five years, including $2.2 billion in 2025.
The Toronto-based company said it plans to open 80 new grocery and pharmacy stores this year, about 50 of which will be discount grocery outlets. Additionally, Loblaw plans to renovate more than 300 grocery and pharmacy stores throughout this year.
The company's investment plans also include modernizing its supply chain, including the opening of a new distribution center that has been under construction since 2022. Loblaw has been shifting towards discount shopping over the past few years as consumers look for ways to manage inflation and elevated interest rates.
Inflation sent grocery prices soaring after the Covid-19 pandemic, and consumers responded by seeking out sales and choosing discount brands. Loblaw said in a news release that, since 2020, it has spent more than $8 billion on improving and expanding its store network as well as modernizing its supply chain.
Loblaw said the planned renovations of its stores will include adding about 100 new pharmacy care clinics to its Shoppers Drug Mart locations throughout Canada. The company has been expanding its network of clinics that provide assessment and treatment of common ailments.
TSE: L stock has risen 29% over the past 12 months on the Toronto Stock Exchange.
The stock of Loblaw Companies has a consensus Moderate Buy rating among four Wall Street analysts. That rating is based on two Buy and two Hold recommendations issued in the last three months. The average L price target of C$204.75 implies 16.09% upside from current levels.