News Briefs

MISSISSAUGA, Ont. - Maple Leaf Foods Inc. saw its share price drop as much as 18% on the Toronto Stock Exchange after it said challenges in labour markets, supply chains and inflation pushed it to a net loss for the second quarter.

The company said it had a net loss of $54.6 million, or 44 cents per share for the quarter ending June 30, compared with earnings of $8.8 million or seven cents per share for the same quarter last year.

Analysts had been expecting earnings of 12 cents a share, according to financial data firm Refinitiv.

The company says the margin of its meat protein group fell short of guidance because of the wider economic challenges, while it took a $18.6 million restructuring charge on its plant protein group as it looks to "rightsize'' the business.

Total company sales were up 3.1% to $1.2 billion, while sales in the plant protein group were down 15.2% to $40.8 million.

Maple Leaf's shares closed down $4.63, or 17.2%, to $22.33 on the Toronto Stock Exchange after trading as low as $22.02 earlier in the day.

-The Canadian Press

TORONTO- The CEO of Tim Hortons' parent company says the quick service chain generated sales in its latest quarter above pre-pandemic levels for the first time since the onset of COVID-19, but the business is still being affected by a slower return to offices in regions like Toronto.

"More offices reopened in the second quarter and people are coming back to hybrid capacity, but downtown Toronto is just getting back to work,'' said Restaurant Brands International CEO Jose Cil, on a Thursday call with analysts.

"They're still down high teens in terms of performance from a sales standpoint for some of the restaurants, so mobility in the downtown corridor is still a work in progress.''

Cil's remarks come as restaurant operators and other hospitality businesses are plotting a rebound from the pandemic, which forced many to close their doors, pare back their store counts and face lower sales.

Quick service restaurants, including RBI's Burger King, Popeyes Louisiana Kitchen and Firehouse Subs, were particularly affected because many people were no longer commuting to workplaces and thus, stopped making coffee runs on their way to the office or on breaks.

But in recent months, companies have demanded their staff head back to workplaces and consumers are falling into old habits like buying lunch or coffee meetings.

They're being met with a slew of new products RBI has released at Tim Hortons like a second collaboration with Justin Bieber that took the form of a French vanilla cold brew called Biebs Brew.

Other new additions include cilantro lime and habanero chicken wraps and loaded bowls, which Cil said drove improvements in performance measures linked to younger customers and have re-engaged others that tend to frequent the business' chains for breakfast and snacks only.

As a result, RBI has seen sales grow 14% in the second quarter, although they were down compared to the same time in 2021.

The company, which keeps its books in U.S. dollars, says global system-wide sales were up nearly US$1 billion year-over-year to over US$10 billion, with digital sales growing by double-digits over the same period.

Topping these results could prove tough for RBI, if a rumoured recession materializes.

Cil has yet to see the near 40-year high inflation level impact consumer habits, but said the company is ready to face economic pressures.

"We recognize the uncertain and, at times, difficult environment that we're facing as a result of ongoing commodity and wage inflation, rising interest rates and broader macro uncertainties impacting our industry and many others,'' said Cil.

"While many of these pressures are out of our control, we've been focused on working closely with our franchisees to take thoughtful action to alleviate those within our and our franchisees' control.''

Those actions include providing franchisees with staffing and retention best practices, simplifying back-of-house processes and making training resources easy to follow.

As RBI undertook these efforts, its net income attributable to common shareholders totalled US$236 million or 76 cents per diluted share for the quarter ended June 30, down from US$259 million or 84 cents per diluted share a year earlier.

Revenue for the quarter totalled US$1.64 billion, up from US$1.44 billion in the same period last year.

On an adjusted basis, RBI said it earned 82 cents per diluted share in its latest quarter, up from an adjusted profit of 77 cents per diluted share a year earlier.

-The Canadian Press

Tim Hortons has reached a proposed settlement in multiple class action lawsuits alleging the restaurant's mobile app violated customer privacy, which would see the restaurant offer a free coffee and doughnut to affected users.

The settlement, negotiated with the legal teams involved in the lawsuits, still requires court approval.

The coffee and doughnut chain would also permanently delete any geolocation information it may have collected between April 1, 2019 and Sept. 30, 2020, and direct third-party service providers to do the same.

"We think that it's a favourable settlement because it offers compensation that has a real value,'' said Joey Zukran, a lawyer with the Montreal-based law firm LPC Avocat Inc., which filed the class action in Quebec.

"Privacy cases across Canada are never guaranteed a win,'' he said. "Here we have some form of guarantee, some form of recovery ... as opposed to uncertainty that could last.''

It's unclear how many customers used the app during the 18-month period ending Sept. 30, 2020, and would be eligible to receive a free hot beverage and baked good.

Restaurant Brands International Inc., the parent company of Tim Hortons, said in an investor presentation in May that it had four million active users during the three months ended March 31, 2022.

"I think people who receive this will think it's paltry, but class action settlements are often paltry for the end consumer,'' said David Fraser, a privacy lawyer with McInnes Cooper in Halifax.

While the individual compensation may not seem like much, he said given the number of people potentially involved "it may be reasonable in aggregate.''

Still, others may feel it's not high enough to "act as a disincentive to further mischief,'' Fraser said.

"Any time you settle, there's going to be a compromise,'' he said, adding that the case "reflects how weird privacy harms are.''

"If you used that app and Tim Hortons collected your location information without your adequate, informed consent but nothing has happened with that information, you actually haven't suffered what would be considered a tangible harm,'' Fraser said.

"You're trying to compensate for the feeling of ickiness, the creepiness somebody might feel knowing that their information was collected without their knowledge or consent.''

The proposed settlement comes after an investigation by federal and provincial privacy watchdogs found the mobile ordering app violated the law by collecting vast amounts of location information from customers.

In a report released last month, privacy commissioners said people who downloaded the Tim Hortons app had their movements tracked and recorded every few minutes - even when the app was not open on their phones.

The investigation was launched after National Post reporter James McLeod obtained data showing the app on his phone had tracked his location more than 2,700 times in less than five months.

In a statement, Tim Hortons said it's pleased to have reached a proposed settlement in the four class action lawsuits filed in Quebec, British Columbia and Ontario.

"All parties agree this is a fair settlement and we look forward to the Superior Court of Quebec's decision on the proposal,'' the company said in a statement.

"We are confident that pending the Quebec court's approval of the settlement, the courts in British Columbia and Ontario will recognize the settlement.''

The company said the allegations raised in the class actions were not proven in court and the settlement is not an admission of any wrongdoing.

Tim Hortons said it would be emailing customers Friday to inform them of the proposed settlement.

Tim Hortons said the retail value of a free hot beverage is $6.19 while the value of a baked good is $2.39, plus taxes, according to court documents.

Customers would be provided with a credit for the items with a coupon or through the Tim Hortons app, documents said.

Details on the distribution of the free hot beverage and baked good would be provided if the court approves the settlement, Tim Hortons said.

A hearing has been scheduled in a Quebec court on Sept. 6 to consider the proposed settlement.

-The Canadian Press

Loblaw Companies Ltd.'s sales growth is softening as inflation continues to grip the economy and shape consumer shopping habits, the company's president and chairman said Wednesday.

While the country's largest grocery and pharmacy chain sees "a little bit of softening'' with its Joe Fresh apparel brand going forward, what it calls "general merchandise'' or non-food sales outside of clothing are "notably down'' in the most recent quarter, Galen Weston said.

"It definitely had a drag on our overall (comparable) sales results,'' he told analysts during a conference call to discuss the grocery and pharmacy chain's second quarter results.

Several large U.S.-based retailers have warned in recent months about unsold inventory as shoppers rein in spending due to rising costs. Companies like Walmart and Target have suggested profits could take a hit as they are forced to mark down excess inventory.

"The key in this circumstance is inventory. The question is how do you feel about inventory and do you have aggressive markdowns that you need to put through to clear that inventory,'' Weston said.

"The answer is we feel good about inventory and we don't see any meaningful margin risk associated with clearing what's left.''

The company posted an increase in profit and sales in its second quarter, with drugstore sales driving overall margin expansion.

Pharmacy same-store sales increased 5.6%, while pharmacy and health-care services increased 6.1%.

"Right now cough and cold (sales) ... it's like we're in the middle of winter,'' Loblaw chief financial officer Richard Dufresne said during the call.

Weston added: "There's tremendous strength in fragrances. We're kind of wondering what people are doing with all of those perfumes.''

Meanwhile, Shoppers Drug Mart opened Canada's first walk-in clinics staffed exclusively by pharmacists during the quarter, he said.

"We have four consultation rooms, we have four pharmacists and we are seeing patients on a very, very frequent basis,'' Weston said.

"As the provinces get more confident in expanding the scope of practice for pharmacists, we see an opportunity to have selected dedicated locations that can provide a health clinic-like service delivered by pharmacists.''

The pharmacists treat minor ailments, prescribe cold sore medications and offer treatments for strep throat and urinary tract infections, he said.

Meanwhile, the retailer's discount grocery division continues to post strong growth.

Loblaw said its "hard discount'' banners No Frills and Maxi as well as its in-house brands No Name and President's Choice are continuing to benefit from value-seeking shoppers.

Yet there are signs inflation has peaked or will soon, with expectations inflation will moderate in the second half of the year, Dufresne said.

"Commodity price are coming off their highs, some freight costs are coming down and supply chain issues are normalizing _ other than fuel costs, which remain high but down from their peaks of last March,'' he said.

The company said its net income available to common shareholders was $387 million or $1.16 per diluted share, a 3.2% increase from $375 million or $1.09 per share a year ago.

Adjusted profit was $566 million or $1.69 per diluted share, up from $464 million or $1.35 per diluted share in the second quarter of 2021.

Revenues were $12.85 billion, an increase of $356 million or 2.9% compared with $12.49 billion in the prior year quarter.

OTTAWA - Statistics Canada says sales in the foodservice and drinking places subsector increased 3% to $7.4 billion in May, the highest monthly gain since the onset of the pandemic.

The agency says sales at drinking places rose 6.1%, while full-service restaurants recorded a 3.1% increase and limited-service restaurants nudged up 1.9%.

The category of special foodservices, which includes food caterers, food trucks and companies that supply food under contract such as through concessions, cafeterias or airlines, soared 8.1%.

Statistics Canada says each province reported higher sales as most had lifted restrictions by May.

Ontario reported the biggest increase in foodservice and drinking places sales at 3.8%, followed by Quebec at 3.5%.

The agency says unadjusted sales in May were up 62.2% compared with May 2021 and 12.7% compared with May 2019.

The Canadian Food Inspection Agency has issued a recall for several Crave Stevia brand All Natural chocolate products because it may contain milk which is not declared on the label.

The recall covers Crave Stevia Almond All Natural Chocolate, Dark All Natural Chocolate, Mint All Natural Chocolate, Sea Salt All Natural Chocolate and Sprinkles All Natural Chocolate, which were sold in 80 and 85 gram packages.

It also includes Crave Stevia Chocolate Chips in 200 gram packages.

The recalled chocolate was sold in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, and Nova Scotia, and may have been distributed in other provinces and territories.

It was also sold online.

There have been no reported reactions linked to the product.

The CFIA says it is conducting a food safety investigation, which may lead to the recall of other products.

-The Canadian Press