Loblaw Companies Aktie

I got up this morning and Heathrow closed yesterday. We're going to lose a couple of people because of that. Oil is back up above $100, so somebody might be stuck in the office. Going to remain a little bit. It's okay, we can deal with that. But get here this morning, still have the butterflies, but glad to see you guys make it out today, so thank you very much. And I look around the room here, and I've been working with you guys for -- many of you for over 10 years now. And it's almost like it's about time we've done that. Like you've met my folks before in conferences and meetings, but you haven't met my family before. So that's why I'm excited today is you finally get to meet the guys and gals that I work with every day that make this such an exciting place to work.

So welcome and spend -- we got some great breaks lined up, some great food, some socializing. So dive in, get to know the family and sit back and enjoy the day. So we're welcoming people online right now. So again, I'm going to thank you for joining us for the day today. And thank you for investing your time with Loblaw.

I'm going to start with a quick land acknowledgment. So I would like to acknowledge that we are gathering today in East Gwillimbury, on lands traditionally used and cared for by the first peoples of the Williams treaties, First Nations and other indigenous peoples. We also recognize the Chippewas of the Georgia Island Land Nation, East Gwillimbury's closest First Nation community, and their enduring relationship with the lands and waters of this territory. We're grateful for the opportunity to gather here today. We honor the indigenous people who have cared for these lands for generations and who continue to do so today.

So let's get the day started. We've sort of -- you guys -- we've lined the agenda. A little bit of a format. It's not totally clean. But Retail and Beyond the theme of today. So we're going to start with the retail excellence. The stuff that we do every day, the reason we get out of bed, what we do for our customers, with our vendors, with our partners and have what drives our superior performance. Then we're going to spend the rest of the day focusing on what we do differently, our differentiators from our peers. We call that enhanced retail, and then we're also going to dive into some of our unique growth drivers, and we've got some folks up here who will spend some time giving you a little bit of a deeper dive on what's planned and how to think about those businesses over the next 5 years.

I'll draw everybody's attention to our forward-looking statements. The information is posted on the web and our filings, so I encourage you to have a look at that. The run of play for today, we've got a couple of breaks organized in there, so a chance to mingle. There's food in the lobby. When we cut for lunch, we'll be going a short hop across the parking lot, if you're into self-driving vehicles and big trucks, there's some pretty cool equipment lined up in the parking lot to take a look at. Our new partners from EQ Bank are here. They've got a display, their activation truck set up, so I encourage you to stop by and have a chat with them. And lunch, as I'm sure you all expect, is going to be amazing. We're doing kind of an eat together format with the executive team, so pull up a seat and enjoy that time. Washroom's in the hall, if somebody needs to jump on a call or attend a business, if you go out these doors and down the hall, there's an office area there, feel free to help yourself. And last piece, we're going to save the Q&A until the end of the day, so I encourage you guys to stick around.

So we'll manage that at the end of the day, Richard and Per will come up, they'll sort of emcee the Q&A, and the management team will be here as well to also participate in that. And with that, I would like to welcome Per Bank, our CEO, to the stage.

Thank you, Roy, and welcome, everyone. I have been looking so much forward to seeing you all. And also to get your feedback on the great facility we have here, it's like, for me, it's amazing. It's just outstanding what Rob Weibe and his team have done. And as you know, we're building another one very similar to this one. It's like being a boy in a toy shop. It's fantastic. And I hope that those of you who have been on the tour this morning, you enjoyed it. And then there's another one this afternoon if you want to go again, that is allowed.

Anyway, I thought I will give a little bit background on myself. I have met most of you. And the same with my colleagues later because today it's all about getting to know us as a team and to get to know our team and the members more than just to get to know Richard and I. I'm Danish, I've been in the army as a lieutenant of the reserves. I've started engineering, started to work in an engineering company for 6 years. I worked in many countries. I worked in the U.S., I worked in Hungary. I worked in England. And I worked, of course, many markets in retail, whether it's Sweden, Norway, Denmark, Poland, Germany and Hungary and now Canada.

And I must say that being in Canada is the best place I've been so far. I really, really enjoy being here. Started my retail career in 2001 after -- before that, I worked for Mars. I became a CEO when I was 35, then I moved to Tesco, was CEO of Tesco in Hungary. There's mostly hypermarkets. So like the real Canadian superstores, that size more than 100,000 square feet, a lot of great learning for me Tesco's operating models, was promoted to be part of the Tesco executive team being responsible for the nonfood and apparel. Then I was back home in Denmark working for selling group, also very similar with like family ownership. That company was founded in 1906. And the first 94 years, it was first 1 for 47 years by the founder, and then another 47 years by the founder's son. So when I started in 2012, I was only the fourth CEO. So that's really, really consistency.

And when I quit Trust me, the founder's son's Vito was not happy because only having been there for 11 years, that was not good enough. But anyway, I couldn't resist coming to Loblaws because coming over here, talking to Galen, talking to the Board members, there was so much to look forward to because coming into Canada, it was not a turnaround because how often do you have an opportunity to take on a job that's not a turnaround because it was a very successful company. And there was something to build on because if you look at what we had 3 years ago, it was like outstanding world-class control brands. It was outstanding loyalty, the best loyalty program in Canada, maybe in the world. The retail excellence, you might not appreciate it, but when I have friends over when I have old colleagues over visiting Canada, the retail excellence in Canada is outstanding.

If you go south of the border, it's not as good. If you go to Europe, it's not as good either. But still, of course, there's a lot that we can learn from others, and I think we will talk more about that later today.

But going for this job was a dream for me at this time of my career. Then I've had some Board experience, not to read on that. I've been a part of the Danish Central Bank, Pandora and currently at Ahold Delhaize, just to get some more learnings, to get some more input. And then I also brought some guiding leadership into it, maybe very down to earth because that's how I see myself, that's how I do business. The first one is here the good news as well as the bad news. I think sometimes in Canada, we are a little bit too nice. That's why we try to come with all the solutions. But if I don't see the bad news, we as a team, we don't get to make the right decisions, so only again the good news is we won't be able to become better. So I think that's important.

And then everything we do, if we put the lens on that, it has to be better for customers, simpler for staff and cheaper for Loblaw. If it just applies to one of those, then we can go ahead and that's kind of a good guiding principle do that or not. So better, simpler, cheaper. And then we need to make fast decisions and don't be afraid of just adjusting as we go and test fast and fail fast. I think in retail, it's so easy to say, okay, we're going to do this, we're going to do it in a district. See where it works. If it doesn't work, we either stop it or we adjust it and then we move on.

One example where we failed or not really failed, but one that we learned from was when we opened the no-name stores. The no-name stores wish to -- we did it for purpose to show Canadians that we could give them value. We were 15% cheaper than the cheapest around the country. So we could give products cheaper. But customer, they didn't appreciate that there was no offers because they actually did not know the prices of the single product. So we closed them again, but we tried it. But now what Melanie Singh, who is the President of Hard Discount, she will talk to you about later that we took some learnings for those no-name stores. And that's why we are now starting to build stores in smaller catchments where we can go down to maybe 4,000, 5,000 inhabitants and provide cheaper groceries to customers, like 30% cheaper than the competitor next door. So that's kind of the learning. So test fast, and you will see during the day that we are testing a lot of great stuff.

And then bringing proven ideas to Canada. I'll come back to that. And then how -- I think is important how we work. It's a 1/3 strategy. It's 1/3 being tactic and it fit ratio because like when I meet a lot of young students applying for jobs, I just want to work with strategy. I said, yes, that's fine. But I don't even spend my full time and state. It might be 1/3 at most. Because in retail, it's so important that you know what's going on, whether it's in the stores, in the distribution centers, around the office, everyday at lunch, I just pick random tables lunch and sit down and ask questions with my colleagues sometimes, my teams or my team say, okay, where do you get that information? Yes, no, it's all at lunch, and I get so much great insights at lunch.

But it's -- I think it's being it's being out there, listening to -- also listening to customers. So I would say I'm still spending one day a week with customers and then work hard and have fun. And I think you will notice that we have a lot of fun with our team because we are spending so much time at work. It's kind of -- it's my hobby as well. And if you don't have fun, it's not worth it. So this, having for fun, having a lot of jokes, they're starting to get used to the Danish at least politely enough to laugh some time. So that's good enough. That's good enough for me.

And then I spent my first time really interviewing a lot of customers. I still do that. And as I said before, you are coming back with some ideas. One idea, one irritant for customer was when I visited customers in the Hard Discount they hated the multi-buys. So multi-buys been like if you buy one ketchup for $5, then you can buy two for $8. It's feeling like you're being forced to buy more than one. And if you're on a tight budget and you only have $50 to spend, you don't want to be forced to buy two ketchup. You get really annoyed about it. And when I spoke to one of our store managers, she was almost crying when I told her that we're going to take it away because there was a big, big relief to them, listening to customers every day.

We did it -- and you can only do it when you're growing because in the beginning, you lose a little bit of sales until customers get used to it. And after they get used it, they're really, really happy about it. We have -- we still have it in the other parts of our business because they're driving a little bit of sales. but it does not belong in hard. That's just one example from customers.

Then last week, you see that, that picture with a thousand of new Loblaw products. That was -- I visited Zehrs in Cambridge nearby Toronto, where we are testing lowering more than 3,000 prices. Again, talked to customers, lowered the prices because the decision we make at head office. If we don't see that deployed in stores, it does not happen. So really, really a good test that we're doing, and let's see where we take it to.

On the family side, in the beginning, I was a lot alone. My wife, she was a part of the Danish -- member of the Danish Parliament. Now she didn't run again, now she's here. My oldest son, he's 27, he moved here. He got his 3 years to work visa last Sunday and his fiance is here. My youngest is coming in January, so it will be all six of us. They're starting off to live with us. Let's see how that goes. Probably it won't be for that long, but like being from one to six just shows that we have really embraced this country, and we love it here. Yes, I think that's enough about that.

Then I'm pleased that we have continued the strong track record because when I came, there was a lot strong results before me, and thank you to Galen and the team who have done that because they have secured a really easy runway for us from 2023, so our job was, how could we then continue to grow? How could we take it to the next level? So here's just some of the ideas that some of you have heard about before. The first one, which is important is like how could we expand Hard Discount. And how can we expand Hard Discount by building more small stores.

Remember, the stores that we are building are small, so we can take the one at Richmond Street. It's sales service is about 7,000, 8,000 square feet. So one of Frank's big real Canadian superstores, you can fit 13 of those -- 13, 14 of those small stores into a big Real Canadian Superstore. So small stores, but they work. And those of you who have met me a few times, you know what I'm going to say now, but I think it's so important to understand why small discount stores are working. When again, you only have a limited amount to spend, you walk into a small discount stores. You don't get tendered to buy up in the range. You buy what's on your shopping list. So you can control your budget, where if you go into a big hypermarket, you get tendered and you buy all sorts of apparel and nonfood, we would like customers to do that when they go into big stores. But that's how we can control you about it.

Plus a lot of convenience. It's fast. I love to spend an hour in a grocery store, but unfortunately, not a lot of our customers do that. But in a Hard Discount, you can do your shopping in 15 minutes, you're in and you're out. That's why these two reasons are -- the two reasons why small discount stores will continue to work. Melanie will talk more about that later.

Then value does not only come in Hard Discount. It also comes in the rest of our portfolio. And a way to show value is one other mechanic that we call hit of the month. Remember, we deployed that 3 years ago. It's using our purchasing power to buy cheap and we buy kind of three products for 2,400 stores, and we have that available for a month, so we can really go lower than anyone else. Some competitors might be able to match the price, but they won't be able to secure the stock. So that's one way to show value.

Another way in our supermarkets in Loblaw or Zehrs that we show the savings. We call out the savings. We can call out the value and the savings at the same time as having the quality. Right-hand side, you know that I've been talking about it, and Frank will get back to it. I think by the end of this year, we will have more than 60 stores. And the reason why we continue to pursue success with the right-hand side is that we spent -- in 180 superstore, we spent 35% of the space but only around 15% of sales. And it's actually margin enhancing, so if we can get that sales up, it will help everyone.

One example is that we moved the pet food to the right-hand side, to get more people over there so they can explore what's happening. And in the corner, we have the great toy section and toys is up plus 30%. Then in Shoppers, Gregers will come back to talking to you about how he's thinking about reinventing the Shoppers, and that's really, really exciting. We have started a little bit. We have done some food reline. We have six stores now where we have added more food products and adding them to a lower price. And that's working well. It's living up to the expectation. When we started, we only had 60. It's giving a good comp sales to front store, and remember, we have 1,400 stores, so a lot to come. And again, sometimes, we go, and it doesn't work as we thought, then we adjust and then we move on. We are very persistent in getting to our priorities.

AMS is another idea, how can we source together with European retailers. We're sourcing together with Ahold Delhaize, my old company, ICA, a British retailer because why wouldn't we take some of the core commodities? Why wouldn't we buy tomato sauce, spaghetti together? It's 5x our volume. We think we are big in Canada, but we're also competing with some of the biggest players in the world. So we need to utilize all the skill and scale that we can.

Enough about this, our financial framework, just some guiding principles that we want to secure, and we believe that we can continue to deliver going forward. The growth is also guidance because you know that we have about 4% growth so far this year, and if we add the new stores and the comp sales, it will be around 4%, sometimes it will be a little bit less, sometimes a little bit more. But if we get that top line growing, then we can also dilute our SG&A, and that will help us to continue to deliver.

Then of course, we don't have a contract with our customers. So tomorrow, they can decide to go into one of our competitors, so we need to be on our toes every day. We need to earn the trust for our customers. Canada is actually a quite a rational market. We have five players. Five players is maybe 80% of the market. I've been working in other markets where two players would have 80%, not five. So it is a good rational market, plus there will be another 20% out there, which consists of 10,000 grocers. So I think it's a good resident market and also a market where we can continue to grow.

We're growing Hard Discount, and we have said that we are building 75 stores this year. We built about the same last year, and I think it will be about the same the next few years. And again, for me, with my background, it's actually not a lot. And also remember, about half of that is Shoppers Drug Mart, and then we have T&T in the U.S., and we have a few market stores. And then the rest 30 to 40 stores would be hard discount stores and primarily small source, Maxis and No Frills.

In 2023, our Hard Discount TAM in Canada was 16.9%. So even with the square footage that we added which, in my mind, compared to other countries is not a lot. We only gained 1.1% points of growth in the Hard Discount sector. Hard Discount sector would be excluding Walmart and excluding our Real Canadian Superstore because for me, this is hypermarket, this is not my definition of Hard Discount. So 1.1%. So if we continue with the same growth, which it looks like the market will be, give us 10 years, and we will be at 21%. It's still below U.K., it's still significant below Germany, and it's still below Poland. I think this is important because that's where customers want us to go. Customers, they want more value, and that's what we're giving it to them, and we want to give it to them closer to where they live.

Then we believe we do have the right strategy to continue to deliver on our framework. The core retail, the retail excellence, we've talked a lot about it. You will hear more about it later. We know how to drive our core business. And then we have the beyond. The beyond kind of the title of today, we're doing much, much more than that. And I think Lauren is coming up next after me, and listening to her, you will see that the digital engagement, the personalization is something that's really working for us. When I look at return on sales on our personalization, it's doubled in 3 years, so we're getting better and better to use our customer data. So that's kind of the enhanced retail.

It's Connected Health care, I will get back to that. It's a private label leadership technology. There's so many things when I compare to other companies where we are leading, and we're just starting to harvest some of the benefits there. Then the growth businesses, I'll get back to that later. Adding that all together, I think that's a really good enabler to force to continue to be confident in delivering what we are promising. And then before we go into the Pacific, maybe just go up in the helicopter and look at how we placed in the Canadian food industry. We are the third largest. We have more than 1 billion customer transactions. And then we are now growing 4%, but if you just grew 3%, we're growing by $2 billion. And the others are quite smaller than us, so us growing with 3%, we will still grow a lot more than the rest, and thereby also taking share.

And then we are Canada's largest the retailer of mass and prestige cosmetics, really, really important for us. And then we are a health care partner for more than 20% of Canadians. Our business as a whole is quite easy to describe. If we take shoppers, it's about 30 -- it's about 1/3 of our sales, supermarket, it's 1/3 of our sales, and Hard Discount is 1/3 of our sales. And within the supermarket, half is hypermarket and half is conventional. So I think we are having a really balanced portfolio to serve the needs of Canadians. So if you want high quality, you go to a Loblaw's, you go to a Fortinos, if you're a big family, you want value for money, you go to Frank's, you have Real Canadian Superstores. If you want to save money, you go to Hard Discount. If you want to provide health, if you want to look after yourself, if you want to go for beauty, you go into the Shoppers Drug Mart. Profit-wise, we have said many times that Shoppers Drug Mart is relatively giving us the most profit, but every part of our business is a healthy business. And every part of our business is growing at the moment.

Then we have a unique ecosystem, which gives us an unmatched relationships with our customers. Again, we have #1 loyalty program in Canada, and we keep developing it. Then we have the brands. We have E-commerce. E-commerce, we have more than a 40% share in E-commerce, in food, a huge penetration. I think dependent in Canada will just be above 4%. So still room to grow. I don't think it will become above 10%, but if it will just double, then we are very, very, very well positioned to take our part of that growth. E-commerce and Shoppers, we are next to nothing. So that's actually quite good because that's a huge opportunity to get into that area. And Gregers has just hired a specialist within e-commerce, who's working in Lawrence team, working with showers to take that to the next level because there's so much we can do in beauty, in E-commerce, BOPIS, Buy Online, Pick Up In Stores, we have 1,400 servers around the country. So that's an area that hopefully will give us some growth in the future.

Then our Beyond, so these businesses it's about $400 million in profit now and growing. It's growing faster than core retail and it's margin accretive. We will have Rob Weibe talking about supply chain Lauren about Retail Media, Sonya about LifeMark, Tina about T&T. And then Richard, he will touch on EQB, so look forward to these presentations, you'll get some insights that you normally don't get. Then we are industry leading in AI. That's probably where I, over the last year have been most impressed. Some of the things that we can do is transforming the way we work. Take Robin. It's a tool that district managers and store managers are using. They can run the numbers on a Monday. And they can ask, okay, how do my waste look. Waste is a big component of cost in retail. And the machine, they will come out, they'll say, okay, in this store, this many can do it for all his stores or someone can do it and then we say, okay, from Monday to Wednesday, you had more waste than normal. And then they will come with a solution. You did not reduce or clear in due time or you bought too much. So not only will it point out the problem, it would also suggest a solution. Normally, it will be completely impossible to dig into all the reasons. So we can get information much, much faster than we have been able to in the past. This is changing the way we work. Take a district manager. Having worked in retail for so many years, it's so difficult. So how do you manage the district managers? They have their own hobby horses. They know what to do. But now you have a tool and they have a tool, they can plan their week. They can see what stores have what challenges. So this is outstanding.

Most importantly, of course, all our colleagues. I am impressed about the value that we have in our business. Trust me, it is a people-first business. And one thing is to go into maybe at Leaf Garden at Carlton Street in Toronto. Another thing is to go to our local superstores in Moncton. When you go there, it's family. You can hardly find a more cohesive management team that you will see when you go about in the country. It is like people who have worked for us for 10 years, 20 years up to 50 years. You just feel so welcome. And if you are a bored and a little bit stressed working the head office, you just need to take your car, go somewhere, meet a store and then you get back in good mood again. That's at least how I do it.

Finishing on a note on our team here, we have, in my mind, an extraordinary team. It's very diverse. You will see today that we probably have -- or we have more female presenters than men and the insight that our team is bringing is extraordinary. Just take one of the examples. Sonya Lockyer who is leading our strategy. She's German, worked for Amazon, worked for BCD and have now had our heading up strategy for the past 3 years. Frank Gambioli, 41 years in the business. Tina, literally born into the T&T business. You cannot avoid being excited when you listen to her. Mary like tons of experience in marketing, a lifetime almost at Loblaw, the same with David Markwell. I haven't seen anyone running IT and system as he does Danni Peirce coming with experience from Australia, latest Singapore. So we have a very diverse team, bringing a lot of new ideas and I think that's what makes my job so fun that I work with an extraordinary team.

So this is the team, but outside this team, we have three more of our executives who are presenting. We have Tonya on GLP-1, we have Sonya on LifeMark, and we have April on brands. On that note, I would like to ask Lauren to come up and take us through some of the tech, the AI and the loyalty. And on the agenda, Lauren is up twice. And that's not a coincidence because there's so much going on in that field. And that's some of the areas that we have been most proud of talking to you about. Welcome, Lauren.

Good morning, everybody. Thank you, Per. Where'd he go? There he is, of course, he's sitting but he's usually the tallest man in the room. Pleasure to be here today. As Per mentioned, Lauren Steinberg, Chief Digital Officer at Loblaw. I oversee our connected commerce ecosystem, which is a combination of digital, e-commerce, retail media, loyalty underpinned by our AI efforts. Like he said, I'll be up here twice today. First, I'm going to talk about AI. But before I do that, I just wanted to introduce myself. I joined Loblaw about 13 years ago. I was actually employee #9 on the Loblaw Digital team. So it's -- I think at the time our ambition was, let's see if we can do e-commerce well. We had $0 in e-commerce, we're now exceeding $4.5 billion in sales. That's the number that we did in 2025. Tremendous growth, obviously, to accomplish that.

We've done so much more beyond that as well, and I'm so proud to lead a team that's doing such incredible work connecting with customers across Canada in new and innovative ways. I like to say I have grocery in my blood. My family was in grocery retail. I grew up around grocery retail. We had a grocery chain from Quebec called Steinberg's. I looked it up this morning, just to double check, 1917. So not as old as Loblaw, maybe we missed it by a year, but I grew up in grocery stores, walking the aisles. I used to spend Saturdays. My dad was a merchant for M stores, which was their general merchandise business. So I spent my Saturdays, he was a merchant for toys. And so as a kid going to the office -- he was a hard worker like me, he was in the office on Saturdays, and I used to get access to the -- first access to the best toys in the '80s, which was a great time for toys, toy heyday, if you will. And I am so glad.

I'd like to think that I ended up -- I was saying to Irene this morning that I ended up in a role similar to a role that I would have, had we not sold the business in the '90ss. We are doing incredible things here when it comes to technology, in particular, with AI. We are already changing how AI is interacting with customers, how customers decide and explore and shop and how colleagues at Loblaw get work done. For anyone who knows Loblaw well, I think you would say that we have -- we are a technology-driven organization. We always have, and we have been one for a very long time. And actually, AI, in particular, also not new to Loblaw. We've been applying machine learning and AI across our business for decades, loyalty, promotional algorithms, a number of different products and services across how our business operates.

What's new is, I think we can all agree this moment that we're in now, the rapid evolution of generative and agentic AI. I'm sure you're all using it in your day-to-day, whether it be for work or for personal. The technology has evolved dramatically and with it, what is possible, particularly for an organization of our scale. And because we have spent years, David, in particular, spent years building this incredible scalable infrastructure of data and technology and certainly, probably most importantly, talent, we have been able to move remarkably quickly. We have something already that I think many companies will spend the next several years working very hard to create. That is agentic and generative AI deployed at significant scale across both sides of our business.

We're using it to fundamentally change how customers experience our business, how they discover, how they shop, how they access services, and we're using it to change how work gets done inside of Loblaw. AI is increasingly being embedded into our business in some incredible ways, which I'm going to share and driving meaningful results. And I'm going to show you both sides of that equation, we're going to start with customers. Now for customers, we believe conversation is going to be the most common way that they will engage with us. That's why we're investing, yes, on chat experiences within our first-party platforms like our websites, our apps, but very importantly, on third-party answer engines. This is like ChatGPT, Claude, Gemini. This is where millions of Canadians are already discovering products and services and getting answers that are influencing what they buy and how they buy it.

Loblaw is the first and only grocer in Canada to bring grocery shopping directly into ChatGPT. In fact, I think we were the first one globally. And the only others that have really done it are grocery marketplaces, so aggregators, folks like Instacart and so on. However, we didn't do what those others did, right? We didn't say let's take our existing experience and let's port it over and let people do exactly what they can do with us with them. We said, what are people using these platforms for? Meal planning, recipe, ideation exploration, new diet exploration. The reality is when people are engaging with these platforms, they're getting an answer, it's static. It's a list of items. And if you are using them, well, then you've got to write those items down, and you got to go to your store and walk your eyes and find them or maybe open a bunch of tabs on your browser and search those items one by one, that's a dead end, and we love fixing dead ends.

We said, how do we actually take that static list, that answer, and turn it into a live interactive experience. And so customers can tell us their postal code, we can surface all the stores around them. And once they select their store, they can see those items, add them directly into a cart. And when they're done interacting and conversing and maybe shopping more in that interface, we drop them right back into our environment, our apps on our websites to transact. And we've been seeing some really incredible insights, learnings and results. We're seeing lots of new customers, new to not just PC Express, but new to Loblaw coming through these channels. We're seeing an incredibly high conversion rate. Customers -- this is our second highest converting channel, meaning customers are coming from this channel, and they're converting -- they're checking out at an insane incredible rate. That's because they've already got the intent, they've already made the decision. So when they're coming to us, that decision is already complete.

And my favorite, they're adding more stuff once they do get there. So they're interacting with ChatGPT. They're adding the stuff that they discovered over there, but they're coming to us. They're adding even more and they're checking out. So really, really exciting. We're continuing to increase or evolve that thinking into Shoppers and Joe Fresh, how do those businesses or general merchandise, how do they play a role inside of these experiences? And we're looking at all the other AI platforms as well, right? We're -- for example, we're going to be one of the first retailers to partner with Google when they launch their Gemini AI shopping experiences later this year.

These efforts represent a really important step forward for Loblaw and agentic commerce for Canadians. And it positions Loblaw as the leader on third-party applications. We are absolutely leading the charge here, and we're making sure that we're participating with Canadians as AI reshapes how products are discovered and purchased. And we're just as excited about -- of course, we want to win on third-party experiences. It's where a tremendous growth is happening. But we also know that conversational interfaces are going to become increasingly important in our first-party experiences, our apps and our websites. ChatGPT, other general purpose assistants, they have reset the bar for how customers expect to discover and navigate and shop.

Our focus has been to bring that same conversational simplicity that you all love, that Canadians all love into our platforms, but make it meaningfully better, meaningfully more powerful. And you might say, "Well, how could you do that? You're Loblaw, they're some big AI company." But the reality is our conversational experiences are not just answering questions. They are connected to real-world retail. We have real-time assortment and inventory. We have live pricing and promotions. We know your preferences, we have the ability to actually fulfill the items that you are exploring and that you need. We understand the intent and we let them act on it.

We're already seeing really positive signals from early launch for our PC Express chat experience. Customers actually have higher baskets when they engage with our chat experience. But I think of this idea of answer and action. And of course, we're going to be good at the action side of that. We're a retailer. We've got that real world retail connectivity. But perhaps nowhere is that answer an action more powerful than in health, right? Because when someone asks a health question, the best outcome isn't really an answer, it's actually care. And Canadians have been going online with health questions for decades, right? We all know Dr. Google. And increasingly, they are taking those questions to AI engines. But the vast majority of you actually ask them and you look at the numbers, the vast majority do not trust the information that they're getting.

What people actually want, what Canadians actually want is an answer that they can trust, grounded in the health care system that they live in, the Canadian health care system, and they want help figuring out what to do next. And that's why we have built and launched PC chat. This is first of its kind, it exists inside of the PC health and the Shoppers Drug Mart applications. This is a free AI-powered conversational health experience, built specifically for Canadians. It's hyperpersonalized because it's connected to your health profiles. It is informed by thousands of Canadian health care sources. We've trained these models on thousands and thousands of specifically Canadian health care sources. And we literally built this platform engineers sitting alongside pharmacists, clinicians and some of the best health practitioners and doctors in the country.

Our ambition here is much larger than just answering questions, though, right? We are creating an intelligent front door to health care, one that understands what someone needs and increasingly can help them get the care that they're looking for, especially because we have the significant physical and digital health care network through our Shoppers Drug Mart environment. Very few organizations have all the pieces together to do something like this. The tech clinical expertise, the trust that Canadians have with Shoppers Drug Mart to manage their health and of course, the health care network to fulfill that care on the other side. So let me show you a video.

[Presentation]

I'm looking at Mary. Thank you. I'm looking at Mary because her team has been doing an absolutely outstanding job figuring out the right way to bring this to Canadians, you're going to start to see this show up if you went through Union Station yesterday. I mean, it's everywhere, you can't miss it. We've got some really incredible activations and even without actually marketing this to the extent that we plan, we've already seen some incredible adoption numbers that we're very excited about. So that's a little bit about the customer side, but I want to talk about the other side of the AI opportunity, which is our colleagues and the way that Loblaw operates. We have a very simple philosophy for getting work done with AI at Loblaw.

We built where our proprietary data or processes or scale can create something uniquely valuable. And we partner or as we say, we buy, where the markets have already built something pretty exceptional, where there's already a clear leader in that space. On the build side, we have spent the last several years developing AI applications around very high-value problems. And at Loblaw, of course, we have so many of those. But these ones are very unique to a retailer of our scale. We built a maintenance cost management tool for our stores to identify end of life, anticipate, find the best cost, the best solution, the best provider of that solution, 3 million cost out on that application. I think we built it in 4 weeks with the real estate team.

Vendor invoice optimization for finance. So this is through our EDI system, identifying errors in the process, flagging them, anticipating them, resolving them AI, $11 million cost out. An ingredient cost database. We built that with procurement in a couple of weeks for them to have a system of record that includes every single ingredient that exists within our product assortment, be able to track the markets and the cost of that ingredient, anticipate supplier increases, pushback on unjustified ones, be able to anticipate that, $15 million cost out. These are a bunch of different AI applications. We've got many of these across our organization, live, working, automating workflows, increasing team productivity, improving business outcomes and delivering bankable savings.

And then there are areas where it would make absolutely no sense for us to build. We want our colleagues using the best technology that exists on the market. So we partner, right? We've got OpenAI as a partner for some general colleague productivity, content generation, Adobe for our marketing teams, dozens more of niche AI applications. My favorite example, my team is largely made up of engineers. We use a tool called CURSOR, this is a coding copilot. Think of this as autocomplete in Microsoft Word, but for engineers who are writing code all day. We built a harness around this to give it context and access and permission and because of that system, we're seeing upwards of a 10x productivity gains from our engineering team.

Now interestingly, if you look at my capital envelope for our digital business, it's been shrinking. We've shrunk it year after year, while still growing our business, while still building more. My favorite part is that same team that's driving that incredible leap in productivity is the same team that's building the AI products for the rest of the organization. So this flywheel is pretty remarkable. So AI is being embedded in to have thousands of people, thousands of our employees are working and driving meaningful gains in many different ways.

And so that's great. We've got AI applications automating individual tasks across the organization. We're going to continue to expand that, find more tasks, more teams. It's wonderful. They come to us, we come to them. But the reality is our ambition is much greater than a collection of AI apps, right? I often say, AI apps are optimization, what we're looking for is transformation. This technology has the ability to transform. And so the bigger opportunity is, in fact, to redesign how entire functions operate in our organization, connecting individual tasks into intelligent end-to-end workflows right, where AI can increasingly do the work alongside colleagues and maybe even on their behalf.

And that's what we call vertical operating systems, vertical being merchandising, marketing, procurement, supply chain. A simple analogy that I like to use is a power tool versus an assembly line, right? A power tool or a point -- an AI point solution, in this case, it gives one person a better tool for one job, maybe with AI, it's many people a better tool, but for one job. A vertical operating system powered by AI connects all of that work together, the information, the decisions, the workflows, the actions. So the whole operation can run differently, right?

And in the case of AI vertical operating systems, autonomously, and that's where we're heading. So I'm going to give you three examples vertical operating systems that are live today. In some cases, they're in motion. These are constant living, breathing products that we're developing alongside our business. Actually, in many cases, they're being led by the business, augmented by the engineers across David's team, my team, building some of the best AI technology, really, I think, in market.

Every day, thousands of decisions are made to keep products flowing through our network and on to our store shelves. I mean you see it here, you see how complicated it is. Transport AI is our AI operating system for that work. So today, we actually focus when it comes to AI and supply chain on two specific areas: replenishment and transportation.

Now on replenishment, historically, if a vendor can't fulfill an order, an analyst, a replenishment analyst has to identify that. They look at a lot of data, in boxes, reports. They identify a shortage. Then they have to figure out what caused that shortage, then they have to identify the downstream impact. They've got to contact the vendor. They've got to determine what to do next, and then that's got to set a whole bunch of things in motion. Now AI can do that work proactively, right? AI can identify that a product isn't going to arrive through a number of different signals. It can recognize that a promo was associated with that product that's now going to be shorted. And that promo might be planned weeks later, but it knows that. It's going to flag the issue early enough so that the teams can actually source a new product or maybe even change that promo. And if orders are at risk of a delay, it can actually contact the vendors and begin resolving the issue itself. That's actually the first AI application that we built, communicating with vendors through generative AI, reading in boxes, identifying sentiment, responding to that e-mail and moving goods much faster.

Instead of teams finding problems and then chasing them down, AI finds them much, much sooner and increasingly takes care of that problem itself, okay? To date, we've actually automated 70% of a replenishment analyst's manual work, actually, 70% of their entire workload. And we've also driven a 13 basis point improvement in on-shelf availability because of that anticipation. And that's massive gains. I know Rob is going to talk about it, and he's very excited about it.

In transportation, very similar patterns here, anticipate and act. That is what AI is incredible at doing. Imagine a truck making a delivery up north that would have otherwise come back empty. And today, we can only use that return trip to pick up orders or pick up product from a vendor if there's a PO created, if we've already forecasted that demand and a purchase order exists. Now AI actually connects those signals, it anticipates the near-term demand, and it will pull the order forward. It's going to create that PO, it's going to pull that order forward. So that truck is no longer coming back empty. That truck is coming back full. And that one use case, that's an eight-figure cost-saving opportunity. Rob thinks it's more. We're going with eight figures for now, but we're already seeing it. It's working. This is live. This is in production. The teams are using this, they build this together. So incredible potential and way more to come. So that's transport AI.

Next is merch AI. And this tackles the thousands of interconnected decisions that merchants make every single day, hundreds of merchants make to drive sales and profitability. What products do I carry? What do I charge for them? Which ones do I promote? How much space do I give them? How do I work with vendors? We already have powerful AI applications that are improving pieces of this work, right? We've got something called our flyer intelligence AI tool, which assesses our promotional position against competitors and years of our own history and does that in seconds. That used to take teams weeks. And in fact, they probably were only scraping the surface. We've got an AI space planning tool. Mel's team uses this really, really effectively, particularly because they're opening up so many new stores. They're assessing based on a number of different inputs and the demographics in that neighborhood of this new store, how much space should I give to which categories.

But the bigger opportunity, like I said, is connecting all of those applications together, not having someone jump from one app to another. We know that's not productivity, right? So imagine, a dairy merchant is short on their sales plan on milk. Now today, they call a bunch of meetings. They build a new plan to close that gap. That means they've got to pull information from a bunch of different systems. They've got to work through pricing and promotion and assortment and vendor funding, and they've got to model the economics and then they've got to coordinate all of that execution.

Merch AI, a merchant can simply ask, I'm 10 million short, build me a plan. I need to close this gap, help me. AI can actually identify available vendor funding in that category. Then it can determine which products fall within that vendor and that category, then it can check for conflicts with existing promotions, then it can model economics. And then it can bring back a recommended plan in seconds. That's what AI can do. We all do that today. We don't realize that it's going off and doing 10 different things before it comes back with an answer. But that's effectively the same technology that we're going to give to our merchants. The merchant can challenge that plan, the merchant can change the assumptions or they can simply approve it. And the Merch OS can then execute that plan back into the systems that run the business, the same systems that brought that information in, in the first place.

So what used to be a complex multisystem workflow becomes a conversation, right? And that gives every merchant dramatically more leverage and enables faster, better communication, better commercial decisions, better relationships with our vendors. And then lastly, Robin, I know Per mentioned this, Robin is our operating system for stores. We named it Robin because our store managers are super heroes, they're Batman, Robin is, of course, their trusted sidekick. I think of a store manager, if you go into a store and you spend time with the managers, they are inundated with an unreal amount of information. Every day there are reports to review and systems to check and performance metrics to understand. There's memos coming from all sides of the organization. And of course, they've got to walk the store and see it for themselves what's happening in my aisles and with my customers and with my team.

Now Robin sits across all of that. And Robin sits through that information continuously, and it distills it into a simple prioritized view of what that manager needs to know about their store on that day. And it might flag things like Per mentioned shrink is unusually high. Here's why have a look. Maybe it's going to identify a product that's selling at negative margin, and it's going to tell you, here's the issue or maybe a product isn't moving at all, but it should be, and so it's going to tell you check the back room. It's going to flag all the things that are specific to your store that seem off that you should have a look at and tell you how to resolve them as well.

Or managers can ask. They can just say, why are my produce sales down today? Am I staffed properly for this weekend, Hey, this fixture broke, take a picture and upload it, who am I supposed to call to get that resolved. And probably their favorite store manager's favorite feature is the store walk. Store managers, you go in a store walks manager, you're going to learn, it's a retail master class. These folks can put Robin in their hand walk the store as they normally do and take photos or take notes of things that they think could be better. They think have opportunity to improve. Maybe there's some spoiled produce that needs to be moved, maybe there's a broken fixture, maybe they see an opportunity or a hole. They're going to assign those tasks, those images, those notes. They're going to be able to track those. They're going to be able to send them back to the appropriate person without knowing who the appropriate person is, they're automatically going to get assigned to the right person at head office or in their store.

And increasingly, Robin is being proactive. It's becoming agentic. So a lot of the information that we tell store managers, a lot of the insights, maybe they don't need to know at all. Maybe that's actually not something a store manager needs to do. If we recognize that an item is selling a negative margin, AI can probably go identify why and fix that problem upstream. That shouldn't be an insight that's shown to a manager and have them figure out how to fix that, right? And so the goal here is simple. Managers spend dramatically less time finding and managing problems and actually more time running their store, working with their teams and spending time with their customers.

So what you've seen today from for me for now, is AI moving from technology to real business impact in Loblaw. We invested early, right? We've built the technology and the talent to operate at scale. And now we're applying AI across the full breadth of what we do, right, changing how customers engage with us, how our colleagues work and increasingly how entire parts of Loblaw operate. So thrilled to get to share that with you. Hopefully, that was interesting. And with that, I will hand it over to Gregers to talk Shoppers Drug Mart.

Thanks, Lauren. I'm Gregers. I joined as President of Shoppers Drug Mart back in January. And just building on Lauren, I think I've been through so many conferences and retail events. Everybody is talking about AI. The big difference that I've experienced is, all of this, it's happening. It's happening every day in the company and it's part of why retail is -- was always exciting, but it's just doubly exciting now. And the future of Shoppers Drug Mart, my main message for you today is full of opportunity in the conventional retail part of it, but also in the beyond and parts of what you've heard Lauren talk about. I will present a bit about the future of Shoppers Drug Mart, and then I'll ask my great colleague, Tonya, to join because we know there's a fair bit of interest in the topic of GLP-1s, so she will cover that as well.

A little bit about myself. It's a very easy narrative in my 20s. It was all about learning to lead. I started out as an officer in the Royal Guards. This is not me with the paint expression. It's actually my son crossing the same river that I crossed and my father crossed that before me, went on to study political science, dreaming of becoming a diplomat and making the world a better place. And what ended up happening is that it was very clear to me that my path to make the world a better place would be in the private sector with the dynamism and the scale at which the private sector can move. Spend a few years consulting doing what Per just said, dreaming of doing only strategy. But fortunately, I got into the real world in my 30s and stepped into the wild world of media.

And you can probably remember the early 2000s, newspapers were this thick and full of classifieds, which was basically like printing money and everybody was watching Flow TV, and when I exited at the end of my 30s, of course, it was a completely different business. So spend 10 years doing what we now call transformation. Every aspect of the business changed the business model, how we were organized, the technology, every single thing. And what I learned is that if as a strong incumbent, if you embrace technology, if you do it really fast, you cannot only get ahead of your conventional competitors, you can actually also match the disruptors, the tech giants of the world.

And then finally, I found my calling in my 40s, stepping into retail for a co-op, a company much like Loblaws, though not at the level of sophistication, came in actually doing Lauren's job with not quite the sophistication that Lauren has and ended up running the conventional part of the business. And then I came to Mass Group in 2017, health and beauty retailer, much like Shoppers, not with the pharmacy piece and did a transformation, taking our digital business from 3% to 30% of the business, taking the company from Denmark into the rest of the Nordics. And then this opportunity of joining Loblaw, of joining Shoppers came up. And you all know the core numbers. It is a spectacular business. It is part of the fabric of Canadian society.

Here are some of the stats you will know many of them, about 1,400 pharmacies across Canada, another 400 in our Loblaw stores as well that we run. I think the most important stat on this one is actually that we have a Shoppers within 10 K of 9 of 10 Canadians. So we are very close to the customer. And that doesn't just matter in the physical world. It matters increasingly in the digital world as well. But an $18 billion company, it's quite easy. It's split evenly between the front store and the pharmacy business.

Clearly the #1 retailer in pharmacy and drug and that's quite important because what happens when we open new stores, we over time, become the preferred drug store, the preferred pharmacy of those communities. So a really strong starting point. And of course, I went through the brochure and the annual report and read all about it. And then I spent the time since I came in, those wonderful first 100 days of just crisscrossing Canada, visiting every province, talking to colleagues and consumers and patients and understanding what the business really is, and it is quite awesome. And I think that the main takeaway for me is the level of connection, Canadians feel with Shoppers Drug Mart with Pharmaprix.

There is an enormous level of trust in the business, and there is an enormous level of passion around Shoppers Drug Mart, around Pharmaprix. And that is probably above and beyond all the hard assets, that is probably the most important starting point and why I think we have an enormous license to seize growth opportunities out there.

It is a relationship business. It is about forming a relationship with the customer, with the patient very early on and following the customer and the patient through life as her needs change. And the mechanism for that, the vehicle for that is PC Optimum. And Per said it, it is probably the world's greatest loyalty program.

It is much more than loyalty. It is an insight into how consumers think, how they act, what phases they go through in life, and it's an ability to be ahead of the customer, ahead of the consumer at all times and target everything we do to the individual customer and patient. So just a few spectacular numbers.

PC Optimum members, they visit 5x as much as non-PC Optimum members. We cross-sell more. So 60% are more likely to add beauty, which we really like and basket sizes are also bigger with PC Optimum members. So having that vehicle, that powerhouse that is PC Optimum is really the core of everything we do. And we don't really think of ourselves as a retailer. We think of ourselves as someone having a lifelong relationship to the customer executed through the loyalty program.

Opportunity. I think there are three pillars of opportunity for shoppers. There's opportunity in category, there is opportunity in our channels and there is opportunity in customer segments. So for categories, we are fortunate to play in the beauty market, which is really interesting. I'll get back to that. That has been a market that has consistently outgrown GDP, and we expect that to continue to happen.

And then pharmacy, which is just growing structurally, and you won't be impressed by seeing a number that says 1.8% growth. That is the conventional pharmacy growth expected for next year. You need to layer in on top of that, the specialty growth that Tanya is going to talk about in a moment. But two categories that have structural tailwinds and where we are perfectly positioned to play a role.

As for channels, there is headroom for more stores. And I can tell you, having been out to store openings, communities share when a shoppers or a pharmacy -- Pharmaprix opens, it's a big day in the community when a Shoppers opens its stores. And there is a lot of headroom to build more stores. It is a very good case when we look at the investment, the IRR, and we see that our new store portfolio actually performs ahead of our expectations. So customers are really voting with their feet and voting for our stores.

Per said it that Shoppers has not had the need to embrace the digital world as much because, frankly, the stores were doing so well. I think we have a huge opportunity in online. We know that this false myth, the myth that when you go online, you pretty much train the customer to move away from your stores and go online. We know now across retail that, that is not true, that the stronger you become online, the stronger your stores become as well. So we see a huge opportunity for growth in the online channel.

And then finally, for customers and patients, we are very well positioned for the aging population. Richard just shared with me this morning a stat that by 2029, there will be more seniors than children in Canada. And of course, seniors have more need for the likes of Shoppers. So we are positioned for long-term growth, and we believe Shoppers is a long-term sustainable growth case.

Four areas where we are investing, four areas where we see opportunity, four areas where we will be making a difference for customers. And I will speak to each of these, adapting the store network, doubling down on digital, renewing the front store and leading pharmacy and health responsibly will be covered by Tanya.

So this is the new box that we have designed, sort of a fresh take on what a Shoppers look like. Those of you who have grown up with Shoppers, you'll recognize this. It's not a foreign object that landed in Canada. It is very familiar, but still updated to be a modern store experience. We have runway to build a lot of stores. We think the right pace is building around 35 stores every year. That's the kind of sites we can secure and still be picky about where we want to show up and get those prime locations because we're going to be around for a very, very long time. And again, once we open stores, we enter a market, over time, we do become the preferred pharmacy, the preferred drug store in that market, returning nicely on our capital.

We're already pretty much everywhere in Canada. So on dollar, dollars, we are the #1 pharmacy in market share and in beauty as well. So we are already that #1 position. And rather than invent something completely different because such a wonderful legacy asset, this is all about building on the strength we already have and really putting a lot of fuel to the core engine that is Shoppers and layering on a lot of the beyond that Lauren talked about and will be talking about.

So the front store, the front store is where we see the greatest potential for renewal, for bringing newness to the market. And I'm going to spend just a moment talking about beauty because beauty for an investor is an amazing category. It's a big category. It would usually outgrow GDP. It's not particularly cyclical.

So there would be a little bit of trading down in bad times and a lot of trading up in good times. It's a category that when you have a downturn, it's one of the last categories to start dropping. It won't drop that much. And when the good times come back, it exits really fast. So beauty is an interesting category to play in. And it's also from a margin perspective, interesting because it's driven by newness, innovation, bringing new brands, new products to market. So every time something commoditizes, something new gets invented. And this happens in a deep collaboration across the value chain.

And in Canada, of course, with the demise of The Bay, a new space has opened up and a lot of the big brands are looking for new points of distribution for new retail partners who can take their brands and make them come alive. And what we've seen for beauty, in particular, is that this combination of discovering product online, but also going to the stores to test and smell and feel and get advice. And the human part of this is absolutely critical. The number of conversations that go on in our stores every day is quite spectacular.

So we believe that for Shoppers, there is an opportunity to build on this already strong position that we have and seize more grounds, win market share within a very attractive beauty segment. And you will see this come to life over the next year in existing stores, but also in the new builds.

So at the very other end of the front store, we have our food business, our convenience food business. And this is one area where we've had a little bit of a challenge where we haven't seen the kind of growth that we had hoped for. Canadians really appreciate using Shoppers as this convenience destination. But we had become maybe a little bit too streamlined, a little bit the same all across.

So as Per alluded to, we have been running programs to test out localizing assortment, bringing in more multicultural, working with prices to be more competitive, especially working with member prices and giving our PC Optimum members more value for money. And we're seeing a very nice return on those initiatives and are rolling out quite rapidly to our broader estate.

So there is this great sort of spectrum of going to a shopper of having this exploration engagement in the beauty part, walking through the store, ending up with a real value experience in the convenience part of the store. We also know that people go to shoppers, and they usually have one product in mind. They're just out the door, go down, pick it up, run back. So the opportunity for us to offer a little bit of treasure hunt, a little bit of finding a treat something you haven't planned is quite significant.

So we're now testing in a few markets this exit maze that you will have seen in other types of retail. And we're seeing that when we get the assortment right, that is a very inspirational walk. I know Galen calls this a forced flow. I call it a magic carpet ride, a guided tour respiration. So this is increasing basket size. It is also helping us reduce shrink.

The stores are the big component of our business. Online is going to be the big growth driver. And we see that as we grow online, it's going to help our front store comps as well. We think there is quite a lot of headroom for Shoppers to get a fair share of the online market for beauty, for wellness. There's actually a fairly strong penetration in those categories when it comes to how the consumer shops. Shoppers is still very much a physical retailer.

We think on the strength of PC Optimum, on the strength of the store, on the strength of our brands and the trust that we place in brands. If we partner with Lauren and all the stuff she's building with David and the stuff that he's been building on the tech side, we have everything in the enterprise that's needed to supercharge our online growth. And when we do that, we see incremental spend. We see that when people come to our stores to pick up and do this buy online, pick up in store, they actually buy something, they get inspired by this impulse opportunity.

And right now, the only game in town for online is about speed. In the old days, people were okay with waiting 1 day, 2 days, 3 days to get their goods. That's no longer the case. Now it's about speed. And of course, having 1,400 little DCs, not as fancy as this one, but little stores around the country and being able to fulfill from those stores is going to be a huge advantage for us as we dig deeper into the digital world.

And then pharmacy and health. And our role at Shoppers is to take on the role as market leaders to always be at the forefront of what's happening in health and pharmacy, but you don't run that kind of business as a retail business. It is about getting everything right every time and being very, very exact. So this is about doing things right, but it is also an opportunity for us to play a broader role within the Canadian health care and pharmacy landscape.

So if you follow me on this journey, we have an aging population with more needs, meaning an increasing prevalence of chronic disease. We have constraints on patient access. We have 6 million Canadians who are not connected to -- attached to primary care. We have a government that frankly needs more players in the market to solve health care needs of Canadians.

We're seeing an increased scope of what pharmacists can do in terms of services. We now have the option of not only connecting with the patient in stores once in a while when they fill or refill their prescription, but actually have an ongoing conversation and engagement, including what Lauren just showed us on PC chat to have an ongoing conversation with the entire body of our -- of our membership base with all our patients, with all our customers on an ongoing basis in the digital world.

So you can imagine everything from drug adherence. And it's quite -- when you look at the numbers, it's quite remarkable how few people get a prescription, they don't fill it or they get a prescription and they forget to refill it. We can actually add in those little reminders. We can do it for you, but we can also do it for your parents. So you know that if you're dad drops off a drug, you actually get a notification, you can remind him to go pick it up. Quite spectacular. And we can do it at scale, thanks to some of the things that Lauren just talked about.

And also on the ops side, there is an immense opportunity to rethink how we operate pharmacists. And as part of my introduction, I spend the full day doing pharmacy assistant training. And I know you're used to digesting a lot of data and looking at -- if you want a really stressful day, come to a store, spend 3 hours as a pharmacy assistant. This is real work.

And the amount of information, the kind of questions you get, the service you're expected to deliver, but also seeing through the eyes of what you can do with technology, an immense opportunity to take away administrative task, data entry and turn screen time into face time. So a lot of opportunity to free up time. And all of this compounded by the fact that the rate of drug innovation is increasing, so higher patient demands, more solutions and a Shoppers that is, I would say, perfectly positioned to capture that opportunity and make a difference in the world.

And just one example here of what we're doing. Instead of pharmacist filling the scripts in the stores, we've built 7 facilities to do central fill and 60% of all eligible prescriptions are actually filled centrally, freeing up time for the pharmacists to engage with patients. And this allows us not only to have those conversations across the counter that really matter to patients and consumers, it also unlocks capacity to provide services within the expanded scope and offer services to the patients.

And that's our cue, Tanya. To introduce Tanya. Tanya is my great colleague. She runs our health care businesses. Tanya's mother was with Shoppers as a beauty manager for 43 years. Tanya has been with the head office for 23 years and before that, 10 years in the physical store. So whereas I'm brand new, this is real experience. So I'll hand it to you, Tanya.

Thank you. Thanks, Gregers, and good morning, everyone. I'm very excited to be here today to have the opportunity to go a little bit deeper on specialty medications and what that means. As Gregers mentioned, I spent the first 10 years behind the counter dispensing in a pharmacy starting in my teens and have been at the office for 23 years in various roles, but really where my passion lies is pharmacy and health. And so to have the opportunity to talk a little bit more about specialty today, I hope that everybody leaves with a better understanding of why this is such an important area for us. Just to sort of ground ourselves in the definition of what specialty is versus our core business.

So Gregers spoke about our core business, which is blood pressure, cholesterol, antibiotics, that is still a very important part of our business, but specialty medicines or specialty molecules are more complex in nature. They treat more complex disease states. So think about oncology, rheumatology, multiple sclerosis, rare diseases. They are generally prescribed by specialists. So a dermatologist or a specialist, not a general practitioner or a family physician. They are high-cost therapies. So anywhere between a minimum of $10,000 per patient per year, upwards to $500,000 plus a year for a single patient.

So that's kind of the main differences between a specialty medication and what we would call our traditional business. And then, of course, there's a category of GLP-1s that we will speak about -- or I'll speak about as well, which is a subset of specialty drugs.

And so why is this so important to us? You would have heard Per and Richard talk about specialty at a high level on some of our calls. This is where R&D research and development and innovation is happening with pharmaceutical companies, not only globally -- not only with Canada, but globally.

So our team spends a good amount of time making sure that we're well connected to the pipeline of new products and therapies that pharmaceutical companies are launching that they'll be bringing to Canada. We travel globally. We visit manufacturing sites. We make sure that pharmaceutical companies know that we are a partner of choice for them, and we can support those patient needs.

So if you look at the growth for each of the categories, specialty is the fastest-growing segment. So it's growing at 13% versus traditional drugs growing at about 2%. And then you've got GLP-1s within that at 17%. Within our Shoppers Drug Mart business today, specialty medications represent about 37% of our pharmacy business. So it is already a meaningful part of our business, and that is very intentional. We've been focused on the specialty category of drugs for about a decade now, investing in capabilities and assets to be able to capture this growth opportunity.

And then you'll see our share -- our market share within those categories. So although we under-index today versus our traditional share on the specialty category, we've made the investments, and we are well positioned to take advantage of that growth. And then on the flip side, on the GLP-1 space, we over-indexed. So 28% of scripts filled in Canada for GLP-1s are filled within the Shoppers Drug Mart Pharmacy.

Just to give you a bit more flavor on the difference between traditional medicines and specialty and what that means for a patient or for anybody in the room who knows somebody or who has been through this process on their own. So if I walk into a doctor's office and I have high blood pressure, I see my family doctor, he or she writes me a prescription. I actually leave the doctor's office with that piece of paper, and I walk into a pharmacy and fill that prescription, take it home, and that's sort of the standard process.

For specialty, more complex drugs, the patient experience is very different. So Gregers sort of alluded to it, but it's even more pronounced with specialists. So some patients wait anywhere from 6 months, 18 months, even longer to see a specialist to be able to get an appointment. Once they see that specialist, they will be diagnosed and they'll be prescribed the medication.

As I mentioned earlier, these medications are $10,000 plus per year. Not many people are paying out of pocket for this. And so the journey for reimbursement or what we call coverage who's going to pay for the therapy takes quite a bit longer. It can take anywhere from 30 days up to 90 days for the insurance companies or the provincial plans to pay for that product.

It's also not something that you just hand to a patient and say take one pill a day. So there's additional training and clinical support required. We have nurses within our business who actually interact with those patients and support them clinically through their journey. And then there's training that can be done at store level. So when they go into a pharmacy to pick it up, we have pharmacists centers of excellence who are actually well positioned to support these patients through that process.

And so we have a business unit within Shoppers Drug Mart called Specialty Health Network, and that is their core focus. There are over 700 colleagues within this business who support these patients through that unique journey that I just spoke about. And we're very uniquely positioned versus other retail pharmacies to be able to capture this growing -- fast-growing market. Of course, we have our 1,800 Shoppers and Loblaw pharmacies, physical locations across the country, which we've spoken about.

We have 5,000 pharmacists who come to our conferences and events and training throughout the year who are specifically trained in supporting specialty patients. We actually have 3 million specialty prescriptions that we fill in our network every year, and we've got over 200% growth in the number of specialty patients that we've seen in the last 3 years.

Why we're uniquely positioned versus other retail pharmacies is because this is not an inexpensive business to run. So the cost to entry or the cost to support and get access to these patients is very high. But we've made that investment over time, and we also have the assets that some of the other pharmacies would not have.

The traditional specialty pharmacies that you can sort of see on the right, that is what they do. These are closed door pharmacies that have the same 700 colleagues that I talked about, and they're shipping prescriptions to patients' home. We have those 1,800 locations. We are sending daily prescription deliveries to those pharmacies. Our cost to serve is next to nothing.

We put another injection or another specialty drug in the same delivery that's going to a store. So our cost to serve is very different. The specialty players to deliver a cold chain product that needs to be temperature controlled and monitored and received by a patient at their home, those are upwards of $100 to have a specialty courier take those to their home.

It's also really important to note that specialty patients are like all of us in the room. So 20 years ago, specialty medications were infused. You'd go to a clinic, you'd sit there for 3 hours, you'd have a product infused. So they were much more complex therapies. The advancement of science and the products that pharma companies have brought to the market is changing the mode in which those medications are delivered.

So there's oral therapies now. There are self-injecting therapies that are very retail-friendly that can be delivered through a retail pharmacy. And so as we've transitioned programs that pharmaceutical companies have asked us to support on their behalf from some of our competitors into the Shoppers business, 76% of patients who previously had those prescriptions delivered to their home are picking up in the Shoppers Drug Mart pharmacy.

These are -- this is not an Amazon package. This is not a bottle of shampoo or a super toothpaste that can be left at the front door. These are pharmaceutical drugs that are $20,000, $30,000. You need to be home to sign for it. So like I said, this is people who are working populations who don't want to be sitting at home for 5 hours once a month to receive a package.

So we are very uniquely positioned with the pharmacists that we have with the expertise, the retail locations that we have and our unmet cost to serve. So what are the categories that we're seeing the most growth in?

The obesity and diabetes highlighted in red there is the GLP-1 category. Obviously, those are two of the fastest-growing disease states or indications that we're seeing growth, but that is not our only focus. If you look at oncology and dermatology, our Shoppers business, such as the health network, is growing at 2% to 3% faster than the market. So those are areas that we've invested resources in. We've invested in the right capabilities to capture on all of the other specialty categories that are also growing very quickly.

So when we think about GLP-1 specifically, the growth in this category is phenomenal, as many of you know. Everybody hears about it in the news and the media on a regular basis. Here are some of the calls that we've put together from the various analysts on what this growth in this category could look like. While there is a range there, it sort of all comes within a similar range. They have various assumptions that drive the differences in their numbers.

So some of the key factors or drivers that will influence the growth are a few things. One is coverage, who's going to pay for these therapies. So as all of these new medicines come to market, both private and public payers need to find the funds to reimburse these therapies. So coverage is a huge variable in these growth assumptions.

Adherence, Gregers spoke about it. Patients starting therapy is one thing, but staying on the therapy indefinitely is another. And some factors are either side effects or cost and affordability. And so that's another big factor in the growth in this category. There's a lot of new therapies coming to market, new entrants that are coming to market and new methods. So again, there's some big oral products coming to market. There's a lot of patients who don't like to inject and those oral therapies will open up another category or cohort of patients to start.

And then the affordability, of course, that I spoke about. So as the genericization happens as an example, we've seen a lot of new patients start on therapy because the cost of the therapy is much more accessible for some.

Just to give you a bit of a sense of the difference of who's paying for these medications across the three key categories that we talked about. So the traditional medicine, sort of our core business, the blood pressure, the cholesterol medications, very little cash or under 20% of cash and a good split between government-funded and private insurance.

So your employers -- your benefits that you have to work.

On the GLP-1 category, it's interesting to see that very little funded by government because it's mostly for the diabetes indication, not for the weight loss indication, but a high concentration in cash. So almost 40% of people who fill their GLP-1s are willing to pay out of pocket within our network.

So that's 38%. And that's helpful in the sense that it is not subject to government deflation and reform and those things that we've seen in the past. And then on the specialty category, I guess, it shouldn't be a surprise, but only less than 5% of people are paying out of pocket when the costs are as high as we said they would be.

So GLP-1s as a category, the growth has been phenomenal. Canada as a country ranks about #9 in the world on pharmaceutical consumption. In the GLP-1 space, we're #2 next to the U.S. So as a country, we over-index in GLP-1s. As I said, our market share is around 28% today. We -- the Canadian market is $4.1 billion today. And if you kind of land in the middle of some of those assumptions or those calls that I shared would be around $8 billion by 2030.

And so our job is not to just wait for patients or Canadians to walk into a pharmacy and hand us their prescription. I'd like to call it, sort of, growing the top of the funnel. And so what are we doing to meet Canadians where they need and to fill the gap in care that we talked about in terms of accessibility of health care providers.

So we have launched late last year a Shoppers Drug Mart weight management program. Think of this as sort of the version of Hims & Hers or Felix, but better because we have a retail offering that goes along with it. It is a fully virtual online program. Anybody in this room can access it at no charge. That's a huge differentiator of our program versus others in the market.

You would be connected virtually with a nurse practitioner, we assess, we do the labs, we prescribe where appropriate. And then it's not just handing over a prescription, but it's a longitudinal connection and journey with those patients. So we have dietitians, we have nurses. They're interacting with our pharmacy teams, and we're connecting them with recommendations around diet and exercise. And the end state would be also that we start to give them offerings of other assets that we have within the enterprise, whether that be recipes or grocery and making those connections across the ecosystem.

This program is endorsed by Obesity Canada. They've done a press release with us. So that is incredibly important to us reputationally from a brand perspective. This is backed by clinicians. It was co-developed with our two clinical advisers who are key opinion leaders or key physicians within the diabetes and obesity space.

It doesn't stop there. So while GLP-1s today are used for diabetes and weight loss, the science behind GLP-1s, GLP-2s, GLP-3s, the next wave of this treatment therapy is very promising. So it's exciting for Canadians. It's exciting for us at Shoppers and Loblaw because they're looking to be able to treat very different disease states. We're talking about pain, we're talking about liver, we're talking about kidney, addiction.

And so the ecosystem that we've built and the capabilities that we have in our stores, both our pharmacy care clinics, our virtual care offerings and the training and support that we provide our pharmacy teams has us well set up to support the growth within the GLP-1 category as well.

And so with that, I'm going to turn it back to Gregers to sort of talk about all of the assets we have in the enterprise and how we can support these patients in the best way.

Thanks, Tanya. It is an absolute game changer, a big market. We're in a good position. And of course, what happens is once patients go on drug, their needs change quite a lot. And we're getting smarter and smarter about what happens to food consumption, how the habits change, but also seeing that it is a real lifestyle change. So it unlocks opportunities to rethink your fashion, your wardrobe basically.

It unlocks opportunities to rethink your skin regime, all kinds of things. So it is quite a pivotal moment in the lives of patients when they go on that drug, and it unlocks quite a few opportunities on the front store, but even with my colleagues, so when I hand over to Frank in just a moment, he's already thinking about how can we build our offering in our supermarkets to cater to a new segment of the population.

So I think bringing it all together, Shoppers is an incredibly strong business. We are positioned to grow $18 billion business, delivering $2 billion of EBIT. We are positioned for long-term sustainable growth, both on the front store-driven by both innovation in the store, but also online and also driven by structural tailwinds and all the work that we've done within specialty and connecting with all the digital and tech opportunities in the enterprise.

So thank you very much. I will hand it over to my great colleague, Frank Gambioli.

Good morning, everyone. I'm super excited to be here. Frank Gambioli, I lead the Supermarket division. I've been with the organization 41 years. I might not think I look that old, but I started in Fortinos in 1985. It's actually the first grocery store I ever shopped in. So it's kind of, bittersweet. I've been fortunate to have 18 different roles in the company. So you think that's just a tenure of over 2 years. And hopefully, it wasn't because I was bad at those roles. I actually think I did a pretty good job.

I wanted to start with giving you a quick overview. So Supermarket division has 550 stores across the country. We serve over 8 million customers a week with 90,000 colleagues. We have a 20% share of the conventional business, and we have a 25% of the hypermarket business, and that's basically Costco and Walmart. $27 billion in annual sales, continuing to grow EBIT.

The cornerstone of our strategy is retail excellence, as Per touched on. Three areas I'm going to take you through today is merchandising excellence, differentiated value and technology and AI and what we're doing there, which Lauren touched a bit on already.

Think about merchandising excellence. The areas we're focused on, there's three areas we're focused on. When we think about multicultural, 3 years ago, multicultural was a single-digit business for us. We've been growing in the last 3 years at double digit. It's going to be a $2 billion business for us in the next 2 years. We continue to see this as a growth engine. And the one advantage we have in our stores is we have the space for it to continue to grow here.

We think about meal solutions. Meal Solutions is another big area. You think about the restaurant business in Canada, last 2 years, there's been over 5,000 closures, and you continue to see that cycle through. We can provide great value in this area, great quality. And when you think about this, this is an $800 million business for us. And we think in the next 3 years, we can scale this to over $1 billion.

Gregers has touched on the GLPs. And Natural value, even though we've been in this business for over 20 years, it continues to grow. And how we think about this business and how to contribute to what happens with GLPs, we still think this is a big growth engine. We're still growing, I'm going to say, between 5% and 10%, and this is a $1 billion business for us. And I don't think there's anybody else in North America who does Natural Value as well as us in our stores.

Right-hand side, those who have been to our store, right-hand side is composed of general merchandise, HABA and apparel. Think of our general merchandise business, we're seeing tremendous growth. Toys growing over 35%. That area is showing good growth for us. HABA, we put in cosmetic bars with cosmetic managers. We're seeing good growth, single digit. But I think with Danni and the team now, we see that as a big opportunity to grow. Gregers touched on it, too.

Pharmacies. We have 350 pharmacies in my stores. So it's a big opportunity for us. I always use this analogy. Our stores -- some of our superstores can do 10,500 flu shots in the fall. When you put that and scale that, it's actually a big push for us this year. So how can we continue to grow the pharmacy.

On the health and beauty on the core, we think we have a little bit of work to do there still, and Danni and the team are working through that with Elaine. Apparel, we launched licensed brands and national brands, very positive growth.

I think the other area that Lauren touched on, we feel that there's a huge opportunity here to grow online. We're just at the infancy stages. And I think with Brian coming on, that's a big opportunity and a big unlock for us to grow.

Right-hand side, renovations. We've Per touched on it. Superstore, we've done 64 renovations. By the end of the year, we'll have up to 99 done. We've done 37 value models. Value models in our smaller stores, what we've done is we've taken the best of the right-hand side, and we've put it into our conventional stores or our smaller footprint superstores. Tremendous. It's actually one of the things that shocked us a little bit because the growth on that has been very, very good. We continue to launch those, and they're very capital light.

When we think about value, obviously, value has many different faces. When you look at price leadership, we launched a campaign in the Kitchener, Cambridge area that Per touched on, we lowered almost 3,000 prices. In the Atlantic in just over 60 stores, we lowered 4,000 prices. Initial results are very positive. We knew we needed to improve our price position in those areas.

So initial stages working really well. We're leveraging Danni's. She's going to talk about her Stronger Together and how we buy better. We're able to leverage that. We think about PC Optimum, it's our secret weapon. You heard them talk about that. We're able to give back $500 million in points to our customers, 70% penetration, great return on sales that helps us drive market share.

And when we think about value beyond price, 2.5 years ago, when I started in the supermarket division, we knew we needed to get more credit for the value we provide. So if you look at the top segment there, we've launched our value campaigns, which have been very positive. We continue to refine that. Bottom there, we think we can differentiate versus our discounts with fresh, discounters with fresh, and we've been very successful at that.

And PC Express. So PC Express is pick up in store continues to be double-digit growth for us. And that's on a pretty mature business and a very big base, and that continues to grow, and we're leaning into that very heavily. That feeds into when we think about technology and AI, I want to think about PC Express, our pickup in store, we've leveraged technology. And what's really important here is we have stores -- superstores that are doing almost 20% penetration online.

And instead of adding more space, we've added technology in. And this technology allows our stores to pick a little faster. So if we were picking at 80 to 90 pieces -- 80, 90 grocery items in the store, this tool is allowing us to get up to 200. We've actually set a benchmark of 150. We've been between 180 and 210. So it's been very, very successful. We're launching this out next year across the network. So that's been a big, big unlock for us.

We looked under cost controls. That's an electronic shelf label there. We -- I'm going to say we're the -- between Mel and I, first in North America to launch our entire chain. You see some banners now in Canada just getting on board. We've been here for a long time.

So that allows us to reinvest our labor into different areas, be it front end, service. And if anybody has ever worked in the store, the worst job in the store is putting up labels. So it's been very encouraging for the stores, too.

We have gatekeeper there. And -- what gatekeeper does is, obviously, you've heard of the retail stuff issue we have. We have -- we call them runners. People would just run out of our stores, fill up buggies and run out. And that's a common occurrence every single day in our stores.

It continues. Gatekeeper stops them at the front door. They haven't gone through a till and deactivate the front wheels because now we have 4 wheels, 2 wheels depending on stores, it locks at the front door, and that's really, really helped us recover a lot.

Lauren touched on Robin. Robin is a big tool. Just think about 2 years ago, a store manager or a franchisee used to do everything on a piece of paper, go find the department managers. They see a hole on the shelf, that technology, they just take a picture, e-mail it directly to the department manager. Think of the efficiencies that's created. And one of my favorites is AI use in our self-checkouts.

So we're launched technology that can identify produce. And why that's important is I'm not going to say people are stealing, people might be miss-scanning items. So we saw just on bananas, organic bananas sales go up 25%. It also detects that if you haven't scanned an item, it will say, hey -- it will nudge them and say, "Hey, you forgot to scan this item." So we've seen good returns here, fully launching in the next 12 months. So very, very promising.

And Scandit is the unit on the bottom there. It's basically a Zebra because think of it as a phone. And this technology, what we're able to do is scan -- you're going to hear about companies, sorry, using robots to go up and down aisles. We find this more effective than the robots, tried both. This will allow us to go scan a store and a big -- say, a superstore in 45 minutes.

That will bring back real data to the stores. It will tell them -- it will create a picklist for the store. Think about in the past, we would have to go to the back room and say, "Hey, you did this, this and this, go check." So Johnny is running back and forth.

Now this will create a picklist within 40 minutes. And on top of that, it will tell the category people if that planograms have been completed and they're compliant in that store. So technology will be rolling out between our businesses over the next couple of years.

Now to close, we feel we're very well positioned versus our competitors. As you can see, we continue to grow sales and EBIT. You think of our hypermarkets, we're very well positioned in our hypermarkets versus discount with lots more to offer. In our conventional business, we continue to show growth differentiating with value assortment and service and leveraging leading to price.

The fallacy that we're not opening stores, we'll be adding in this year and next year, over 500,000 square feet into the retail market. So we feel we're well positioned to continue to grow sales and EBIT.

Thank you for the time today. And with that, I'm going to pass it over to my colleague, Melanie Singh.

Actually, slight detour, Frank. We're going to give you guys a little bit of a break, freshen up your coffee cup, and then we're going to try and get ourselves back on track by starting at 20 after -- or sorry, half past 10. So refreshments in the hallway, stretch your legs, and we'll see you back in a bit.

[break]

We'll try and get ourselves back on track here. So next up, we've got Mel Singh from our discount operations. One note, I've seen a few people taking photographs of the screen. We'll have the deck up shortly on our website. It's also going to be filed on SEDAR, so you should have access to it in a couple of minutes. Mel, I wore my socks for you.

I need those socks. Good morning. It's nice to meet and see all of you. It's my pleasure to be here. As Roy says, I'm Melanie Singh. I lead the hard discount operations here at Loblaws. So I've been here for 17 years. I've had various roles in merchandising, operations, procurement. But my love affair with the hard discount business started in 1979. I know I'm giving my age away when I tell you this, but that's okay.

In 1979, as a new immigrant to Canada, there's a new grocery store called No Frills that opened up at Vic Park and St. Clair. And I called my mother last night and she remembered right away because it was a family outing. We went as a family to No Frills. And I was amazed as a kid about this grocery store, about how red the apples looked and about how it was great that we could -- and as a kid, I'd always ask my parents for all these things, which I never got, but that was okay. I've got since gotten over that.

But can you imagine what my job is like today when I walk in a No Frills or a Masse and I was there as a kid. It's a fascinating thing for me, but it's an incredibly humbling experience because I understand what it means to shop at one of our grocery stores. So it's my pleasure to be here with you today.

So from the hard discount perspective, we'll be 570 stores strong by the end of 2026. Hard Discount is anchored by two amazing brands, -- No Frills and Maxi. And why that's important and why that's part -- an integral part of the story of hard discount is those two brands are iconic and symbolized value for customers. And what we've seen over the past several years are we have two types of customers: value needed, the $50 a week shop that Per talked about, and value wanted, where they're looking for a different value.

We've also seen the divergence. The [indiscernible] 35, hard discount is cool. I've never been called cool in my life, but I'll take it now. Second is, as the population ages and more people go on pensions, we see they are seeking value as well. But we also have the middle that just want to come for value that we offer. And Maxi and No Frills has made it their business to be the value leaders of Canada.

I got a question at the break that asked me, how are you doing this? How are you opening up a store almost a week?

We're really good at what we do, but that's beside the point. But what we have done is we found a repeatable process. And when you have strong iconic brands that resonate with your customers, it becomes a function of just time and how we make the process repeatable.

So with that, I want to take you on a little journey. I want to tell you a story about how this has evolved. I'm going to start with Trois-Rivières, Quebec. And someone also asked me at the break, I don't see Loblaw stores in Quebec. So my good friend and my brother from another mother, Frank, and I will look at the network across the country, and we will collectively decide should we convert a store?

Trois-Rivières was a conversion. And Trois-Rivières as a Provigo was a really good store. Trois-Rivières as a Maxi does 5x the sales of a Provigo and is profitable year 1 and resonates with the customer. Equally as important, it doesn't erode the current Maxi store that we have in Trois-Rivières. It warranted a second store in that city. That's the story of Trois-Rivières.

If some of you have gone to downtown Toronto and visited our store on Richmond Street, anybody? I think I toured with some of you there. It's freaky, right? There's a two front doors. I get mixed up all the time, and I go there a lot. But when that store was presented to me as -- from our real estate team, I was like, are you people crazy? This is a U-shaped store. There's 2 front doors. How are we going to make this work?

And I do it 12 times. We went back and we looked at it 12 times before we said, okay, we think we can make this work. Guess what happened? It was an empty pocket for us. What happened was the store does 3x what we thought it would do, and it continues to grow. And it continues to resonate with the customers in that area.

And finally, the story of Victoria, British Columbia. 1.5 years ago, we had one store. One store on the island -- Vancouver Island. At the end of this year, we'll have five. By the end of 2027, we will have 5 more because the catchment area, as Per talked about, warrants the discount presence we will give it.

What the stores in Vancouver Island are doing are 2 and 3x the size of our projections. So we're very pleased with how we rolled it out, but it's not one cookie-cutter experience we're doing across the country. We play to our strengths, and we play to the market.

If you know me, you know I love all the people I work with, but I also love all the great jobs they do. So if Frank talked about AI. Every single piece of AI functionality Frank and Lauren talked about, I employ in my store. I don't care if it's 4,000 square feet to 80,000 square feet, it's in the store.

Robin, the macro space, the merchandising that Lauren talked about, the standard that Frank talked about it to doing shop floor walk, we employ all of it. PCX, so delivery and online digital presence is present in Hard Discount, and we're growing exponentially.

Loyalty. It's one of the big unlocks for us. Not only are you shopping discount, but we have created a loyalty program within Hard Discount that delivers value to our customer. But what we see, and Per talked about it, our penetration in Canada, the Hard Discount market is 18%. The closest one we see is 22% in the U.K. We have room to grow, as he talked about, but we have to -- we're going to grow intentionally, and he talked about it. 30 to 35 stores a year is what we're targeting.

And why does this make sense? So in the last 3 years, we've opened 200 stores. You must have a repeatable process if you're going to open up 200 stores. But we are really pleased with what we see. And what we see is that portfolio, the sales exceeding plan, we see year 2 and 3 comps outpacing our expectation, and we see EBIT positive less than 3 years. That's a great portfolio, and the work continues.

But how does the work continue? If I'm sitting here as leading hard discount, there's opportunity across this country. I told you about Vancouver Island. But how are we thinking about it and taking this up a level. You would have heard earlier this year, we opened Caraquet in New Brunswick. It was the first time we took Maxi out of Quebec. Guess what happened, resonated with the customer. We'll have four Maxi stores in New Brunswick by the end of the year. And it's resonating with the customers and delivering exactly the results we see Maxi delivering in Quebec.

A year ago, precisely to the week, Per said, now we should go to Poland. When Per put up those 6 things of his leadership style, you know when he says, we should go to Poland, you're going to Poland, okay? That's how this works, okay? So off we went to Poland. And I said, Per, what are we doing in Poland? It's the highest per capita discount stores in the world. And we went because we knew we had underserved markets in Canada.

We had population of 4,000, 5,000, 6,000, 7,000. And we needed an offering to deliver the No Frills brand or the Maxi brand to those communities. What we saw in Poland, we brought back the inspiration and we created Dutton, Ontario. What is Dutton, Ontario?

Dutton, Ontario is a 4,000 square foot store with 4,000 SKUs. They can do your full shop, operates as a No Frills and operates at the entire promotional program of a regular No Frills. This is a No Frills that we can take across the country. It's been open since the end of July. But two things I would tell you.

We dive deep within ourselves to figure out how to build it cheaper, and we dive deep within ourselves, and we're learning every day and how to operate it more efficiently. And those are the 2 things of Dutton, Ontario. But for me, Dutton, Ontario represents one thing.

The first customer in Dutton, Ontario, the morning we opened was an elderly gentleman with his son. And he said to me, he goes, thank you. I said, for what? And he said, I could walk to the grocery store. My son doesn't have to drive 20 minutes to go take me to a grocery store to do my shopping. He had me in tears and I bought his grocery. So like I mean, he's going to be my customer for life. But Dutton, Ontario affords us to go across this country in underserved communities.

But that in Ontario affords us to go across this country in underserved communities. And finally, Komoka. As Gregers talked about, we've reinvented what it means to be a discount store. We've modernized it. And I wanted to take you to Komoka, although I couldn't take it to Komoka's day. But the look and feel of the store doesn't make you feel discounted shopping at discount. And as we roll this banner across the country and Maxi, they will be the same. The only difference is the front is not yellow in Maxi, it is blue and the new logo is there. We will roll this across the country. And we -- as we open new stores, it will take shape as this.

And what the sweet ingredients that we also have is right next door is my other brother from another mother, Gregers, with his new store, the look -- so can you imagine the landscape of Komoka, Ontario, where you have the new No Frills not feeling discounted to shop discount and you have the shoppers shopping -- shoppers lending itself to what we can do best together. And what we see is when Gregers and I go together, it is a winning proposition for many of our customers. We're delivering growth. We're delivering it in the right way. We're delivering it, and we see the results from our efforts. We're providing value to our customers. The Maxi brand, the No Frills brand means something to Canadians, and they are assured value. It is that value promise we deliver each and every week. And we're doing it through the most efficient way, both building stores, operating stores and using AI where we possibly can. So for me, the future is bright. The growth engine is there. We see the trajectory we have using every asset we as a company have. Be it loyalty, be it what Lauren is doing, being technology, what David is using, being control brand that April talked about, selling T&T products, making sure Mary has given me the best marketing campaigns I have. I am using every single piece of this company and what it stands for to drive the growth engine that is hard discount. Thank you for your time.

With that, I'm going to bring up my good friend, Tina from Tina from T&T.

Very good. Thank you.

Thank you. So much. The ultimate Asian food destination. Some of you guys have toured my stores before. Some of you guys are stuck in London, U.K. dialing in. And actually, if you've never been before, it's a little bit hard to describe what a T&T is. But I hope that here are some images that help you along. This is what you would see. As soon as you walk into the store on the right-hand side, this is our story. T&T stands for Tina and Tiffany. It's a business that my parents started. in 1993, named it after me and my sister. And my mother was a founding CEO. She brought to the store what she needed as a mother of 3. And it's so amazing that we started in Richmond, BC and so many moms were desperate for what she brought just like in 1993. There's a sentence in here that actually want to blow out a little bit. It's this. T&T provides food that helps Asian families connect with their past and build cultural traditions in their lives outside of Asia and through time between generations. In pursuit of this cause, T&T has also become a destination for all Canadians for Asian food discovery.

It's not just about selling bananas and bok choy. This is not the store that you need to go to, it's the store that you want to go to. What we do is about culture, it's about community, it's about identity and it's about belonging. People find a piece of themselves at T&T and sometimes maybe they find a bit of less. These are real. This one bottom right, Mississauga, an engagement of a young couple, a wedding part -- a couple coming on their wedding day to take their wedding pictures. And this bride right here took a bouquet of kale right off the shelf to make this picture shine bright. So you can see that we mean so much more to our customers, identity, belonging, pride and a lot of joy. The numbers follow. This is T&T's performance since 2009. We have been a proud part of the Loblaw family since 2009. And now we have over 41 stores across North America. We -- my mother would never have thought one day we would go all the way to Quebec. You can thank Robert Sawyer for that. And she also never would have thought our recent venture would take us south of the border. Our first store in the United States opened in Bellevue, Washington. And I thought in a 76,000 square foot former Walmart, and you should take a look at this video and hear it from what was the response in our first store in the U.S.

[Presentation]

It's true. Parking is a huge bottleneck for us in the U.S.A. We rocked Bellevue and most recently, we brought our format to San Jose. We opened up a 55,000 square foot store, also happens to be in a former Walmart. What you can see here is the lineup on our opening weekend. It wasn't just the first hour guys. It was for the first 3 weeks. We have this pent-up for the first 3 weeks. I love this headline here, the first one, Canada's cult favorite supermarket arrived in the Bay Area, and it's a showstopper. It literally like gets the hairs on my arm standing up because cult's favorite to describe at T&T. I mean, usually, that's reserved for like a Trader Joe's, right? But T&T has earned cult favorite already, even though we've got 3 stores. And you can see here a lot -- the most hyped Asian supermarket is finally here, a lot of great headlines. And in 2025, the Institute of Grocery Distribution, the IGD, did an international scan for stores of the future, and T&T is on that list as #3.

Customers tell the story the best though. I'm taking you deep into RedNote. RedNote is the #1 Asian social media platform out there. I've done a bit of translation for you. You can see here while China often praises American Costco, it's crazy that is Chinese Canadians to make the breakthrough. Hopefully, T&T can expand to key China communities across the U.S.A. I can't face my friends until in Seattle, so I've been to AT&T. It's practically a social requirement. And the guy at the bottom here, he did his research. I immediately decided to buy Loblaw stock because the shopping experience was unreal.

So why T&T is winning in Canada and in the U.S. Let's double-click on a few of these. The first is destination real estate. Actually, 1/4 of our network in Canada is in regional malls. One -- we are one of very few grocers that actually gravitate towards malls. We have a special sauce about bringing empty boxes, empty department stores back to life. We've seen it -- you've seen it in Fairview Mall, and we're doing it in many locations across Canada. We don't actually have to be main on main, so we don't pay main on main rents and people come to us from a very wide trading radius.

Grocerant, I think the Financial Post said it the first. T&T is a grocery store plus restaurants. Kitchen and bakery are between 20% and 30% of our store revenue, highly popular, difficult to emulate, and it makes T&T a destination go beyond and appeal beyond the Chinese community. Actually, 40% of our customers today are non-Chinese speaking. Private label is also a very special part of our business. We have over 600 SKUs in Canada, 300 of them made it to the United States.

But what's so special about it because we learned from the best. No one in the world is better at private label than Loblaw Brands Limited. That's such a beautiful thing about T&T and Loblaw together because they -- Mary's team taught us the how to. We brought the authenticity. We brought the production. And now this is the #1 Asian food brand in Canada. And I can tell you, Americans love it. They are trying it and they are buying it on repeat. Value for money, social marketing and amazing assortment round out the top 6 reasons why T&T is winning.

You see some familiar names on this list. This is a list of the leading U.S. grocers -- leading U.S. retailers, food stores, sales per square foot. No surprise, maybe #1 for sales per square foot is Trader Joe's. Trader Joe's small stores, pretty high volume, top on sales per square foot, led by Costco. I'm a little bit surprised Costco being a wholesale club is on this list. What is crazy is that T&T makes this list.

We cracked the top 10 for sales per square feet in the United States. We're on this list. Yes, wow, right, #1, 2, 3, third top for sales per square foot in our stores in the United States. This is a great start, guys. What we've built starting in Richmond, BC, the fuel that we've had across the country, our positioning in that we are agile and yet backed up by the enterprise of Loblaw is going to be a great growth engine for T&T and for Loblaw.

3 major pillars. Number one, we're going to continue delivering our winning strategy. Number two, we're going to continue growing our Canadian base. We've got a solid pipeline in Canada. Somebody who had already requested that they want an invitation to the opening of Empress Walk that happens 1 month from now, October 8, Empress Walk, former Loblaw converted to a T&T coming up soon. Markville Mall, Sherway Gardens, Winnipeg Polo Park.

We've got 4 locations converting the Bay locations with Cadillac Fairview. And even in markets that are too small population-wise for T&T, Mel got 2. Frank's got 2. We have our products distributed from coast to coast, from Victoria to Halifax. T&T private label products are now available in No Frills stores, in superstores, in Loblaw stores. That's the magic of all of us coming together. And then the and beyond is expanding in the U.S. Bellevue, I got it. We're focused now on finding our footing in California on top of the 3 that we've already opened, 5 -- we have announced on the heels of that. The next one is going to be San Francisco, right in the heart of it. We're going to shake out that city. And with each new store, we're learning more, we're gaining more confidence and really going to be making ways in the United States.

So that's how we folded in into the Loblaw strategy, and I'm so grateful for all the support that I have from this team. And I want you to watch for the headlines on T&T coming soon. Thank you so much.

Are you back? Okay. You're back.

I was originally very excited I got to go after the break and then they shifted and now I have to go after you. So -- that. Hello again. Thank you for welcoming me back. Great conversations during the break. I'm going to move into what we call our digital connected ecosystem. This is the core of my portfolio. Like I said, AI underpins really everything that we do. But my portfolio actually consists of these 3 extraordinary businesses. We've got digital commerce at a very large scale, Canada's largest and most trusted, most beloved loyalty program, you heard quite a bit about it already and a leading retail media business.

Each of these is meaningful in its own right, but what actually makes this portfolio particularly powerful and quite hard to replicate, in fact, is how much stronger each becomes because of the other. And Per and I joke about this portfolio a lot. Sometimes I think it's just the stuff that was handed to me and other times, like, no, there's actually a reason this all fits together.

Our retail media business financially supports our e-commerce economics, right, like helping us fundamentally change the profitability of that business. No longer is e-commerce a drag on our earnings, right? So retail media is helping bolster the financials inside of our e-commerce business to ultimately move to that profitability level. PC Optimum is actually the single best reason that our retail media proposition is so differentiated. The data that is generated from PC Optimum is actually what allows Advance, our Retail Media business to help CPG so effectively reach relevant audiences and then actually measure what those customers bought.

And digital strengthens loyalty. A digitally engaged PC Optimum member. So a PC Optimum member who uses the app actually spends nearly twice as much and stays 3x longer inside of our organization than a member who isn't digitally engaged, but engaged nonetheless. So these aren't simply 3 distinct businesses sitting beside one another. They actually are reinforcing each other economically and strengthening the customer relationship, the customer value proposition.

So I'm going to show you the value, in fact, that we're creating inside of each and why we think there's considerably more ahead. I'm going to start with digital commerce. This is already a significant business for us, $4.5 billion in 2025. We're continuing to grow at roughly 15% particularly important here is that we're growing with improving economics. I said we're taking cost out of our headquarters, but we're also, as Frank mentioned, driving incredible profitability in our pick, right?

So we're moving from about picking 90 units per hour to upwards of 200 units per hour that's allowing us not only to drive our cost down and not have to increase labor as our sales increase, but actually, that's improving our immediacy for the customer, for our value proposition for our customer. We can pick more, we can pick faster, we can get into the hands of the customer. We're also making really targeted decisions to keep this e-commerce growth growing. So this isn't growing because the market is growing. This is growing because we are actively pursuing that specific growth.

You heard from Gregers, Shoppers is scaling out BOPIS, buy online, pick up in store. We've got this expansive physical footprint that allows us to get orders into customers' hands within 30 minutes, right? And so we want to extend the convenience value proposition that Shoppers is so widely known and loved for into the digital space. We're also rethinking how customers discover products online. If I go into a store and I ask a customer, why haven't you tried shopping online, they always tell me, they used to say, "I don't trust the fresh picking, but we've actually nailed that." Now they say, "Oh, I'm worried I'm going to miss out on something."

I discover products as I'm walking. And that's actually true. We have more than 100,000 products on many of our online portals. Great categories are getting buried on the digital shelf. And so we've introduced something called virtual banners. These are curated destinations. Think of these as like shop within shops, right? These are categories like toys, like baby, even mission shops, something like East Asian food.

And we build these as a micro shop and we actually -- because we are able to understand what customers would actually care about these shops, we're able to target those customers with those shops. And actually, in the East Asian example, we're seeing category growth of more than 20% when we build and put these virtual banners with East Asian called Mart Asia infront of customers. And so we're replicating that over and over to bring more of our assortment to the customers who perhaps are missing it or want more of it today.

So e-commerce growth, it's not simply moving with the market. We're actively creating more reasons to shop digitally with us using a combination of our scale and our stores, of course, and our customer understanding to drive that growth. A quick double-click on PC Express, our online grocery business because our position in online grocery is particularly strong. It starts with the customer proposition. We have built the most comprehensive grocery convenience offering in Canada. I actually don't think we get enough credit for this, but we do pickup and delivery.

We do planned next-day shop all the way to deliver delivery as little as 30 minutes.

We're on all 4 major third-party marketplaces for grocery and meals. However a customer wants to shop online grocery, when they think I need groceries, we have made it so easy, so, so easy to choose us. And that translates into share. I know Per mentioned it, Loblaw has about 32 or so percent of the Canadian grocery market in brick-and-mortar, we've got nearly 45% online in that same category.

We significantly over-indexed in digital. We also see substantial room to grow, right? So this is an e-com penetration nationally. We're at about 6.5%. Stores in Western Canada, we see upwards of 20%. Superstore consistently nationally is operating around a 10% penetration. So that is real evidence that materially higher adoption is achievable, and we're going to go after that by opening up more capacity. I think we're at 99% capacity out west in the stores that are pushing that 18%, 19%, 20%.

And importantly, we want customers to shop both. Gregers has mentioned it, we know a customer who engages with us in more places is more valuable, right? We see customers that -- who shop in-store and online spend 2.3x more per year than a customer who shops just in store. So growing PCX is actually about creating a more engaged and definitely a more valuable relationship with customers.

Next is PC Optimum. Gosh, I feel silly even talking about it still it feels like all my peers have done an incredible job. It really is an important asset in our retail ecosystem, but more so important for customers to get the most value, particularly as budgets get tight and wallets get tight. It's the #1 loyalty program in Canada, 18 million active members, more than 65% of our sales connected to a PC Optimum member, so 60% in Shoppers, 70% in grocery.

Yes, that gives us extraordinary reach, but the real advantage I find is what we learn from it. We have a very rich understanding of what our customers buy, what matters to them and how to access them and engage them across the business. And that allows us to make, yes, our experience increasingly personal and more relevant. But that actually creates value on both sides. Customers get better offers, more relevant offers to get more value. But our teams, our merchandising teams actually use their promotional dollars way more precisely. And today, we generate about a 2.2x return on that promotional investment. Some weeks, we see 3%, 4%. It's just 3, 4x rather, just continuing to improve. So PCO, much more than a loyalty program.

The power of it isn't also just scale. It's actually the breadth of the network around it. So we have deliberately extended PC Optimum across high-frequency everyday needs that matter most to Canadians. It starts with our own businesses, of course, grocery, health and beauty, apparel. It extends through to partners into financial services, fuel, meals, optical, digital services, list goes on.

Together, that gives members more than 4,600 locations to earn, an incredible number, the biggest in the country. That breadth makes PC Optimum more useful, more valuable and part of more moments in a customer's everyday life. And there's an important economic component to it as well, a big benefit for us when members earn points outside of our own business, in many cases, in most cases, in fact, they come back to Loblaw to redeem them, right? So obviously, our customers see the value. What makes me happy responsible for this partnership ecosystem is that partners actually see that value just as clearly. My favorite example, Esso, we launched with them.

They had operated their own loyalty program for decades, very much entrenched in Canada in their business. They first introduced PC Optimum as an earn only on top of their existing program. Very quickly, they asked to turn on redeem as well. And within a couple of years, they had sunsetted their decades-old own loyalty program in favor of just having PC Optimum.

So really, really impressive. We see that response from many of our other partners as well. And the reality is we're not done with this. We have an incredible pipeline. I'm super excited. I can't share too much today, but we've got an incredible pipeline of new partners coming into the PC Optimum network, making an already powerful program even more broader, more valuable. Another big opportunity for us on PCO, the app. So yes, we have 18 million members. But the moment a member starts to engage with us digitally, the relationship changes dramatically. They see more value, they spend more, they stay longer. Economics are significant. We track it. And this is a cohort that we've been really pursuing this population for some time. Over the last 3 years, we've consistently grown that population about 8%.

They spend about $720 more per year, 40% lift in basket from these folks because they're more engaged, because they better understand the program. Now interestingly, though, today, only 20% of those that move from member to digitally engaged member engage with one other digital product. So perhaps engage with PC Financial, PC Express, PC Health. But when they do, when they go from member to digitally engaged to even more digital products, that number, again, of their spend and their stickiness increases.

And so the answer there for us is -- and the opportunity is really simply get more people into the PC Optimum app and make that app the place where customers can discover more and more from Loblaw because we have so much to offer. And that is exactly what we're doing. This month, we're launching the brand-new PC Optimum app. This is effectively a super app for the Loblaw ecosystem, right? For the first time, we are bringing our entire digital ecosystem together in one place. I think today, we have 6 apps, customers can keep all those apps, if that's what you'd like, but they no longer need to.

They no longer have to jump from one to the other, reauthenticate every time they do, start over, build a basket, tell you who I am and where I shop and what I like. And the experience in PC Optimum becomes more actionable. So you no longer just see an offer. You see an offer, you click on it, you buy that product, you check out directly there, okay? Now what makes this particularly exciting for me is that we're building it largely around conversation. So I talked a lot about earlier about how important conversation will be for customers engaging with our brands.

Well, now instead of asking customers to navigate Loblaw, they can simply ask us to solve a problem, and we can solve it across the entire ecosystem.

So imagine telling chat, I'm going to Florida next week, help me get ready. It can recommend a bathing suit from Joe Fresh, Sun Care from Shoppers Drug Mart, travel size snacks for the plane from Loblaws, 3 businesses, 3 cards, 1 conversation inside of one application. Very few companies have the breadth of assortment and customer relationships and digital capabilities and, of course, the physical network to bring an experience like this to life. For us, this is the natural evolution of PC Optimum from a loyalty app into really the digital front door to the entire Loblaw ecosystem. And lastly, Loblaw Advance. This is the -- and more, as Tina said, the and growth. This is our Retail Media business.

The first thing to understand about Advance is the extraordinary scale of the audience we can reach. I don't think people appreciate this. Of course, the 18 million PC Optimum members more than 2,800 stores. Over 11 million Canadians are visiting our digital properties every single month. And actually, combined, we reached 92% of Canadian shoppers monthly, 92%. But what actually makes the reach incredibly valuable is when and where we can reach them, not just reach for each of state.

Our advertisers want the advertising we offer because it is incredibly close to the shopping decision, right? While customers are browsing online, while they're walking by our store -- in our stores, seeing products side by side, while they are making decisions right there at the shelf. We put relevant messages in front of a customer at the moment it has the greatest chance of influencing what they buy. And then we can also see what happened, right? We know if what they saw, they bought.

So we combine the reach of a major media platform with something media platforms do not have, right? We can actually say whether a customer who saw this ad bought this item or not and maybe even what they bought instead. And that makes events incredibly valuable to brands. We can help them reach the right customers when it matters most and show them what happens. And we've turned that advantage into this incredibly growing suite of products for brands. We help brands reach customers inside our stores. We've got screens. We've got audio. We've got -- even on receipts, they're buying on printed receipts.

We reach them while they're shopping on our digital properties, sponsored products, display ads, video ads. And actually, we reach them outside of Loblaw, too. We use our customer understanding to help brands reach relevant audiences across platforms like YouTube and Meta and connected TV and we still can measure that as well.

So -- and actually, we've even turned our data capabilities into brands, into products that brands are buying or subscribing to. We've got a product called LDIA. I'm going to talk a little bit about. So there are multiple ways for brands to work with us and multiple ways importantly, for us to grow. We've grown about 24% annually since 2023. Importantly, we expect the business to hit -- to actually exceed $100 million in EBIT for the first time this year, no longer an emerging opportunity. This is a scaled profitable growth business with significant runway still ahead. 3 areas for that significant runway. The first is in-store.

This is probably the biggest untapped opportunity we have in advance. We built our retail media largely digital first. If you talk to a lot of the international players, they started in store. Today, they would tell you in-store is their biggest channel, not because it's where they started, but rather because that's where advertisers want to be. We believe the same is going to happen in Canada. And because we've only begun to build out in-store, tremendous amount of runway for us.

We have a meaningful footprint in our stores today. We've got roughly 1,800 screens across our store network, but most actually sit on the periphery of our stores. So customers see them on their way in. They see them on their way out.

But as we've come to learn, they've already forgotten what they saw on the screen by the time they get to that product. That is why we are moving those ad units directly into the aisles on end caps, aisle blades right beside where customers are making their decisions. We plan to grow from roughly 1,800 screens today to 4,700, more than 2.5x our current inventory. And we're introducing new formats. We have incredible formats. We were in Georgetown last week. We've got broadcasting onto the floor. Uncrustables had a great spinning ad. -- apparently, you cannot mix this thing.

We've got holograms, produce bins wrapped in screens, pretty incredible stuff. Marketers love this stuff, right, Mary. So we're not simply adding more screens. We're dramatically expanding our media inventory, moving closer to the moments of purchase. Second is measurement. This one allows us to participate in media spend even when the advertising doesn't run with us.

We only have so much reach. I know it sounds like a lot, but there's only so much. People spend more time on social media than in our stores, unfortunately. The idea here is simple. A brand runs an ad somewhere else. We securely connect the customer who saw that ad to the actual purchase data on our side, and we tell that brand whether their advertising drove sales.

We provide the measurement. We earn a share of that media spend, and we don't have to own any of the inventory. We don't have to run any of the selling. We started this with connected TV. We did a partnership with Bell, first of its kind in Canada and actually very few examples globally. So an advertiser like P&G, who spends, I think, billions in Canada on TV can actually see for the first time, did their TV ad drive sales and one of those customers buy.

Now we're taking that same capability into a much larger pool of media space, social and digital media, platforms like Meta, platforms like TikTok. That changes the size of this opportunity for advance meaningfully, right? If Loblaw's measurement is underneath the billions of ad dollars being spent everywhere across Canada, not just inside of our ecosystem, we have a huge opportunity to unlock. And lastly, LDIA, Loblaw Data, Insights and Analytics. This is the platform I described. It's a platform that's quite large today. It's about -- we do about $70 million a year in top line from this platform. CPG subscribe to LDIA to understand and manage their business within Loblaw, meaningful. And the product actually has an extraordinary number of reports to understand what's happening in your business, over 100.

Unfortunately, what we saw was advertisers were only looking at 2 or 3. And therefore, the product itself is only as valuable as those 2 or 3 reports. So we said, let's take the power of AI and completely transform this product. Let's take all the data that exists inside of our organization, layer AI on top and below it and allow CPs to actually converse with their data. And so that's exactly what we did. We transformed LDIA into an AI-first product. So think of this as ChatGPT for your business at Loblaw.

By the way, nobody is doing this. Yes, some may, but nobody has this today. No retail media business has a product of this caliber. This fundamentally changes not only the opportunity because of who can use it. So for example, marketers can ask who's buying my product, what else do they buy? Supply chain teams can ask, how is my on-shelf availability? Where am I struggling? What stores? What can I do? Executives who are running these CBGs can just say, where am I losing share? They don't have to wait days or weeks for answers.

Users can build dashboards, investigate issues, drill deep, assign work, you name it. Everything that we can do in Robin, you can do on LDIA.

This step change in the utility of LDIA changes the entire economics of this product. We've got 3,000 customers of LDIA today, but we've got probably 8,000 or 9,000 other customers who aren't using LDIA yet because they didn't know that it can do things like this. This is a really easy product to understand. We go into boardrooms with CBGs. We demo this, they're buying it, okay? So this is a truly differentiated product, combining data and capabilities of AI in brand-new ways, meaningful, meaningful growth opportunity, probably 30%, 40% opportunity for LDIA inside of our organization. So that's it. I'm really, really proud of these 3 exceptional businesses, each compelling growth story of their own, of course, but combined a really meaningful and hard to replicate ecosystem of digital e-commerce, retail media, data, loyalty. You name it, we've got it. And with that, I will hand it over to April on brands. Thank you very much.

So from exceptional digital products to exceptional physical products. Mel made a really bold statement yesterday. Actually, she said, I've got the best job in the organization. I'm sorry, Mel, but I think I've actually trumped you at that one. I'm April Preston, and I've got the absolute privilege of looking after our private label brands at the moment. So I want you to picture the scene. It's 2012, Loblaws at Maple Leaf Gardens has just opened, and it's news all around the world. And a food and retail expert comes over from the U.K. to have a look at this store. It is so exceptional. And that person walked in through the door and was so blown away by the brands they saw showing up there. They said to themselves, if you ever work for another retailer, the only place you can go to and another major grocer will be Loblaws. So fast forward to last year, 13 years later, the phone rang. It was a headhunter, I never pick up the headhunters.

But on this particular occasion, they said, this is Loblaws and I thought right, that's it. They've asked me to join the team I'm going over there. So in February this year, I landed in Canada, moved countries, moved jobs, and I can say that exactly the same as Per said earlier, actually, it was the best decision I've ever made. And I'm absolutely delighted to be here. It's an absolute privilege.

So my specialist subjects, really a brand strategy, customer insight, product innovation and product and packaging excellence. I've worked over 40 years in the industry, I hate to say that, but work out how old I am. And in that time, I've sort of either launched or overseen the launch of over 20,000 products. And I've also led the transformations of 3 really strong heritage brands. And again, I would say the same, as Per said, we've got a lot of parallels here. But when I landed here, I really didn't feel this was a sort of turnaround job. This was building on something that was really strong already.

But over those 40 years, that experience has taught me a huge amount, and it's primarily the biggest thing I've learned is the power of a unique brand portfolio and the role innovation plays in that. And I want to talk to you today about innovation because that's where the growth is going to come from in the next few years. But this experience has taught me other things as well. And my last job was actually with a business called Holland & Barrett, who some of you might know. It's a U.K. retailer. They're a health and wellness specialist, but it's given me a deep immersion into the world of health and wellness.

And what that means is I covered a load of categories, not just food. My early career was primarily food, but this put me in an ideal position to be able to come and support Gregers as well as Frank and Mel to really expand our portfolio of products.

So here in the last 6 months, what's really been cemented in my mind, what I've been learning as I've been going around is that we've got a really rare combination here. We've got trusted brands -- we've got customer reach. We've got technical expertise, and we've got brilliant retail execution. And all of that is what's needed to really capitalize on the growth that's happening in the market at the moment.

The first thing that struck me when I started to see the data, and this is what I've seen right back in 2012, manifesting itself on the shelves, but these brands are not small private label alternatives like many global retailers have. They're some of the most powerful brands in Canada. I mean, President's Choice, #1. I mean, East Asian brand, we're #2, second only to T&T, which is -- we've got both of those within our portfolio. We've got Farmers Market. We've got No Name. We've got Suraj, we've got Life brand, and we've got a number of others as well. And the key thing about this portfolio of brands is that they cross all the most important consumer dynamics at the moment in terms of quality, in terms of value, in terms of multicultural food and in terms of everyday essentials. So we're really ideally placed.

And this matters from a commercial perspective because these brands drive penetration, they drive margin accretion, which is really important, customer preference and customer loyalty.

And the thing that excites me the most in all my 40 years, what I've started to see is that I've never seen before is there's data coming through to say there's a massive shift with consumers. They are actively choosing private label brands now. Before, it was a bit of a compromise. They're almost as good as the national brands, but they're a bit cheaper, so I'll go for it. What's happened is that is switched -- the data and the growth projections on our brands, on private label brands is huge because they are now being seen as the brand -- the place to go for quality and innovation and really understanding consumer needs. And that's what's so exciting, and that's what's going to really turbocharge our growth over the next few years. So I mentioned innovation. There's a whole new opportunity for growth as we move from private label being from an acceptable substitute to the preferred choice. Our approach when we're developing these brands always starts with a really simple question, why would customers choose to come to us and buy our brands over others?

For me, our brands give them a reason to prefer us, but it's the innovation that's going to keep them coming back, keep them interested and keep them talking about us, and that's what my team are laser-focused on at the moment. Innovation, I call it a catalyst. It's a catalyst to growth. It's what gets people and it gets them talking, and that lifts the whole category. It lifts national brands and it lifts our categories in total. And how we approach our innovation is the key to unlocking this new era of growth I've talked about, and we're ideally placed to capitalize on that.

Now I'm going to take you into a few product examples because I don't think there's any better way of sort of explaining our innovation approach than talking specifics. But have a look at these because you're going to be eating quite a lot of these for lunch. So you can start planning what you're going to pick as we go through. So if you want to be highly competitive in the market, we need to deliver best quality and best value. And to do that, what we're always looking for is how do we get volume and scale. And one of the ways that we do that, I've got this approach that we call half a step ahead.

Actually, the business was already doing it when I got here, but this is how I describe it. And this is back taking something that's very familiar to people, but putting a new twist on it, so it feels new and interesting. I've got an example here, this Strawberry Triplelicious. You are having this one for lunch, by the way. So save some room for pudding. This was -- this is the fastest new line that we've launched this year. And the reason is because it's half a step ahead.

Everybody loves strawberries and cream. It's an absolutely delicious combination. But I think you do in Canada anyway, and we certainly do in the U.K., come Wimbledon. But this is strawberries and premium flavor, but the new and interesting part is it's a mashup between a cheesecake and a pie. And nobody has done that before. Nobody has seen that before, and that's what really piqued the interest. And this is where the volume and scale comes in, and that's what allows us to deliver quality and value.

Right. Creating and you can get this one for lunch as well. So this is one of my favorites actually. This was actually launched in 2024, but I think it's a brilliant example of a really iconic product, and we've got hundreds of these, but iconic products inspire loyalty and they inspire repeat purchase, but they don't happen by accident. They come from true expertise, and Lauren talked about this earlier, and it's the same in my team. You've got to have recipe expertise. You've got to understand processes, ingredients and execution.

It's all really important for creating incredible products. So the competitive edge here for Loblaw brands is it comes from our people, comes from their experience and their capability. And I have been so lucky in the team that I've inherited when I arrived back in February. We've got product developers, technical experts. We've got insights. We've got sourcing, Danni is going to talk to you next. We've got brilliant category partners. We've got brilliant retail partners. And this is what really helps us create these products that stand up to the test of time.

This example, as I said, is delicious. You'll be tasting it at lunchtime, but it took true expertise to create this product, and this happens every single day in my team.

Now you're not going to be eating this one for lunch. I promise you. But this is about our Pet Nutrition. So there's a bit missing some slide. The packaging has dropped off for some reason. But what we're always striving for within our brand portfolio isn't simply to match the national brands, it's to beat them. And it's to beat them on what matters most to the customer. And you don't need to see the detail on the slide there, but you just need to see the number of green ticks. Every single one of those green ticks is an important thing for our customers that we deliver through this pet nutrition brand. On the right -- besides that, you can see our competitors in the national brands and how much better we are than they are.

And you look at the price there, we're 57 per 100 grams, half the price of Purina, for example. And we don't use this on our marketing, but the number of people that have said to me, this food gives their dogs the cleanest poop in the marketplace. And honestly, it's a really important -- we should use this in marketing there, but it's a really important thing. Who wants -- they talk about the one hand scoop. I mean this is what our dog food does.

And that's the length that we go to, to make sure that our products are delivering against customer expectations and what's important to them.

One of the other ways we lead is by taking a powerhouse category approach. Some of you might know this as sort of creating destination categories, but this is really about creating categories that strategically customers choose to come to us for. You can't do this with every category across retail. So you have to be very specific about the ones that you're going to choose. And this is a great example of the chips category that we have built as a powerhouse within our organization.

And it's a great example of where the work that we've done in our private label brands has lifted the whole category, and we have grown market share both for our own brands and the national brands by taking this approach where we really, really wanted to make sure that we stand out against our customers. Interestingly, the other thing you'll see here, this was a range we launched this summer,

Canadian flavors, I call it Canadiana. I mean this is a massive growing area for us at the moment. Made in Canada, Canadian flavors, all things Canada are very, very important to our customers at the moment and something that we're really focused on. I've got some -- I wanted to have a top secret slide to sort of talk about all the things that are coming through, which I can't do because it is all top secret a bit like Lauren, but there's some really exciting stuff coming in this space over the next year or so.

So a core role of our brands is democratizing quality. How can we make better products more accessible through scale, through price and through technical capability. We've got an incredible greenhouse grown program, which is a great example of this, where we use technical innovation to ensure that we've got great tasting, affordable tomatoes available all year round. And this solves a real customer problem.

So that quality -- does anyone like horrible hard not very tasteless tomatoes? I know I don't -- or tomayto, I should say now in Canada, sorry. But this solves a real customer problem, quality, consistency, freshness, availability, and it really builds trust in our brands, and this is what keeps people coming back. This is where our private label brands are so powerful because we can take quality that might otherwise feel premium or seasonal or inaccessible, and we can make it accessible to all of our customers. Health. I mentioned Holland & Barrett. I think one of the reasons I'm here is certainly Galen and Per, can you help us do what you do at Holland & Barrett. I mean this is obviously -- Frank talked about it as well in terms of natural foods.

This is just one of the biggest areas of growth at the moment. And I think to really excel here, what we need to do is deeply understand the market, deeply understand our customers and what's important to them.

You need to be very clever at spotting the difference between a trend and a fad and a trend is something that's here to stay. A fad is something that's flash in the pan. And I think the really exciting thing here and what we're really building on is to how the health market has shifted in the last 10 years. 10 years ago, it was all about weight watchers. It was about deprivation. It was about taking stuff out. It was low sugar, it was low fat. The whole world has changed now.

Health is a positive thing. It's about putting more in. It's more protein, more functional benefits. This is the stuff that gets customers excited that they resonate with, and this is the stuff that we're building. And here's an excellent example of a range of functional drinks that we've launched. I think you might even have them for breakfast actually, but really helping customers with their gut health, which we know the science is really emerging.

We follow the science in health and wellness. As I said, we don't follow the fats. But your gut health, this is just a little topic for everybody here. Your gut health is the key to your overall health and wellness. So if you're going to do one thing for your health, look after those little Microbiomes inside and make sure you plenty of variety of plants.

So I'm just going to finish with one final example. No name for me, and I've given out a sweatshirt today. I know somebody is very pleased to have received one. But this is the most important battle brand in the market. And as we all know, value isn't just about price. It's that combination of cost, quality, trust and that emotional connection. And it shows up differently across each of our brands. But No Name for me really stands out. It's a genuine standout because it delivers quality of the price customers believe in, but it's got a tone of voice that is cheeky, distinctive and emotionally connected.

And honestly, you'll see some of the stimulus around the room. We've got some incredible products coming through here that people just cannot believe the price they're at. It's not just an opening price point private label range. It's not just kind of the cheapest. It's a true brand, and that's the message I want to leave you with across our entire portfolio.

These brands are powerful and have got so much growth potential. So just in summary, our private label innovations does more than shift share. When we get it right, it grows total categories. Every year, we launch over 500 new products, which create buzz, anticipation and excitement, and it gives customers more reasons to choose Loblaws, and we've got another 500 coming this year that I am really, really excited about.

We're already strong. We've got trusted brands with meaningful scale, strong market positions and attractive economics. And our customers increasingly choose private label for quality, innovation and value, not just price, we are so ideally placed. So our ambition is really, really clear. And I've sort of created this phrase since I arrived because I think it captures what Per talked about.

We're going from strong to unstoppable here. That's what we're intending to do with these brands. We're going to be driving trips. We're going to be driving baskets. We're going to be driving loyalty, margin accretive growth and long-term category leadership. So what I want to leave you with today is a very short video. It brings to life our #1 brand, Canada's #1 brand, that's your President's Choice. It brings to life how we earn that position in the first place, but more importantly, how we're going to maintain that going forward. So I'll just play this for you.

[Presentation]

I love that too. Just music to do that version. They are actually from my hometown in the U.K. So I've got good emotional connection with me. I'm now going to hand you over to the incredible super woman, my fellow Brit, Danni. I couldn't do what I did without her team doing what they do. So I'm really delighted that she's following me up on the stage now.

Here we go. I do karaoke when I do this. So I'm Danni Peirce. I lead our apparel and our nonfood team and also our sourcing function. And so I'm here today to talk to you about how we are using our scale to unlock savings and those savings is what we are reinvesting back into price. And you've heard it from Per, from Gregers, from Frank from Mel and so we're here to support them in doing that.

In terms of myself, so I joined Loblaw last year. I moved here to Canada. My background, so you can probably tell, I'm British originally. I've been in retail for over 20 years. I started my retail career with Tesco in the U.K. and have been on a bit of a worldwide journey that's taken me through Australia, the U.S. and then I moved to Canada from Asia, where I worked for a big retail conglomerate out there called the Dairy Farm Retail Group, where I was most recently the CEO for 7-Eleven.

I wouldn't recommend to anyone moving from the equator where I lived in Singapore to Toronto in February. I spent my first week with my husband and my kids wearing a ski suit, but you'll be pleased to know that we've now adapted and very happy to be here in Canada.

And similar to Per and to Gregers, so I spent my first few weeks very much out in stores with our operators, listening and learning as well as spending time with our growers and supplier partners. And I heard firsthand the fantastic partnerships and relationships that we had with our growers and supplier partners. I saw the great capabilities that we had across the organization as well.

But there was one thing that became clear as I listen to what could we do better, and it was about how do we utilize our enterprise scale and go forward with one enterprise voice to be able to unlock savings across the organization. And the reason that we can do that is because we have tremendous scale here in Canada. And so when I talk about that scale, this is the scale that I'm referring to.

And so across our team, we spent $45 billion across all these different categories across grocery, across fresh, across health and beauty and nonfood and across GM and apparel. And really few retail organizations have the breadth of purchasing that we do. And so the opportunity here was how do we buy better? How do we increasingly act as one enterprise.

And this is the thing that makes me want to get out of bed and leap out of bed and come out to work every day is because every dollar that we save gives us the ability to invest back into price. It gives us the ability to invest back into our customers, and that's what fuels our growth. So you saw it on one of Per's earlier slides. So we said, right, we don't want to be Canada's best buying team.

That's -- we think that's too easy. Actually, we think we've got the capabilities to build the world's best buying team because we've got the scale and we can turn that scale into value for our customers. And so we said, right, well, how are we going to do that? There are 3 ways that we're going to do that. So one is we're going to source better. We're going to pay the right cost for the products that we're buying. Secondly, we've got to source closer. So for us to win, Canada has got to win. We've got to build Canadian supply capacity. This is particularly important to support April's plans as well. And then finally, we've got to source for resilience. And so we've got to complement that with what we buy in Canada, but there are many products we can't get here in Canada. And so we've got to be the best at buying globally as well. And all of this is supported by a future-ready team. And you heard Lauren talk a little bit about what we're doing in terms of AI there.

So this is what we set out to do 18 months ago. And the great news is that we're already starting to see some really meaningful results from this. So before I get into cost decreases, I'm going to talk about fighting on behalf of Canadians when it comes to cost increases because cost increases is a normal part of retail. But our job is to ensure that any increases that we take into our business are fair and are justified.

And so we've introduced a new approach to how we look at cost increases and the discipline into how we review them. We've got better market intelligence. We've got the tool that Lauren referred to, an AI tool that takes into account all of the commodity data that we have, and we make sure that every cost increase that we assess, whether it is justified or not. And then what we do is we have one enterprise voice in our supplier conversations. So this year, that enabled us to push back on $220 million of unjustified cost increases that otherwise would have come into our business and would have been passed on to customers at a time when grocery prices are the top thing on their minds.

So this is one example where coming together as an enterprise is making a meaningful difference.

The other piece is on tariffs. And so yesterday was round 2 of tariffs, and we were hoping we would never have to say that, but we are. And so we will again operate for our customers with the same transparency that we did last time. So every product that is tariffed will have a T on it. It will be fewer products this year than it was last year, but the tariffs are particularly centered on nonfood and health and beauty products, but the tariffs this time around are up to 50%

as you will know. And we only pass on the penny for penny cost increase to our customers. So Loblaw will never profit from any of these tariff increases. And what we have done is we have a very disciplined way of dealing with these. And as soon as those tariffs roll off, then our costs will immediately revert back. So these aren't costs that get built into our cost base over the long term.

And it's data, it's AI, and it's having one enterprise voice that has enabled us to do this. So this is cost increases, but the next bit is where it gets really exciting because this is how do we take our scale and enable stronger, more strategic partnerships to lower costs for our customers. And so I've got 3 examples here for you.

So the first one is in Produce. And in Produce, we would typically have spot bought. So we would have bought out in the market when we needed products. And actually, what we have done on several of our Produce categories is we've come together as one enterprise pulled our volumes together, and we have agreed longer-term contracts with our Produce suppliers. That gives them the stability to be able to know what to plant, that gives them the stability to know what land they need to lease and better economics, which we are then able to share. And this is with Canadian growers. So this has been fantastic for us, and there is more that we're going to be doing in this space. The next one is on Meats, where we've taken a portfolio approach across the enterprise. Instead of negotiating the cost of individual products independently

we've come together and we've negotiated as one enterprise across a category. We've seen tremendous results from that as well in terms of our costs. And then finally, on Confectionery, this is a typical grocery category. Again, there's a theme. We've come together as one enterprise. We've aligned on where we see growth opportunities, which suppliers we really believe that we can win with.

And we have been able to use that to be able to secure savings in the confectionery category as well. So these are 3 very different categories, but one consistent approach, which is how do we use our scale to unlock cost, and then be able to pass that on to the customer.

Sourcing closer. So we need to make sure that we have a strong Canadian supply base. We have onboarded 200 new Canadian suppliers so far this year, which is really exciting. And we've made it easier as well for our Canadian customers to find Canadian products in our stores. So we have now over 35,000 products that have maple leaf on the shelf tags. We're really proud of our Small Supplier Program. We now have over 1,200 small suppliers in that program. Over 90% of those suppliers are Canadians. And we're really proud of this program because we're really tapped into what's important to our small suppliers. So we know it can be hard to deal with a big organization such as ourselves. We have a dedicated team to deal with any queries and to help our small suppliers to navigate. And then we know that cash flow is so important to these suppliers. And so we have 7-day payment terms for our small suppliers.

And then finally, Made in Canada funds, and we've got Wittington -- Cornell from Wittington here today. So we've partnered with Wittington Investments. It's a $100 million fund. We have helped to provide a pipeline of suppliers into that fund, and this is very much targeted at categories where we are reliant on imports here in Canada, and finding ways to partner with suppliers and invest in suppliers to build up Canadian supply. And so we've had some great successes coming in radishes, in trout, in leafy green. So this is really exciting and is going to make a really meaningful difference here in Canada.

And then sourcing for resilience. And so Per talked a little bit about this earlier. So a couple of years ago, we joined what was at the time a European buying alliance. It's now become -- with our presence, it's become a global buying alliance. You can see here the partners. Every retailer that is part of it is the #1 grocery retailer in the market they operate. This year, we've put over $1 billion -- well over $1 billion of COGS through this program. It gives us access to a global supply base we didn't have access to before. And because our volumes are 5x bigger than when we go alone, we're seeing really significant savings. And this is on control brand products. And we're seeing anything from 5% to 25% savings on the products that are going through AMS.

So we're going to be doing more of this. This is a fantastic initiative for us. And the other benefit of it is that we've also been able to dual supply some of the products, some of our best sellers, which in the past, we would have been reliant on one supplier. And so it gives us more resilience there as well.

So this is the most important part. So myself and my team, we're focused on unlocking savings, delivering lower costs. That means that the presidents and the divisions can invest into price that drives traffic into our stores, expands our share and enables us to lead in growth, and that creates the flywheel. So I will never be out of the job because if we can grow, then we can go back again and again, and this creates a repeatable playbook for us to be able to go and secure more savings. So thank you very much for your time.

And with that, I'm going to hand over to Sonya from the Lifemark team. Thank you.

I'm going to test my microphone before I walk up there. There we go. Okay. We're going to change gears a little bit. Anyone heard of Lifemark before? Anyone know what we do? You heard a lot about product. You've heard a lot about retail, that food just before lunch, like -- but I'm standing between you and lunch right now. And the first thing I'm going to do is ask everyone to stand up, arms around over their head because that's what we do. We do physical health, and you've been sitting for way too long, just to be clear. How are those sciatic nerves.

Okay. So my name is Sonya Lockyer. I'm the President of Lifemark Health Group. I spent more than 25 years in health care, relatively new to Loblaw. So I joined in 2023. I arrived about 6 months before Per, so I had everything under control by the time he showed up. So I started as a clinician in frontline health care before moving into management consulting, then into health care operations, took my first CEO role at 38, almost a decade ago, if you can believe it. Much of my career has been spent leading businesses through significant change. You'll notice on this slide, there's a military Insignia as well. The Army taught me how to endure transformation, if you want to put it there.

But anything from turnarounds to acquisitions, I spent most of my time in Canada, but did take a short stint internationally over to Europe and the Middle East. And I did that for inspiration because I said there's no way Canada is doing it right. I came back saying we're doing it mostly right, just not quite as efficiently as we need to. So these experiences are incredibly relevant to what we're building at Lifemark today. Most Canadians know Shoppers, right? They know Shoppers, they know pharmacy. They understand that side of health care. Lifemark extends that health care presence into what we call community-based rehabilitation.

Ours is a people-powered business. So you'll hear Rob shortly talking about how we ship products. You heard from Danni about how we buy products. We sell people. We sell people helping people. Think about hands-on therapy. We have more than 6,000 team members that are helping Canadians recover from injury and illness. The injury can happen on the soccer field, very simple acute injury, twisted ankle, tennis elbow, anyone over the age of 45 has probably experienced that. All the way to some pretty significant catastrophic injuries that could happen at the workplace, could happen in a motor vehicle accident. We serve people from the military with amputations, for example. So we have a full spectrum of rehabilitation care.

Today, I want to give you a sense of the scale of Lifemark. We are small, but we are mighty. I think the joke of the quarter is who's growing faster, T&T or Lifemark. And I'd like to say Lifemark, we're pretty good. How Tina do is always what I ask. The growth we've delivered since joining Loblaw, which has been quite remarkable. So talk about the power of the enterprise getting behind the small business and seeing what it can do. And then, of course, our path forward to the number that Richard really likes to think about, which is $100 million in EBIT.

So here's our scale. Let's start with that. Today, we're approximately 370 clinics across Canada. As I said, roughly 6,000 team members caring for Canadians. We generated roughly $700 million in revenue in 2025. And we're currently seeing our same-store sales ranging from 8% to 10%. That being said, the last couple of months have been exceptional. So I'm excited about what's going to happen next year. But perhaps the most interesting number on this slide is actually the $6 billion market growing at 4% to 5% that we are part of.

From a physical plant standpoint, i.e., the number of stores we have, we represent about 8% of that market. From a sales standpoint, we represent about 13% of that market. So that tells you something important about the opportunity ahead of Lifemark. Rehabilitation and care in Canada remains highly fragmented. Local regional providers, you walk through the door, quality, not always certain. We have an opportunity inside of Lifemark even at our scale to continue to grow. And the focus for growth for us is actually very practical. I'd like to call it practical growth in health care. It means more clinicians. It means more locations and ultimately more access for Canadians that need it.

Gregers touched on the aging population. Being mobile, enjoying those things in life will become increasingly important as Canadians age. And when people start to hear of Lifemark, physio, right? That's what comes to mind. Community-based rehabilitation is roughly 50% of our revenue today. And so if any of you walked into an outpatient rehabilitation clinic, it usually has physiotherapy written on the door. Physiotherapy is about 60% of our revenue from a community-based standpoint.

But we are a diversified health care services business. So we have medical assessments, occupational therapy, the largest occupational therapy provider in Canada. We have massage therapy. We have mental health, vocational rehab, veterans care, I mentioned, occupational health and seniors wellness. That's a very diversified health service offering that touches from acute all the way to specialty services.

And our funding model is equally diverse. So approximately 65% of our revenue comes from third-party payers. That's always lovely. And that would be insurers. So think about motor vehicle accident, your insurance is going to pay. Think about workers' compensation boards if you're injured on the workplace, employers pay as well as governments. The remaining portion is usually covered by an extended health benefit, which most people in this room would have. And then roughly 10% of our revenue would be private pay, i.e., patients are paying out of their pocket for the services that we deliver.

This breadth is actually one of Lifemark's most important strengths because you put it all together, we have a diversified funding model. We have a diversified customer base, and we have geographies that are also diverse. Combine that with a growing, highly fragmented industry, we see a very attractive runway ahead. And so how do I think about that runway? I think about it in 3 chapters. I'd like to say, like sometimes we're actually growing as fast as we are at Lifemark, we traverse these chapters very quickly. And so we're often setting strategy sort of a year, 18 months.

The first way I'm thinking about strategy is what we have today, which is very important. It was very important when we first joined Loblaw that we cemented our foundation. And so we now have a national footprint, coast-to-coast, strong and evolving affiliate network. And what that means is we don't necessarily have to own the clinic to have access to the clinician. And so when our capacity is constrained internally, we can find a clinician in the Yukon and Prince Edward Island to service that customer and patient need. And that's a very strong affiliate network. And of course, our customer relationships.

So we've built a very strong platform. What do we do now? So this is essentially what we're working on, effective immediately, is growing care across our channels. And I'll talk a little bit about that in a second, but that is doing more of what we already have. The second piece is how do we expand that network. So acquisitions has been a significant source of growth for Lifemark since joining Loblaw, but before that as well. And then new locations, I get very excited when I see Mel talking about No Frills and Shoppers across the parking lot. We're not there yet, but I can't wait until there's a Lifemark right there as well, and that's going to be great.

And then there's the opportunity, of course, in the longer term, which is once we have the scale, once we have the sophistication, we will be able to partner in a different way across the enterprise. We'll be able to unlock the customer experience differently within Shoppers, and that's what gets me excited. So we have the platform. We know where the growth is coming from. And really, we have a track record of delivering it. So let's get into that track record.

Since joining Loblaw in 2022, Lifemark has delivered 18% sales CAGR. So very impressive. And this has been on, I would say, 50% organic, 50% inorganic. That's a question I always get asked, is this all M&A, Sonya? No, it's not. Our same stores are doing extremely well. We are doing a lot better with the assets that we have under the hood. But when I think about this growth as someone who's dedicated her entire career to health care services, it's what's behind these numbers that are really -- that's really cool. So think about it, 1.5x as many clinicians helping Canadians. That's more access. 20% more locations across the country. We added 40 new locations last year.

And we've improved our operating efficiency. You hear in health care, we always talk about bending the cost curve. We've been talking about it for about 20 years in Canadian health care. Lifemark is actually doing it. Our margin has improved by -- or by 125%. That means we're reducing that cost to serve, which is allowing us to reinvest back into more access for Canadians. So for us, growth and access goes together. That's the passion. That's what drives everything inside of Lifemark is how do we help more Canadians. Every time we add a new clinician, expand the clinic or enter a new community, we create more capacity to care for Canadians. That track record gives us the confidence for the next phase of growth. So here we are today.

First, we're going to start growing our existing -- we call these patient channels. We call them customer channels, but our channels. We already have the clinics. We already have the clinicians and the customer relationships. What really changed over the last 3 years is our scale. We can now see our business in a different way, which we couldn't before. We now have the expertise and the capabilities within Lifemark to grow these channels much more deliberately, expanding what we offer, where we offer it and to whom we offer it. This creates significant opportunities to do better within the network that we already have. But it's not lost on us that the network needs to expand. We need more physical points on the map, and we will get those in 2 ways. We will continue our acquisition trajectory, but we'll also build new locations because that's going to be important.

And then last but not least, strengthening the operating model. So at 370 clinics, up roughly 150 since we're acquired. You need systems, technology and data and common ways of working that will allow us to operate consistently in the future. and at what I would call a national enterprise scale. So for me, that one is important as an enabler of the other 2. We already have the scale, but how do we now make that scale work harder for us to improve the efficiency of how our clinicians are delivering care every day.

Talked a lot about AI. Guess what, went live inside of Lifemark yesterday, Ambient AI. That means my therapists are going to have their hands on patients, not on keyboards. They're going to have a conversation with their therapists and the Ambient AI is going to write their note. And if you think about access and expanding access, the #1 thing that clinicians talk about in Canada, they don't like the administrative burden that comes with delivering health care. If we were not inside of the Loblaw network, we would not have launched Ambient AI yesterday. Very proud of that.

So the future is bright. When I look ahead, I see a business with significant runway. We operate in a $6 billion fragmented market. We demonstrated that we can grow, 18% since joining, and we have a clear path. I can feel $100 million in EBIT. It's there. But what excites me most is what this growth is going to allow us to do for Canadians. One thing I didn't mention, born in rural Newfoundland, small fishing village, there is no health care where I grew up. When I left the military, I said, I will serve my country in a different way, and it is to fix this health care system. It is a very -- I will not see it in my lifetime. But Lord knows I will try.

So every new clinician, every new location, every service we offer, ways of working changes, we get to build more capacity to care for Canadians and keep this country moving forward. That's the Lifemark growth story. Growth creates access, and I'm very excited about what Loblaw, Shoppers and Lifemark can build together when we just get a little bit bigger.

So Rob? Where's Rob? Rob is between you guys and lunch. It's going to be fun now. Thank you very much.

Thanks, Sonya. Wow, that was inspiring, fixing Canadian health care. Now you get to hear about supply chain, forklifts. So sometimes I say to Per, I'd almost do this job for free until I got to do s*** like this. And then I say, I deserve a raise. This is -- Galen's here. I always say I'm not going to do this, but I did it. You know what, though, the f-bombs are going to be kept to a minimum for sure.

So my name is Rob Wiebe. I've got the privilege of leading the Loblaw supply chain. A little about myself. I've been here 42 years. Frank says he moved up because he was really good. Sometimes I think I moved up just because I was sort of the guy hanging around. And no one else had hired me. So they got took pity on me and moved me up. But 42 years, met my wife here. She worked for Loblaw. And family, I've got one kid as an engineer in Victoria. My daughter is a successful business person in Winnipeg. And then I got one hammerhead that runs up and down the field for the Saskatchewan Roughriders. So pretty happy with him, some days, some days.

But I think one of the things I'm most proud of within the Loblaw supply chain is really about what we've done in terms of go further women and really moving women ahead within the supply chain. It's really been something that's been close to my heart for quite some time. And we've had incredible operators that set really, really hard targets in terms of how many women will hire into our workforce. And I'm happy to say in this distribution facility, we are 56% women. So over half are women within this DC. And that, I think, is an outstanding achievement for the management team here.

Now -- thanks, that will help. And if my legs starts shaking, I'm going over here to the podium. So this thing's not -- what are we doing here? There. So this is our core supply chain for Loblaw. It was really a supply chain to the shelf. And what I love about focusing on this slide is we can never forget about our core. We're going to talk about the cool sexy things a little bit later around how we're going to build revenue and those kinds of things. But this starts with we service Loblaws first. We service Shoppers Drug Mart. We service Frank's stores, we service Mel's stores, and that's that. And there's no fooling around on -- see Galen, I'm getting better.

But there's no room on that in terms of what time you're going to be there, get there on time, make sure your fill rate is good. That's nonnegotiable. We only get to do the cool s*** that we're going to talk about after this because we get the core right. And as I said, that's nonnegotiable, and I've got a meeting every Tuesday morning where I have to face my brothers and sisters and I have to explain to them if I s*** the bed, they're going to be on me. And so I've got to make sure that we do a great job, and they're going to hold me accountable and well they should. And Per, as I'm sure you've heard, is super good at holding us accountable as well.

So this is our -- really our cost base. And right now, we're very happy with where we're at from a cost perspective. Remember, this graph would include layering in fixed costs that we'll take in this building, and we've been taking that most of last year and all of this year, and we're still able to bring the cost down. And a lot of that is both driving the revenue, but it's also laser focused on costs. We've got some of the most discrete labor standards in the country in our conventional distribution facilities. And when you think about that, it's really when you come to work, we're going to track you from the time you're in the building and all the activities that you've performed, and we give you a certain amount of time to do that work. And then when you leave, we understand when that is as well.

But we want to make sure our workforce is productive. We're happy to pay some of the better wages in the industry, but we want to make sure that the work follows that as well. And I think what we really -- and that really extends to our operational excellence. You got to see a facility here, which is our brand-new facility. I think you went through the 45. I'm not sure if you went through the 55, but you can see how many perishables we're doing.

Within this building of all the product that we're picking, we're over 90% within the automation. And you don't hear that a lot for other retailers, but we've been very successful at working with our suppliers and getting the packaging we need that will support us through the automation. And that's been a tremendous help for us as well. I'm not sure -- Ray did show you a graph around what we do from a productivity perspective on the network. And what we've really -- I think the team has done an incredible job on is understanding what best fits automation and then what do we leave in our conventional network. And that's why you're seeing such a strong performance from a productivity perspective and also from a cost perspective.

And then there is also the commercialization. We want to grow Supply Chain as a Service. You probably heard about a little bit of that from Amazon, some of those other folks. I think when you reach a point and you feel you're quite good at what you're doing and world-class, you can start to do that for other people. It's not all food that we're doing. It would be a lot of resources that we're working on as well, but I'll get into some of those examples later. But we have confidence in our plan to get to the $400 million. We've been doing it already. We're at -- well, I'll show you that on the next slide. You don't need to watch that yet.

And -- yes, that's it. So why are we able to do this? And what's unique about Loblaw? Because you can say -- I'm going to talk about our diverse delivery network, the fact that we are within 10 minutes of 90% of the Canadian population with our stores, that we're in almost every small community every night because of the nature of the delivery of grocery business. And there are others, retailers that would be doing the same thing. So why are we unique? We've been on quite a journey in terms of getting product to our distribution network. So 93% of the product that you will see in a store comes through our distribution channel.

Of that 93%, 90% of that product, we control the transport on. So from the time it's ordered, the time it's manufactured, we pick it up and we bring it to our distribution facility. That level of penetration that we've got now gives us a unique ability to really service the Canadian marketplace in a different way from what some of our competitors can do.

So this is the exciting slide. Right now, we're running about $200 million. We're going to do a little better than that this year. But we're about $200 million on 2025. 2026 -- sorry, anyway, we're going to be better than what we're seeing here in 2026. We're very confident in our ability to build to the $400 million. And when you think about what Supply Chain as a Service is for us, it's warehousing. So as we build these automated distribution facilities, we've got conventional facilities that we pull volume out of.

Generally, you would say, I'll just close that distribution facility. What we chose to do is really repurpose that and go to the market and say, we will offer you a complete supply chain package, both transport and warehouse. What I love about warehouse is the stickiness of the warehouse because once you're in the warehouse, it's harder to get out. It's harder to pull that out and go to a separate warehouse. You've got inventory issues, you've got demand forecasting issues. We take care of all of that for many of our customers.

On the freight forwarding side, this is really around the Loblaw scale. We built our international network on small shipments because we started 10 years ago. These are small shipments that originate in China, originate in Asia, and we would have to build less than container loads, and we've become incredibly good at doing that in an economical way to the point where now we control much of the inland logistics. We started that with Loblaw, and now we offer that for our customers. Really excited where that can take us as well.

We're more mature on the domestic truckload and less-than-truckload. Domestic truckload is pretty easy. You haul a load to Vancouver from Toronto. We'll unload our distribution facility. We'll pick up for a customer. We'll get that unit back. The key here is we are Canadian Pacific Kansas City's largest intermodal partner, and we would be in the top 10 for both Canadian National Railroad and with Union Pacific down in the U.S. And so we're really happy about how we're positioned and how we can continue to grow that business.

And then when you think of less than truckload, I like this example probably the best. There's a manufacturer in Stettler, Alberta, manufactures geothermal pumps for the petroleum industry. His biggest problem was he had an LTL service that would come up, but they only came up 3 days a week. And he said, "I don't know when we're going to be finished. We may not be finished on a Tuesday, and I want to ship it on a Wednesday. Right now, that service won't allow me to do that."

And I said, look, we're there 7 days a week. We haul groceries. As long as it's in a crate that it will work in a food safe trailer, we can haul that product. He's happy to do that. We can be incredibly flexible for him. And when you think about the towns that we service from a grocery perspective, you can really start to gauge the level of concentration we can put into that market once we put our minds to it, and we're really excited about what that can be as well.

Cross-border U.S., we're doing that today. And that really started -- that would have been the first one we did. And a lot of that was because we didn't feel we were being treated fairly from a freight rate perspective through COVID. And we decided to take more control of our freight, get our trucks -- put our own trucks on, get a pickup in the U.S. and then bring our own produce back. And we're now doing that to the tune of almost 1,000 loads a week. So it's a pretty significant piece of the business for us.

And because we're a little worried about what's going on south of the border, about 20% of our drivers are located south of the border. And so if there is an issue at the border, we can dispatch American drivers, both from Great Falls, Montana, and Indianapolis, and we're going to continue to grow that. So again, we're pretty bullish on where that can go.

And then the U.S. brokerage, very, very new for us. And that really comes about because a lot of customers say, well, I don't mind giving you my Toronto to California load, but I need you to take Toronto to Ohio. I need you to take Toronto to Kansas. If we don't have a ready backhaul on our own here, then we need to find a way to help them with that load. And that's -- we do that through what's called freight brokerage. And that's -- while, again, it's in its infancy, there's a tremendous amount of growth, especially because you're servicing the U.S. market, 10x the size of Canada. So again, we feel really good about that as well.

So look, I've bored you long enough. You guys want lunch. I don't blame you. It's really good lunch. Roy, did they get that puddle cleaned up? You said they were in the tent. There you go. So that's what I got for you. Hopefully, a Q&A, you've got good questions. I'm not a very good speaker, but I'm a pretty good question answerer. So love to hear it. Thanks a lot.

All right. Yes. Thanks, Rob. Your guys got that cleaned up and they arranged for the rain to stop. So we're good to go now. So we're running a little bit behind. We'll cut the lunch time down to 45 minutes, if that's okay with everybody. So we'll adjourn out the same door you came in, you'll see the tent on your left, follow the crowd. There's some great food waiting, and we can continue the conversations offline.

Enjoy, and we'll see you back after lunch. Thank you.

[Break]

All right. Good afternoon, everybody. Okay, back. Welcome back. I hope everybody had a great lunch. Mary's incredible team helped put this together. We brought in one of our company chefs, known affectionately as Chef Tom, who curated the meal and put everything together. So I hope you guys all enjoyed it, and you've identified some good finds for your shopping basket this weekend. We're going to bring it all together now. The last official portion of it will be Richard Dufresne, our CFO. I'll get him up here in a second. He's going to bring this whole thing together and talk about our financial framework and consistency.

You might have noticed an odd sight in the food tent this afternoon. We're lucky enough to bring Michael Van Aelst back from retirement for a day. Apparently, it was raining in Montreal and he couldn't golf. So he's going to join us today, and he's going to lead a fireside chat with our Chairman, Galen Weston, after Richard's done. So it's going to be an exciting afternoon.

And with that, let me call Richard up to the stage.

Thank you, Roy. Good afternoon, everybody. My name is Richard Dufresne. Whoop. That one? Okay. My name is Richard Dufresne. I've been with the group for over 15 years. Long enough to know this business quite well, but not long enough to stop being excited about what's to come. My goal this afternoon is to connect all you've heard this morning with our numbers and describe why we all think that the great performance we have historically is going to continue going forward. So if I start, all of you have seen the strong performance we've delivered over the years. Consistency has been a theme, but the nature of our business being necessity-based retail leads itself well for stable growth in earnings.

But our performance is strong despite us having significantly invested in our business over the last few years. We've invested in our stores, we've invested in supply chain, we acquired Lifemark, we are investing in T&T U.S., and we've also ramped up our AI initiatives. So despite all of these investments, we delivered consistent performance. This investment phase is essentially peaking now. Many of you are familiar with our financial framework. This framework was introduced years ago as a concept to reflect the specific nature of our business. Our business is inherently low growth, but to deliver acceptable returns to our shareholders, we determined that we needed to deliver more absolute earnings growth.

The way to do so requires us to grow our expenses at a lower rate than our top line. We refer to that as operating leverage. Through operating leverage, we can transform a 2% to 3% top line growth into 4% to 6% EBIT growth. Further, because of the significant excess cash flow we generate with our business, we can grow EPS growth by another 2-plus percent. So this is a framework. It's not financial guidance because if you look what we've been doing recently, our top line growth has actually been way higher than that. We're closer to 4%, and that's because we built many new stores. So the concept is more important than the numbers, and that's what I wanted to convey.

To illustrate numerically what I mean by the framework, like, we generate about $65 billion of sales and about $5 billion of EBIT. So to deliver 8% to 10% EPS growth, we need to grow EBIT by $250 million to $300 million a year, like, that's exactly what we need to do. So very roughly, we expect Mel and Frank to deliver about $100 million of EBIT growth year in, year out. Gregers should give us around $150 million of EBIT growth and our growth businesses, the balance. So if you were to look back in the last 3, 4 years, this is more or less what we've achieved like with a bit of puts and takes, but that's how we've done it. So this is actually a very crude outcome of the very rigorous annual budgeting process that we launch every spring. But that's how we look at our business year in, year out.

Since the EQ deal just closed, we thought it would be maybe too early to invite Chadwick to talk to you, but we have Daniel with us today. So thanks for coming, Daniel. But here is financially what we're trying to achieve here. Again, roughly, PC Financial, we're generating about $120 million of earnings. We expect that our 25% share in EQ, which we will get to at some point next year, will generate more or less the same $120 million of earnings, but with higher growth and less volatility. And on top of that, we expect, and that's -- I'm looking at you, Daniel, right now, that you will issue more Mastercard annually than we've done in the past. So if Daniel issues more Mastercards, we're going to be issuing more PC Optimum points, which will translate in more sales. So win-win-win. So this is what we're trying to achieve here.

This is -- I want to be very quick on this one. It's just very interesting to simply compare our financial performance with some of our peers. Like, our share price CAGR is best-in-class, as is our EPS growth. And what it shows to me is that we're clearly ahead of our Canadian peers, but we also fare quite well when we look to our global ones. Capital allocation is a process we take very seriously. For each decision, we challenge not only the cash flow, but also the amount invested. And you've heard about this a little bit this morning. Many times over the past few years, we found ways to improve our returns, not by generating more sales or earnings, but spending less capital to generate a similar level of return.

This is not easy. It's actually been difficult, but it's proven very useful for us to accept a number of projects that otherwise would have been rejected. And bottom line is the discipline that we've instilled on ourselves has allowed us to deliver an improving return on invested capital over the last 5 years. Bottom line, though, the most important metric that drives our ability to continue to deliver on our strategy remains our new store performance. At the end of this year, we will have opened 200 new stores in 3 years. About half grocery stores, mostly discount, and half Shoppers. Essentially, all of these stores are doing well. So this is giving us the conviction that discount food stores and Shoppers Drug Mart boxes continue to resonate with customers.

We, therefore, plan to continuing to open new stores at that pace we've been going at, 70 to 75, which is probably 35 new stores, 35 Shoppers. But I need to remind everybody, this is -- on the food side, this represents only 1.5% of square footage growth. I said it, CapEx is peaking. We've ramped up both our new store and our supply chain capital. Our supply chain program will slow down considerably once our second automated DC in Caledon opens in 2028. Caledon will be essentially a carbon copy of this building. So -- but our new store capital will continue. So therefore, starting in 2028, you will see a meaningful reduction in our CapEx, and this additional cash flow will be allocated towards share buyback.

Whichever way you want to look at Loblaw, we generate significant amount of free cash flow. With EBITDA close to $7.5 billion, CapEx of $2 billion, dividends of $600 million, we still buy back more than $2 billion worth of our stock every year. All of this while maintaining a very strong balance sheet. We have the right strategy. Why? On core retail, Frank is running a lower growth but growing EBIT business that is gaining market share versus its peers. Mel is winning a lot of market share through her square footage growth while slowly growing EBIT margin as it drives scale. And by the way, I have said it, she is only adding 1.5% of square footage growth. Gregers is running a business that has tailwind in both pharmacy and beauty.

If you go to the far right of the slide in our growth businesses, all of them are growing earnings at double digit. All are reaching some form of scale other than T&T U.S., and EQ should start contributing to our growth hopefully in 2027. And then as you go back in the middle, our digital business, namely food e-commerce, leads in market share. And you look at personalization and connected health care, this is clearly differentiating us from everybody. And I'm sure you've got this, we are at the forefront of AI of any Canadian and maybe any North American retailer. You heard April, private label leadership will fuel -- continue to fuel growth as it's done in the past, but I feel we're just on the verge of actually ramping it up even more.

And last but not least, sourcing is now harnessing our scale and driving real business results. So it's hard for me to not be excited at what's coming next for Loblaw, but I still have one more slide. We feel our framework has longevity. Why? I just walked you through how I think about our core retail business. 2025 and 2026 were harder years for us because of the drag of ramping up new stores and ramping up a new DC. Also, T&T U.S. is also a real drag on earnings, okay? 2027 becomes relatively easier as those drags will be gone. I want to be very clear. We're not changing our framework. The framework stays the same.

It's just that from your perspective, we had to work much harder in 2025 and 2026 to deliver our framework. So that is now behind us. As we project our growth businesses, because they are growing double digit, we see them representing 20% of our earnings 5 years from now, versus about 10% today. So to conclude, we feel very well positioned in our markets. I hope you feel that we have the best team, and therefore, we should continue to perform.

And now I will invite Galen and Mike for the fireside chat. Thank you.

I can get around here.

Welcome back.

Thanks, Galen. Feels different this time.

Yes, yes. You are not usually up on stage.

No, and I'm wearing golf pants. A little bit of symbolism there.

Yes.

Great to have you here.

Yes, great to be here. Did you enjoy your lunch? I don't know what it was, but I didn't eat. I was like, I tried to eat and then I was chit-chatting with people. So I didn't get to eat very much. But it was -- so Mary, and to your whole team, thanks. It was really terrific.

Yes. Difficult to eat in those situations. But -- so it's great that you're here in front of shareholders and giving us some views, and I certainly would have appreciated it if I was sitting on that side. And particularly because as Chairman of the Board and the largest shareholder at Loblaw, you have a significant vested interest in the businesses that were discussed today. So I'd like to explore both perspectives. So if we start off, as a fourth generation leader, you've often said that as a family business, that means thinking in decades, not quarters. Do you see any tension between the long-term view that you take versus the priorities of investors who -- many of which have much, much shorter views?

I was asking, what's the average time horizon for people in the room? Will it be like 3 to 5 years? He's like, no, more like a quarter or 2. Maybe a couple of people might get up to 2 years. So I mean, I think from a big picture perspective, yes, you could imagine that there's a tension between sort of a generational outlook versus a quarterly or even sort of an annual outlook. I think where we are now, that tension is at a historic minimum. And why? Because of the financial framework that Richard articulates and reiterated here today. We've designed that framework intentionally, to have a sensible set of targets.

We're not trying to maximize profit in any given year. What we're trying to do is to deliver consistency of performance and anchor all of our planning around that framework. And in doing so, we create for ourselves the capacity to do what we need to do to sustain the business for multiple quarters and ultimately decades, which is a really important priority for me and is something that Per and I are completely aligned on in how we think about that framework. He was the one who came to us and said, actually, we need to put a bit more top line growth here to ease the pressure on that operating leverage just a little bit, because if there's too much pressure on the operating leverage, it can lead to us making short-term decisions that will negatively impact that kind of, generational outcome.

And so as Richard described, over the last 4 or 5 years, we've been on an investment peak. It's the fact that we've been making investments in technology for 20 years and in our estate, in SAP, in our warehouse management systems, in our new supply chain distribution systems. Those are the infrastructure foundations that have allowed Lauren and David, and others to build on top of to move in these really innovative areas so rapidly. And so we're going to try and strike the balance all the way through. And if that means that we deliver 10% instead of 15% 1 year because we want to push value to the consumer, we're going to do that if we feel that strategically, we need to do it. And so I don't see any tension. Certainly, there's no tension between me and Per and between me and Richard. And our goal today is to make sure you don't feel any tension between us and you guys. Consistency is what we're committing to, and that's the basis on which you should be investing in Loblaw.

Certainly makes it a lot easier to invest long term when you have the short-term results, right?

100%.

So it was about 3 years ago that you stepped back out of the CEO role and Per stepped into that role. I always find it interesting to think about how you let go and how you transition that. But can you provide some insights into how you work together with Per? Also, how you are investing your time within the company and some of those areas that maybe you're having a harder time letting go as the other Chairman might not.

Maybe I just won't let go of a couple of things. So no, that's a good question. So first of all, let me say this, Per joined us 3 years ago, and he is an absolute pleasure to work with. And for me, that is an incredibly. It's a gift, really. And when you combine that with how exceptional he is as a retailer and as a leader, I count myself extremely privileged as the representative of the ownership group of the company. And what Per brings in addition to his retail excellence, is he's got great values, which are really synergistic with my own approach and my family's approach to how to do business. He's super competitive. So he always wants to win, which is kind of, exciting and it keeps us all on edge, I think, making sure that we feel the same competitive intensity even at my level.

And then we have different strengths. And I think we have found over the last couple of years that those strengths are very compatible. They're very synergistic with one another. And it means we spend a lot of time chatting and talking. And as someone who feels such a generational sense of responsibility for Loblaw, to be working with somebody who wants input and wants to sort of, brainstorm on things, it's a really lovely combination. And Per, I appreciate it, as you know, very, very much. And so what -- so how do we work? I mean there are a few places that I stay particularly interested in. It won't surprise those of you who know me. The work that the organization has been doing around its digital ecosystem, PC Optimum, PC Express, this recent launch of PC Health and the AI chat assistant.

These are areas that have been really close to my heart for many years. And Per and I've been working really closely together on those to continue to push the level of ambition and aspiration so that we can take advantage of this technological advancement that we have. So that -- those are 2. Along with Sonya, I'm very passionate about opportunities to improve the Canadian health care system and the combination of our digital capability with our physical footprint, which includes Lifemark and obviously Shoppers Drug Mart. That's an area that I spend a lot of time with Per and the team on.

And then the third one, April and I were just chit-chatting about, as a onetime, long-time spokesperson for President's Choice, I get a disproportionate number of fabulous President's Choice lunches where I get a chance to talk to April about what she's doing and where she's going and what she's thinking about.

And we have very similar aligned ideas around opportunities going forward. So those are kind of, the 3 areas I spend kind of the detailed time in Loblaw on. And then, of course, when it comes to the long-term strategy, capital allocation, should we be thinking of any materially different steps, I'll collaborate very much with Richard and with Per on those things. And then we got a lot of other things going on in the group and the organization. Richard and I had our first Board meeting at EQ Bank just a week or so ago. We're doing some really interesting things at Wittington from a private capital allocation perspective. Danni talked about one of the areas of partnership that Wittington's private investment group is working with Loblaw.

So I guess I feel we have a group with this very attractive construct of a private holding company with a tremendous amount of financial flexibility. We have a public holding company that gives us enormous flexibility around the structure and ownership of our public operating businesses. And then we have Loblaw generating a tremendous amount of cash flow. And we have Choice Properties, which has just announced a very significant transformational deal and also generates a significant amount of cash flow.

And so one of the things that I do at George, along with Richard and others, is how do we optimize this incoming cash flow and make sure that we use it to strengthen the long-term position of the operating businesses and the collective. And I think that the group is very much in a situation where the whole is greater than the sum of the parts. And that's been a long journey to get to that place. It's no surprise that Choice describes its relationship with Loblaw as its single biggest strategic advantage. And we're increasingly seeing synergies between Wittington and Loblaw and Choice that are also driving value for Loblaw and, of course, other parts of the group.

So since you brought up the structure, maybe I'll jump to that question, and I have a feeling it will be a pretty short answer. But I was asked over the years, what's the purpose of Weston staying public? And particularly, I think as you've made acquisitions at Loblaw, you have made acquisitions at Choice, both businesses are getting to the point where they probably can't make too many more acquisitions, at least in the immediate disciplines. So what is the purpose from your perspective of keeping Weston public?

Yes. I mean you're right. We do get asked that question a lot. So thanks for asking it again. But so George is a 97-year-old public company, okay? It was listed in 1929, which seems weird. I didn't know they were doing IPOs in 1929, but apparently, they were. And I share that because the current circumstances of George Weston with 2 terrific operating businesses, quite different to the circumstances of George, say, in the 1950s. Over the course of 100 years, we've been in the pulp and paper business. We've been in the fishing business. We've been in the milling business, the sugar business, the packaging business, the chocolate bar business. We've basically been in almost every business, the bakery business, cookies.

We have a long history of doing different things inside and through George Weston. And as part of that architecture, we've had multiple public companies inside sort of, the George Weston holding company structure. And that flexibility has been extremely valuable to the family over that kind of, generational outlook. And so just because it doesn't look that it looks a little bit redundant today doesn't mean that it is going to be redundant 25 years from now or 30 years from now. It serves a very effective purpose for us as a family. So I see no time horizon right now where taking that entity out of the public markets would make sense. The holding company discount is 14%. And so you guys will get a 14% bump if I was to buy out your shares in George tomorrow.

Over the next 10 years, we'll do a lot better than 14%, in our view, by holding George and benefiting from the growth and success of both Choice and Loblaw. That's certainly how I see it. I don't really want to tie up another $20 billion or whatever the number is, $10 billion in George stock right now. I'd rather have that flexibility to put that cash to work to support other ambitions that we have, whether in Loblaw or at Choice or privately.

Okay. It is a bit longer than I expected.

I don't know, you said you wanted the exact, so anyway, there you go.

There you go. All right. So back to the operating business. What gives you the greatest confidence in Loblaw's long-term outlook? And then at the same time, that might not take too long, but at the same time, what's the biggest concern that you're looking at that you're seeing lately? Is it regulatory reform or potential for new competition, consumer health, a lot of risks out there?

Well, look, I think it's exactly what Richard put up on the Board. Why are we all so -- have such high conviction around Loblaw? We have a terrific core business in food and drug. That core business is being aided by a small but meaningful new store growth tailwind. And in retail businesses, a new store growth tailwind is profoundly helpful. And Per brought a type of thinking to our strategy, which was, hey, we can do a little bit better here. We can do a little bit more here and take, as I said, that pressure off the SG&A. So the fact that we've got that going and the fact that it is working as well as it is, is the first thing that gives me confidence.

The second is that noncore business growth, okay? So -- the fact that, that is going to increase, let's say, from 10% of total earnings to 20%, should give everybody here a sense of, wow, these guys have another noncompetitive, highly accretive, fast-growing pool of earnings growth that has reached a level of scale that makes it meaningful to the overall enterprise. And so that's the second pillar, which has been strategically in our minds now for 8 or 10 years, but is now actually achieving the level of contribution that we wanted, and we'll move beyond that. So those are the 2 things that give me lots of conviction. What do I worry about? Well, we have great competitors here. Despite what the federal government says, we compete aggressively with Walmart and with Costco and increasingly with Amazon.

They all have unique strengths that they bring to the market that make them difficult to compete against. But I'm not afraid of them. I don't think our management team is afraid of them. We also have great strengths that we bring to the market to effectively compete against them. So we're hypervigilant. We watch them very carefully. We respond to them, and we play our own game as well. I probably worry more at my level about the things that are outside of our control. Hyperinflation in cost of living and particularly the cost of food, that is something that I do occasionally lose sleep over. It's out of our control, and it has a tremendous capacity to impact the way that our business functions, both in terms of how do you manage costs in the context of sort of, a difficult inflationary environment.

And then what's the political and regulatory response to that type of volatility, I worry about that a little bit, too. I don't see it imminently, but there's so much destabilization in the world, you have to keep an eye on it. And it makes investing every extra dollar in lowering prices or putting low-priced food formats into the country ever more important. It's an imperative that not only we are seen to be lowering prices for Canadians, but that we are actually lowering prices for Canadians. That's our best defense against that type of uncertainty. And I know Per and the management team are totally dedicated to that.

Okay. From your perspective, and I know we've talked about a lot of areas of growth already today, but are there any significant investments that weren't discussed today that Loblaw or Shoppers Drug Mart might need to maintain that moat that they currently have? And then is there anything from a geographic growth perspective that people should be thinking about and anything that's off the table?

Yes. I think we have a great plan. Our framework gives us the capacity to make the necessary investments to drive the core strategy forward. So I kind of -- there may be 2 areas that we would ask ourselves about regularly. One, is there an opportunity to deploy capital in inorganic places that increase the size, scale or growth rate of some of these noncore businesses? Lifemark is an example of an adjacent noncore business, maybe there's an inorganic opportunity to scale that up. Supply chain. I don't know, maybe Supply Chain as a Service. Rob comes to Per and Richard and says, you know what? We can do more if we acquired some supply chain assets.

So we ask ourselves, are there places where we can grow our adjacent businesses more effectively by deploying some inorganic capital? So that's one. But I want to say, this isn't me saying this is what we're going to do. This is just me saying we ask these questions. Is there an opportunity? Don't know. We've been asking them for 10 years. We've only done a couple of things in that respect.

The second one, are there other geographies that we would consider? We're a big business. I think it is important to ask ourselves that question on a periodic basis. I would just say this, that if we were going to deploy capital in another country, we would do so against a format, a concept or a business that we felt met accretive growth aspirations, that met accretive earnings metrics and that's something we felt had a really strong chance of winning. We're not going to go out there and buy a business in Loblaw that we need to fix.

This would be about businesses that we could confidently bring into the fold that would expand our geography and do so in a manner that was accretive to the financial framework, which would be the same, by the way, in any adjacent businesses in Canada.

Great. And I guess just to wrap it up, you've had the unique opportunity to lead this company as a CEO, you're the largest shareholder, you're now Chairman. What's the one message that you want to leave shareholders with today?

I think confidence. I hope that you've seen today a really talented group of executives who know their stuff like, incredibly well, that have a passion and energy that is both about execution and also about bringing excitement and innovation to the things that they do. And that if I'm excited, you guys should be excited and that you can have real confidence that if you were to put $1 against the Loblaw stock price, we will -- this team will deliver against their commitments from a financial perspective.

Great. Thank you. I think that's all our time.

Okay. Mike, thanks. I really appreciate you coming.

Great. We are getting to the end of the first session because the Q&A will not be recorded. So I'll just do a short wrap-up before we go to the Q&A. I just want to dwell a little bit with the framework. I always asked during launch a few questions that with all the great ideas that you guys have, how can you then manage to stay within the 8 to 10? Then if all comes true, which, of course, it will not, we hope and we work hard that it will, then why will you not deliver more? And I think to what Galen said, what we will do, we have a few levers to keep it down. If we were so lucky to do better.

We could invest faster in the U.S. with T&T. I know Tina, she will be very happy to do more than 3 stores a year. And with that growth rate and the performance that you're doing in T&T, then that will faster turnaround to be a great contributor to our profit. But also investing back in prices and in customers. That's something that we're already doing now because of the work that Danni is doing. So we have reduced a significant amount of prices in the East with the Real Canadian Superstores. As I said, we have a test in Newfoundland on Shoppers. We have a test in Zehrs. So we are investing back in our customers. When we do that, we will be better priced than a few of our Canadian competitors, and we will get very close to some of the others.

So by doing it, and hopefully, others can't follow us, we will be more competitive, and we will be able to basically support our revenue, not only in the short term, but also in the long term. Because supporting with better prices is real and something that customers want us to do. And we just started that journey. And it's so great like, last week, I was in Zehrs Cambridge, talking to customers, talking to our colleagues. Their excitement about us going out lowering prices, that's something that you really, really feel. It's great. And we can do it at the same time as a minimum, keeping the margin percentage. That's not going to be hurt because like, the AMS Sourcing in Europe, we will be able to take some of that profit to margin and more importantly, to customers.

Okay. So today, I think I will use the phrase that April used, like, if we can go from strong to unstoppable, then I would be really, really pleased. And I hope that you experienced a very strong and very diverse team with significant experience within each their field and also a team that are bringing new ideas. I think it's a good mix of long-term experience from Loblaw, some younger people from abroad. I think we have 4 Europeans up there with all their odd ideas. We have young talents from Loblaw, from Canada, who are pushing all of us like, you're doing, Lauren, all the time together with David. It's fantastic to be in a team.

And I hope also that you sense that we like each other. We like to work together. And when we like each other, when we like to work together, then we allow ourselves to push each other harder because we want a win together for customers. We want to win. We are not as -- what are you saying, Mel? We just want to -- don't want to lose. We just -- we want to win more. Yes, yes. That's how we are. And I think just some of the ideas that we have, whether it's right-hand side, it's full relaying in Shoppers. It's a new beauty concept that Greg is bringing. It's e-commerce in Shoppers. It's a strong pharmacy growth. It's the GLP-1s. It's our strong cost discipline. We haven't talked a lot about it, but Galen here alluded to it.

We are very disciplined about taking cost out. We're also using AI to take cost out. We need to get that SG&A leverage over time because it's so easy that it just creeps up. I mean when it's doing well, it can just creep up a little bit -- a little bit more. So we have a philosophy like, on the VP level, one in, one out. And we actually took our number of VPs down with some, I think from 210 to 160, 170 over the last year. So we can do more with less fewer. I would rather invest more people in stores and give customers more service. Then there's a new rule, the Hard Discount stores, it's a health care chat. What can they do to book more appointment at Shoppers? And then we have the Beyond strategy, why we are here today. What can Rob do with his supply chain?

You saw the $400 million up there. And I've never seen Rob promise a number that he hasn't delivered. So I trust in him and as much in his team to go about and do it. You saw Lifemark with Sonya, also a lot of great ideas. Tina, the excitement that you're bringing to your team, to U.S., I think you are in trouble, if any, right? And then the retail media. So we have those businesses that support us going forward. And again, going on, have you heard about anything? Of course, we are positive. We believe in the future. And I think we have a business that are very, very well balanced, no matter where the economy goes well or it goes sour because we have 1/3 is Shoppers, 2/3 is food. 1/3 of food is hard discount, 1/3 is conventional and 1/3 is our Real Canadian Superstore.

So we are very, very well balanced to meet the needs of Canadian. Well, of course, if customers have less money, if they suffer, our concept will be lower, but don't worry. We know it's an important number. And even if a little bit lower, we will do our utmost to deliver within our framework.

So I think with these words, I would say many, many thanks for you to show up today. It's much appreciated that you want to take a day out of your busy calendar to show up and listen to us and the team. So thanks for coming. And then probably close the online, and then we'll go over to Q&A. Thank you. And on the Q&A, so Richard and I will be up here, but I hope that you will ask questions that I can direct to the teams because you will meet him and me.

Good morning, ladies and gentlemen, and welcome to the Loblaw Companies Limited 2026 Second Quarter Results Conference Call. [Operator Instructions] Please note this call is being recorded on Thursday, July 30, 2026.

I would now like to turn the conference over to Roy MacDonald, Vice President, Investor Relations. Please go ahead.

Thanks very much, Colby. And I will also officially welcome you to the Loblaw Companies Limited Second Quarter 2026 Results Conference Call. And joining me this morning is Per Bank, our President and Chief Executive Officer; and Richard Dufresne, our Chief Financial Officer.

Before we begin, I want to remind you that today's discussion will include forward-looking statements, which may include, but are not limited to, statements with respect to Loblaw's anticipated future results. These statements are based on assumptions and reflect management's current expectations. As such, are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from our expectations. These risks and uncertainties are discussed in the company's materials that are filed with the Canadian securities regulators.

And any forward-looking statements speak only as of the date they are made. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than what's required by law. Also, certain non-GAAP financial measures may be discussed or referred to today. So please refer to our annual report or other materials filed with the Canadian securities regulators for a reconciliation of each of these measures to the most directly comparable GAAP financial measure.

And with that, I will turn the call over to Richard.

Thank you, Roy, and good morning, everyone. Before I begin with my remarks, I just want to acknowledge that today is the last day [ Michael Vanna ] before he retires. So I want to thank Michael for his long [ and ] support. And so while he's not officially on this call, I hear that he is listening, so enjoy your retirement, Michael.

Okay. So we delivered another strong quarter of consistent operational and financial performance. The quarter was characterized by solid revenue growth stable gross margin, a flat SG&A rate and strong adjusted EPS growth. We delivered this performance while we continue to invest in new stores, pharmacies and optimizing our distribution network. All of our businesses have momentum, we feel good about the rest of the year, and our 2027 plans are beginning to take shape.

In the second quarter, revenue, including PC Financial, was $15.3 billion, up 4.1%. Total company adjusted EBITDA increased 5.1% to $1.9 billion and adjusted EBITDA margin improved by 10 basis points. Adjusted diluted net earnings per common share grew 11.9% to $0.66. On a GAAP basis, revenue was $15 billion, up 4.1% and diluted net earnings per common share were $0.64, up 8.5%.

In Food Retail, absolute sales grew 3.3%, supported by new store growth, while same-store sales grew 1.6% and which includes a 20 basis point drag from the right-hand side. Our hard discount banners continued to perform well in the quarter with comparable sales close to 4%. Maxi and No Frills remain well positioned for customers focused on value, supported by strong execution in both existing and new stores.

As recent openings mature and enter a comparable store base, they are delivering strong double-digit same-store sales growth. This performance reflects the strength of our expansion strategy. Food retail traffic and basket were both positive on a same-store basis, and we remain pleased with our market share. We continue to gain share in hard discount, and we are outperforming our peers in conventional.

Our internal CPI like food inflation metric remains lower than Canada's grocery CPI. Our actual quarterly in-store average article price has now been consistently lower than CPI inflation for more than 4 years. This reflects the relevance of our promotions, our effectiveness at pushing back on unjustified supplier cost increases and trade down by consumers. During the quarter, we opened 11 food stores, including 7 Maxi and No Frills stores, 1 T&T store in Canada and 1 T&T store in the U.S. We also opened 3 new Shopper Drug Mart locations. These new stores contributed to a net positive impact on our grocery square footage of approximately 1.5% and 2.6% in pharmacy.

Our new stores continue to perform very well, and we are currently on track to open about 75 stores this year. Our conventional banners also performed well, delivering positive same-store sales growth. For [ notes ] and T&T remains strong, helping our conventional banners continue to outperform their peers. In Drug Retail, absolute sales increased 6.1%, while same-store sales grew 4.6%. Pharmacy and Healthcare services grew same-store sales by 7.5%, driven by continued strength in specialty and chronic prescriptions.

On a same-store basis, prescription volumes increased 3.4% and average prescription value increased 5.5%. Specialty prescription growth continues to lead our pharmacy performance. Within this category, we are beginning to see the impact of GLP-1 drugs going generic. It's still very early, but the initial indications are encouraging. Lower generic pricing is being offset by higher volumes, and we expect higher revenue, higher gross profit dollars and higher gross margin rate. We will provide a more detailed update at our Investor Day in September.

Lifemark delivered double-digit sales growth as it continued to experience strong growth in the number of patient visits to its clinics. Front store same-store sales grew 1.3%. Prestige cosmetics, OTC and [ baby ] were strong, while the timing of the Easter ship was a headwind to sales.

The underlying strength and profitability of the front store business remains solid. Online sales increased 19.3% in the quarter driven by PC Express Delivery, PCX Pass, our third-party marketplace partnerships and the expansion of [ Pick & Deliver ] in marketplace locations. Retail gross margins were stable, up 10 basis points.

Retail SG&A as a percentage of sales was flat at 20%. This reflects operating leverage from higher sales offset by incremental costs related to opening new stores, the ramp-up of our automated distribution facility and the year-over-year impact of certain real estate activities. The ramp-up of our [ East Gidembury ] distribution center continues to progress, and we're making progress on the construction of our second new distribution center in South Caledon. These remain important investments in the long-term capability and efficiency of our supply chain.

Turning to financial services. Subsequent to the end of the quarter, we completed the sale of PC Financial to EQ Bank. As of closing, Loblaw owns approximately 19.9% of EQB issued and outstanding common shares. We expect to increase our ownership to approximately 25% over time. In connection with the transaction, Loblaw received $625 million in cash, representing the excess -- the release of excess capital, cash consideration from EQB and the collection of certain commodity tax receivables. Starting in the third quarter, we will no longer report PC financial results, and we'll begin to recognize our proportionate shares of EQB's net income within our consolidated financial results as financial services remain important to Loblaw's strategy.

As we begin this new partnership, we are excited to continue expanding the benefits of PC Optimum while participating in the future growth of EQB. In the quarter, we repurchased $552 million worth of common shares under our NCIB program for a year-to-date total of $1.2 billion. Our return on equity was 27.2% and our return on capital was 12.5%.

Looking ahead, we continue to expect our retail business to grow earnings faster than sales and adjusted net earnings per common share growth in the high single digits. Because the PC Financial transaction closed pathway through the quarter and our reporting calendars are different, we'll only recognize 1 month of EQB's earnings in the third quarter. Despite this timing-related headwind, we remain confident in our ability to deliver net earnings per common share growth in the high single digits.

We expect to continue to deliver consistent top line sales growth in the third quarter and remain confident in the long-term strength of our retail business and our ability to deliver on our outlook for the year. Consistent growth in free cash flow remains one of the defining strengths of our business. It provides us with the flexibility to simultaneously invest to deliver our long-term growth strategy while maintaining a strong balance sheet and returning capital to shareholders.

We believe this balanced approach to capital allocation is a key competitive advantage and an important driver of long-term shareholder value. Given the strength of our balance sheet and growing free cash flow, we now expect to repurchase $2.1 billion of our shares this year, an increase of $200 million to our initial plan.

I will now turn the call over to Per.

Thanks, Richard, and good morning, everyone. We are very pleased to report a strong second quarter for 2026. What stands out to me is the quality of execution across the entire business. We're staying focused on the fundamentals Its strong stores, its disciplined growth and delivering our customers relevant value and offers in the way they want to shop.

The consumer environment remains consistent with what we have seen over the past several quarters. Customers are looking for value using promotions, engaging with PC Optimum offers and making choices across the basket to manage their budgets. That puts a premium on execution. We recognize that customers can choose where they make their purchases and spend their hard-earned dollars. And they are responding to retailers that understand and anticipate their needs.

Consumers have on retailers that offer great value, meaningful service, compelling offers and unbeatable selection. We believe we are delivering on all these parameters and customers continue to reward us for meeting their needs. Every day, our merchant sourcing teams and suppliers work together to balance delivering affordable products for Canadians while growing our domestic supply chain network.

We continue to onboard new Canadian suppliers, invest in local production and help smaller businesses scale alongside us. I'm incredibly proud that more than 70% of the food we buy be sourced from or prepared in Canada. And we're always looking for opportunities to increase that number where it benefits our customers. Supporting Canadian suppliers and delivering value to customers, are not competing for [ uses ]. They do go hand-in-hand. It's about making thoughtful choices that strengthen our economy while continuing to deliver the quality, selection and value our customers need and expect.

We continue to see suppliers come with cost increases, and our approach remains disciplined. We carefully assess every proposal that only accept increases that are supported by the underlying costs. As a result, we have identified a successfully pushed back more than ever on unjustified cost increases requests, saving hundreds of millions of dollars for our customers.

In food retail, our discount banners remain very well positioned. [ MacNeil ] continue to help customers test their budgets, and we continue to see strong customer response as we add capacity in underserved markets. We opened 4 No Frills and 3 Maxi stores in the last quarter. As an example, we are proud to bring the first ever hard discount store to the community employs Minister in Alberta.

We also opened our second Maxi in new [ brunch ] where we converted No Frills and [ Bastos ] and saw sales more than double under the new Maxi banner, a bit better than we expected. And this morning, we opened a new [ novel ] store in Dothan, Ontario, which will be the first [ Heartist ] store in that community, providing customers with more choice and the option to save significantly on their groceries.

As Richard mentioned, our commercial banners are also performing well after lapping a very strong performance in quarter 2 last year. T&T remains one of the most exciting growth opportunities that we have in the company. and customers' response continues to be strong, both in Canada and in the U.S. In June, we opened our first T&T location in California, and it has been a huge success. The [ Sense ] store generated the highest first week sales of any store opening in the history of Loblaw. Hundreds of customers were lined up for hours on the opening day.

And the [ MAA ] was there to help cut the ceremonial ribbon. We plan to open 2 more California stores in '26. We are and stay excited to bring TNT experience to new communities. In Drug Retail, [ Sebarok mid and Pharmapre ] continue to grow. It's great to see the role our pharmacy teams are playing in improving health care delivery in Canada. Customers want convenient access to care closer to the home, and our pharmacists and health care professionals are increasingly part of that solution. In the quarter, we brought that convenience to 3 new communities, including a new smaller format pharmacy and care clinic in a new residential development in the west end of Toronto. In France, we continue to focus on making the offer more relevant for customers.

One example is the full refresh we are testing in select server stores. with more SKUs achieve prices. Early results are encouraging, and we plan to expand the test this year. It is practical retail work, listen to customers, test the offer, learn quickly and scale if it works. Our pharmacy health care services business continues to perform very well.

Our chronic prescription volume continues to grow in the mid-single digits, while Specialty and Healthcare Services delivered strong double-digit growth. As the Specialty segment begins to evolve with the introduction of generic alternatives in the GLP-1 space, we have an opportunity to play a meaningful role in helping Canadians better understand their treatment options and in partnership with health care providers help them benefit from safe and appropriate use of these treatments.

E-commerce growth remains very strong at 19.3%, Our clear and collect sales remained stable, while PCX increased more than 40%, led by our PC Express delivery and third-party options. We're seeing improving efficiencies and profitability as our growth accelerate in both third-party [ Pick & delivery ]. Shoppers, we recently rolled out our Buy Online [ Pigin ] stores to 500 stores, offering customers additional convenience in the front door shop while driving an incremental in-store purchase.

Looking ahead, we are confident that consumer preference for discount is a long-term shift. Our momentum on investing in this area and the differentiation of Maci and No Frill banners position us very well for continued growth. We believe the diversity of our banner portfolio, combined with our scale, loyalty program, control brand and execution puts us in a very strong position.

As an example, customers have really embraced our [ Somers Insiders ] program. And this is the best and most successful program so far, and it's also bringing us a lot of new customers. I'm proud to add that one of our top-selling insider products this season is our PC cherry tomatoes and these delicious online wine carat tomatoes are greenhouse grown right here in Canada.

And on tomatoes, that actually reminds me that our president of [indiscernible], whenever she asked about what he does, he answer, I'm just here to sell tomatoes. And trust me, we are selling tons of tomato in [ heart decel ]. On a more serious note, our performance this quarter reinforces our confidence in the year. We are serving our customers well, investing with discipline and delivering consistent performance across the business.

I want to thank our colleagues across stores, distribution centers, pharmacies, clinics and store support offices. Their hard work and dedication are what allows us to deliver for our customers every day. With that, we will open the floor for questions. Thanks a lot.

Thank you, Per. Colby, if you don't mind introducing the Q&A process again, please?

[Operator Instructions] Your first question comes from the line of Mark Carden with UBS.

So to start, can you guys walk through any shifts you're seeing with respect to the health of the consumer? You called out some continued challenges on this front. Any shifts in spend by income cohort, how about with respect to trade between banners or from branded to private label?

Thank you for the questions. And our customers, it's more or less in line what we have seen so far this year. There are a few examples that customers, they are they are looking more and more for value, more for a discount. That's also why in the way that we work, we are applying more value both to our discount stores, but also to our [ continental ] banners and to reach a point before having close to a 4% discount comp growth. I think that's approved to that. But we are still seeing the customers there.

They're going for the promotions. And we have seen an increase in our private labels. And also, we're seeing some shift in patterns how the shop a new insight that we just revealed a few weeks ago was that customers are buying more and more into the frozen veg area. So it's more than 500 basis points growth in the frozen beds in our hard discount banners. So those customers shop there they're trying to mitigate their inflation.

And they're doing that also proof that our internal inflation is much lower than the external range. So I would say, customers, they stay conscious, they stay focused on value. it's more or less the same as last quarter with a little bit of more comp to the discount. But that's also because we had a very strong comp last year of 2.5% also on our conventional banner.

Got you. That's great color. And then at this stage, how are you thinking about fuel costs for the balance of the year? How much of an impact could higher diesel costs have in your P&L just given nonsettled situation in the Middle East?

It's very hard like prices went up and then they start to go down again, and now they're going back up. So it's very hard to predict. But like when you look at inflation year-to-date. It's still pretty stable. So -- but as we said in previous quarter, if this lasts longer than expected, like you're going to have -- you're going to see an impact. But right now, we're still seeing our inflation below 3%.

Yes. And I would add to that, that we have only seen a few of our suppliers coming with cost increases because of fuel. But of course, as Richard said, if it's continuing, then we will expect a few more of those cost increases that, of course, we will pushback on, but we would expect that, but we don't expect that inflation will increase compared to where it is now.

Your next question comes from the line of Irene Nattel with RBC Capital Markets.

Just following up on the last question. So you said comps and a hard discount were up 4%, which implies that conventional was pretty solidly sort of negative. You just called out the 3.5% comp last year on the promo, but how should we be thinking about conventional and whether were modestly positive or modestly negative? And how -- what are the key initiatives to drive value in that channel?

Irene, Per hinted like I think our conventional business continues to be quite strong. I think when you look at comparing it to the comp last year, like Per mentioned that at the total comp was 3.5%. Our comp and conventional in Q2 of last year was actually higher than our comp and discount, okay?

And I won't go back as to why everybody knows why. So that is queuing a bit what's happening now. So from a comp perspective, you'll see -- and that effect that we saw in conventional started in Q2 of '25 and lasted for also Q3 and a bit in Q4. So you'll see that affecting the reported comp -- but like you look at our top line performance and you look at our market share performance, it sort of signals that our business continues to be quite healthy.

Yes. And I would add to that, that we do continue to manage our business to deliver against our financial framework with the comp sales that we are achieving and rest assured that the comp sales will remain as a really key metric for us. And in the quarter, there were several moving parts, I think, influence our performance.

But on market share, as Richard said, that we gained market shares with our discount banners. Were better than our peers in our conventional business. And overall, we did gain share in the quarter. And then there was a few factors as mentioned in our script, that we had a negative impact from the Easter shift. We had some headwinds from lower tobacco and liquid sales. And then we are also right now seeing a headwind from tariffs impact from last year.

Remember, we increased prices on American products directly imported because of the tariffs. So they were increased by 25% last year. It disappeared again in October. So there's a short impact swing of about 40 bps right now. It has no profit impact, and that will disappear again in October. So we actually feel really strong about our comp sales as well.

That's great. And I just also want to clarify something that was said in the opening remarks about shoppers and the impact of the GLP-1s, you said that you expect total revenue to be positive, notwithstanding the pricing headwind, which implies that you expect volume to more than offset. Is that correct?

Yes. Actually, like we started to plan 2027. It's still early days, okay? So we're using just preliminary data. But like our data is telling us that next year, GLP-1 sales despite the price decrease, should grow double digit, okay, in dollars. And that you're going to see gross profit dollars and gross profit rate grow way more than that.

Your next question comes from the line of Tamy Chen with BMO Capital Markets.

So Per, Richard, it sounds like with the food comp this quarter, that it was more a function of the year-over-year laps, Doesn't sound like the consumer changed sequentially as gas prices at the pumps increased. Is that fair to say? And I'm also wondering if there's anything to call out in competitive dynamics. I think we've seen on our end, Walmart price a little bit more aggressively lately.

I think the Market Day stays very rational. And I think you're right, not a lot has changed to the last quarter, and there are some different impacts in this quarter.

Okay. Got it. And my other question is, where are you in terms of your phase of higher square footage growth for next year, should we expect that percentage growth to decelerate versus the last 2 years? And how would you characterize right now the industry's pace of square footage growth?

We're still running on food at about 1.5%, like -- and pharmacy is growing a little bit faster. Like we said 75 stores this year, like we think our number next year is going to be probably very close to that also. So I think the pace will be stable. We don't see it accelerating or decelerating.

And it's -- remember, it's in our base now. So as we have said several times that in the beginning, when we're ramping up building those stores, it will be will be a headwind. But over time, of course, there will be a tailwind because we don't add additional depreciations compared to the base.

Your next question comes from the line of Vishal Shreedhar with National Bank.

Just a quick clarification. And I think I know what you mean, but I just want to clarify, you said that the GLP sales dollars next year is intended to grow double digits and gross profit dollars way more than that. But you're saying within double digits but greater than that level of...

We expect gross margin rate and gross margin dollar will grow more than top line growth. That's what we mean.

Yes. Okay. With respect to the cannibalization within your comp associated with the square footage growth. Are you able to calculate that? Or do you have an estimate of that internally?

Yes, we do. We do have erosion estimates in our plan. And so far, we're doing better than our internal estimate.

Okay. So are you able to share what the impact is on the comp associated with the square footage growth that you're putting in?

We don't measure it like that, but -- so we don't have that number. Like we measure it as a percentage of sales. And so -- and that's the planning assumption we have, and that's what we track. -- and we're doing better than our...

And it's not a concern of us at all, not ours and not competitors.

I see. And with respect to the -- when the new cohort of stores enters into your comp, do you have an estimate of how much that will benefit the comp? You said the new stores are comping double digit. So presumably it will be a nice relief as those start to enter into the base.

Yes. Yes. If I think about it, we're going to finish the year, and we probably have had open about 200 stores over the last 3 years. I think about half of those are pharmacies and half of those are our food stores. So and the bulk of those are discount stores. So I think you can go play with your model to figure out the impact of that has on comp, but it's definitely the more we open, the more we start to get an impact. And what we've said, and we're seeing it is like when these stores get into comp, we're getting double-digit comp performance.

Okay. And with respect to the e-commerce growth that you're seeing, how is that on your -- the impact on your operations and on the store experience. Have you hit those thresholds such that the third-party aggregators are placing pressure within the stores?

No. No. Our operation is absolutely fine. It doesn't impact our operations. So no.

Your next question comes from the line of Brian Morrison with TD Cowen.

Just high level, thinking about your gross margin outlook. You've got many tailwinds next year, generic GLP-1 growth, lower new store and DC ramps and even -- sorry, profit streams. I know it's early days, but I wonder if you plan to accept this margin expansion from these tailwinds or if you plan to reinvest in the product or pricing to further drive food market share?

Like we always want to keep our price competitive, and we always reinvest money in our stores. But you should see a positive tailwind on gross margin, largely on the back of GLP-1 drugs going generic. So that's what you should start to see, and that's what we're planning for.

And we have invested back in prices in the past, and we will continue to do that in the future to stay competitive.

And we feel good about risk margin for the next -- we feel good about the gross margin for the next while.

Okay. And then can you just -- sorry if I missed this, but do you have an updated time line to get to your 25% EQB ownership. And I know it's small, but can you just quantify the impact from the timing mismatch of the calendar when we're picking up when [indiscernible] assume it's a 1 year or 2, but it will be offset like...

We have a rough estimate like by November of next year, we should get there. Obviously, that's us buying using the rules. But if some blocks were to become available and that could help us go faster. But like right now, I think it's sort of November '27 is the date.

Your next question comes from the line of John Zamparo with Scotiabank.

I wanted to come back to the pharmacy side of the business, in particular, the comp, and it was a meaningful acceleration you saw in the quarter. I wonder if there's any color you can add here. I think we're all familiar with the long-term structural trends of aging population, but it was still a meaningful shift upward in Q2? And is it as simple as GLP-1s? Or is there more to it than that you can share?

Yes. Yes, I think it's mainly driven by GLP-1 and it was not generic yet. So they were helped by that. But we're also seeing a very, very strong sales in chronic this decreased management, disease management, so the [ Medleviews ] and yes, everything else that our pharmacists are doing but driven by Don definitely.

Okay. So just to clarify, I think you said last quarter, GLP-1s were growing 40% year-to-date. It's fair to say that accelerated in Q2 then?

It's around the same.

Yes.

Okay. And then secondly, at Shoppers, I wonder if you can comment on your shrink reduction initiatives. You talked about this as an opportunity in the past. It sounds like that's being adequately captured this year. And I wonder if you can quantify or describe the progress so far and what remains in '26.

I think we are -- we still want to reduce shrink even further. We are at a very good level right now. We are back to pre-Covid levels on spring in Shoppers. So we are pleased where we are -- but of course, we always strive to reduce it.

We like the slope at which the shrink curve on shoppers is falling. So we want to maintain that.

[Operator Instructions] Your next question comes from Chris Lee with Desjardins.

Sorry if you already touched on this in the beginning. I was wondering in terms of the gross margin for this quarter, was food gross margin largely stable again?

Yes.

Perfect. Okay. That's helpful. And then, Per, you mentioned the food refresher shoppers that you mentioned it's quite encouraging so far. I was wondering, can you share with us a bit more sort of what you're seeing so far that gives you that encouragement and what's the plan for the rest of the year?

So we have completed 17 stores now, and we have 11 more on the way, and we are still reviewing and adjusting them and they're giving us some very, very good numbers. And we will -- I think we'll share more when we have the Investor Day coming later in the year to get a little bit more into some of the details in Shopper. But so far, we are very pleased. And for us, it is about -- continues to test. And since we will be soon more than 30 is a good indication of that, that we're getting what we want.

Okay. Great. And Richard, just maybe one more for you. Do you still expect the costs related to the [ East Gwillimbury ] DC ramp-up and the new store openings to start to ease in the second half of the year?

Yes.

Since there are no further questions in queue, I would like to turn the call back over to Roy for closing remarks.

Thanks for your time, everybody, this morning. We are around if you have any questions, call or drop me an e-mail. In terms of Q3, [ Circle ] November 19 when we'll be releasing our results. And as both Per and Richard diluted. We're looking forward to hosting you all up at our [ East Goenberry ] DC in September for an Investor Day.

Have a great day, everybody. Thanks again.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Good morning, and welcome to the annual general meetings of shareholders for both George Weston Limited and Loblaw Companies Limited. I'm Galen Weston, Chairman and Chief Executive Officer of George Weston and Chairman of Loblaw. And thank you for joining us here at Massey Hall, a Canadian cultural landmark that was first opened in 1894, which for those of you who have a good memory for dates was only 12 years after the founding of George Weston Limited in 1882. It's wonderful to see this historical space revitalized after several years of renovations. And I hope you'll take the opportunity to explore this unique venue following today's meeting.

So during the hybrid meeting, we look forward to engaging with shareholders of both companies. Those of you who are gathered here in person and through our virtual platform. Joining me on stage, we have Richard Dufresne, President and Chief Financial Officer of George Weston and Chief Financial Officer of Loblaw; Per Bank, President and Chief Executive Officer of Loblaw; Nick Henn, Chief Legal Officer and Secretary of George Weston; and Andrew Bunston, Chief Legal Officer and Secretary of Loblaw.

By the way, in case you didn't pick up on this, they switched places from last year because they've done a little roll swap, which is very exciting for me and for both of them.

Okay. We're honored to welcome Director nominees of George Weston and Loblaw Trust and trustees of Choice Properties, representatives of the auditors and members of the senior management team from across the Weston Group. I'd ask all of you, please, to stand and be recognized.

That's the management team, the Board of Directors, our auditors, come on guys.

We'd also like to extend a warm welcome to the Grade 12 accounting class from Bloor Collegiate Institute. I had a chance to chat with them a little bit earlier, study hard and stay in school. That was my major message. And so I'd ask you all to please stand and be recognized. Thank you. It's absolutely terrific to have you here, and I hope you enjoy the meeting and that you will take the opportunity to ask a couple of questions, just direct them to the folks over there and not to me.

Okay. So just before we begin, I want to take a minute to outline the meeting procedures. It is slightly complex because of the combination of the 2 AGMs at the same time. So we'll also describe how voting and questions will be handled. And then following those remarks, we'll get an update from Richard on the business and financial performance of George Weston. I've asked Rael Diamond, the President and CEO of Choice Properties, one of George's biggest holdings, to share a bit about that business, including their latest real estate transaction, which is exciting, quite a big deal.

And finally, we'll hear from Per as the President and CEO of Loblaw. We'll then proceed with the formal business of the George Weston meeting, followed by the formal business of the Loblaw meeting, including voting on the matters set out in the respective management proxy circulars.

Once the formal business has been concluded, I'll share a few thoughts on our group of companies followed by a joint question-and-answer session. So the majority of shareholders of both companies have submitted their proxies or their voting instructions in advance. Voting during today's meetings will be conducted in person or through our online platform. And please note that you cannot cast votes via telephone. If you're voting in person, please complete the ballot provided by the scrutineer.

If you're a shareholder of both companies, please note that the blue ballot is for George Weston and the yellow ballot is for Loblaw. To vote online, please use the Lumi platform. And when an item of business is put to vote, you'll see voting options on your screen. And if you're a shareholder of both companies, please ensure that you're logged in with the control number provided for George Weston as the George Weston formal meeting will be held first. I'll remind you to log in -- I will remind you to log into the meeting using your Loblaw control number when the Loblaw meeting begins.

Your online vote will only be counted if you have logged in with the correct control number for the relevant meeting. Your vote on George Weston matters will not be counted if you've logged in with your Loblaw control number and vice versa, even if Lumi appears to be accepting your vote. So everybody got that. Those of you who are online, just try and keep it straight, and we'll navigate you through it as well just to make sure you get as much support as possible.

The scrutineers will then tabulate all of the votes cast during each meeting, and we will share preliminary voting results at the end of the relevant meeting. Nick Henn will act as Secretary of the George Weston meeting, and Andrew Bunston will act as Secretary of the Loblaw meeting. Computershare Investor Services Inc. is acting as scrutineer of both meetings by way of its representatives, Melissa Phillips and Kate Stevens.

Only George Weston and Loblaw shareholders of record at the close of business on March 16, 2026, or their proxies are entitled to take part in and vote in each respective meeting. To make the best use of our time, certain shareholders have been asked to move and second the motions, which are called for in the notices of the meeting. A copy of each of the George Weston and Loblaw notices of meeting and proof of their mailing have been filed with the respective company.

The scrutineer's report indicates that a quorum is present for each meeting, and I therefore declare that each of the George Weston and Loblaw annual meetings has been properly called and is duly constituted for the transaction of business. Questions will be accepted in person and through the online platform. We will address questions directly related to a particular motion at the appropriate time of the relevant meeting and save general questions until the question-and-answer period. To ask a question in person, please line up in front of one of the microphones at the front. There's one, I think, here, one in the center and then one over on your right-hand side. And if you ask -- want to ask a general question, please wait to line up until we begin the question-and-answer period at the end following my closing remarks.

If you wish to submit a question online in writing, select the messaging tab on the top of your screen and please identify whether your question relates to a motion being considered as part of the formal business of either meeting or whether it is general in nature. If you wish to ask your question verbally, please dial the audio line and press star 1 or click the request to speak icon on the online platform. The operator will verify that you are a shareholder or a proxy holder and you will be asked to ask your question at the appropriate time.

If you have further questions, you'll need to repeat this process and to be added back into the queue. If you are attending the meeting virtually and are logged in as a guest, you will be able to listen to the meeting, but you will not be able to vote or ask questions as only registered shareholders and duly registered proxy holders may do so. Today's remarks may include forward-looking statements. Details regarding forward-looking statements can be found in the applicable company's 2025 annual report and first quarter 2025 report to shareholders.

How are we doing? Okay. So we'll now move to the financial update portion of the meeting as well as the business update for George Weston. And with that, I'd like to ask Richard Dufresne to share his perspective on how the group of companies performed in 2025.

Thank you, Galen, and good morning, everyone. I'm pleased to share an update on the continued strong performance of George Weston and its operating businesses, Loblaw and Choice Properties. At George Weston, our focus remains consistent, building long-term generational value through disciplined capital allocation, strong operating performance and active portfolio management.

Canadians continue to feel pressure from higher prices, and that environment has shaped what our businesses have focused on and how they have operated and performed over the past year. In 2025, we delivered solid results across the group. Consolidated revenue increased to approximately $64.5 billion and adjusted EBITDA grew by 7.5%, reflecting continued strength in both Loblaw and Choice Properties. We also grew net asset value and free cash flow, supported by stable earnings and a disciplined approach to capital deployment.

George Weston repurchased $1 billion of its shares last year. Today, we announced an 8% dividend increase, marking our 15th consecutive year of growth. Net asset value increased by 25.8% year-over-year, underscoring the strength of our underlying assets and long-term strategy. We remain focused on actively managing our portfolio to enhance long-term value.

At Loblaw, the announced sale of the PC Financial business to EQB reflects a strategic decision to simplify the business and sharpen our focus on core retail and health care operations. Importantly, this transaction also establishes a long-term strategic relationship with EQB, ensuring that financial services remain a key part of the PC Optimum ecosystem while reducing capital intensity and complexity. At Choice Properties, the recently announced acquisition of high-quality urban necessity-anchored assets of First Capital REIT represent a significant step forward in its continued focus on strengthening the scale and quality of its portfolio. The transaction supports long-term growth in both net operating income and net asset value.

George Weston participation reflects our role as an active long-term owner, supporting strategic opportunities that enhance value over time. Together, these actions demonstrate our disciplined approach to capital allocation, simplifying where appropriate and investing where we see the strongest opportunities for sustainable long-term returns.

Turning to Loblaw. 2025 was another year of solid financial and operating results. Total company revenue increased by $3.8 billion to approximately $64.8 billion, up 6.2% year-over-year. Food same-store sales grew by 2.3%, while drug retail same-store sales increased by 3.9%. These results reflect strong execution and a continued focus on delivering value to customers in a challenging environment. Performance in food retail reflected continued strength in traffic and market share growth, supported by a clear focus on value, particularly in our hard discount banners.

In drug retail, beauty, pharmacy and health care services remained key growth drivers. Gross margins remained stable, while disciplined cost control enabled operating leverage and EBITDA growth. On a total company basis, adjusted EBITDA increased to over $7.5 billion. Adjusted net earnings grew by $276 million and adjusted earnings per share grew by 13.6%. Loblaw also generated strong free cash flow, supporting reinvestment in the business alongside continued returns to shareholders. In 2025, we reinvested $2.8 billion back into the Canadian economy, creating new jobs and building a foundation for Loblaw's future growth. We also repurchased $1.9 billion in shares last year. And last week, we announced that we would further increase our buybacks in 2026.

At the same time, we grew our dividend for the 15th consecutive year, announcing a 10% increase. The balance sheet remains strong as evidenced by Loblaw's recent credit rating upgrade by DBRS to A low. At the same time, the company continues to invest meaningfully in its network and infrastructure to support long-term growth. The market has taken notice. In 2025, Loblaw delivered a 32.5% total shareholder return. And today, this Canadian company stands as the third most valuable grocer in the world by market cap.

Turning to Choice Properties. Choice delivered another year of strong and stable performance underpinned by the quality of its portfolio and disciplined execution. Occupancy increased to 98.2%, supported by strong tenant demand across its grocery-anchored retail and industrial assets. Same-asset cash NOI grew by approximately 2.2% and funds from operations increased by 3.6%, reflecting steady underlying growth. Choice continues to benefit from a differentiated platform, combining a high-quality necessity-based retail portfolio, a growing industrial footprint and a disciplined development pipeline. The balance sheet remains strong and flexible. Choice ended the year with an adjusted debt-to-EBITDA ratio of approximately 7x and $13.8 billion of unencumbered assets.

In closing, I'm very pleased with the continued performance across the Weston Group. Our businesses are delivering consistent results supported by strong balance sheets, disciplined capital allocation and clear strategic focus. We remain committed to returning capital to shareholders. Looking ahead, we remain confident in our ability to continue creating long-term value for our shareholders.

And I will now turn the meeting back over to Galen.

Richard, thank you. That's terrific. Okay. So as I mentioned before, I'd now like to invite Rael Diamond, President and CEO of Choice Properties, to come out and give us an update on that business.

Thank you, Galen, and good morning, everyone. I'm very excited to be here to share Choice Properties' strategic priorities and story with you. The growth of Choice since our IPO in 2013 has been extraordinary. In just over a decade, we've built something truly special. Today, Choice is the largest REIT in Canada with nearly 700 properties across 3 strategic asset classes: retail, industrial and mixed-use and residential, and we're not done.

4 weeks ago, we announced a $5 billion transformational asset acquisition as part of the privatization of First Capital REIT. This transaction is a clear step change in Choice's scale and long-term growth potential. I'll come back to this in a moment. But to fully appreciate it, it is important to understand how we got here. Choice was not built overnight. It was built through a series of deliberate, disciplined decisions over time, decisions that compounded to create an irreplaceable foundation in what is Canada's leading REIT. It started with Choice's IPO in 2013 when an initial portfolio of 425 properties representing $7 billion of assets was spun out of Loblaw to create Choice. In our first 5 years, we focused on acquiring and intensifying high-quality retail properties.

We acquired approximately 120 additional properties and completed more than 60 intensification projects. By 2018, we've become Canada's third largest retail-focused REIT. That same year marked a major step forward with the acquisition of CREIT. With this transaction, we became Canada's largest REIT. We expanded into new strategic asset classes and created the best-in-class operating platform.

Also in 2018, Loblaw spun out its stake in Choice to George Weston. This gave us a more natural long-term owner that is better positioned to support our growth and diversification plans. Following the CREIT acquisition, we focused our attention on 3 priorities: first, strengthening the balance sheet; second, improving portfolio quality; and finally, leveraging our strategic relationship with our key tenants, including Loblaw.

We executed a clear plan, recycle capital by selling noncore assets and reinvested into higher-quality assets and reduced leverage. To achieve this, we completed over $5 billion in transactions, including $3 billion of dispositions and reinvested $2 billion into high-quality retail assets while expanding our industrial and residential businesses. The results were meaningful. And in a relatively short period of time, we significantly improved our strategic asset mix, including a sharpened focus on our core asset classes.

We reduced leverage and built what we believe is the strongest balance sheet in the Canadian REIT sector. A strong balance sheet provides us with financial flexibility. It allows us to be patient and when opportunities arise, such as the First Capital transaction, it allows us to be decisive. And importantly, we leaned on one of Choice's key differentiators, our strategic relationship with Loblaw. This relationship gives us access to growth opportunities and stability. It lets us move faster, act with conviction and create value for both organizations and ultimately, George Weston.

And you can see that advantage clearly in our development program. Over the past few years, we have developed nearly 4 million square feet of new commercial real estate. This includes retail intensifications, greenfield developments and new industrial distribution facilities. Many of these are anchored by Loblaw. For example, we recently completed a new 40,000 square foot T&T in Erin Mills, which celebrated its grand opening last month.

The reception from Mississauga and the surrounding communities has been exceptional. What's equally exciting is that we're developing 5 new grocery-anchored shopping centers. One of these is in Barrhaven, one of Ottawa's fastest-growing communities. It will be anchored by No Frills and a Shoppers Drug Mart alongside a strong mix of complementary retailers. The center is well positioned to serve a rapidly growing residential population. On the Shoppers Drug Mart side, we're also building 8 new Shoppers Drug Marts with 20 more in the pipeline.

These projects are a few examples, but they illustrate how we continue to grow with our key tenants and create win-win situations. That brings me to today. A few weeks ago, we announced another defining moment in Choice's history. Together with our partner, KingSett Capital, we announced the acquisition of First Capital REIT for $9.4 billion, the largest take-private transaction in the Canadian REIT sector.

As part of this transaction, Choice plans to acquire $5 billion of First Capital's highest quality neighborhood retail centers in Canada's strongest urban markets. Choice's ability to pursue this transaction was made possible by the operating platform we have built, our team's relentless focus on balance sheet strength and the support of our largest shareholder, George Weston, who committed $600 million of equity to this transaction.

The portfolio acquisition is another transformational step for Choice and firmly solidifies us as Canada's leading REIT. It meaningfully scales our exposure to high-growth markets and strengthens our tenant mix. These assets serve daily needs, are located in dense urban communities and benefit from the strong demand and resilient cash flow. Take Carre Lucerne in Montreal, for example, 116,000 square feet anchored by Provigo and Pharmaprix. The property is supported by a strong mix of tenants, service, food and fitness with exceptional visibility along the expressway and serves a dense high-income trade area.

Or Leaside Village in Toronto, 120,000 square feet in one of the city's strongest urban markets anchored by Longo's in a restored heritage rail building with a deep mix of service-orientated tenants. Together, these assets exemplify the portfolio we're buying high-quality, necessity-based retail in dense urban neighborhoods.

Stepping back, including this transaction, what we have created at Choice is remarkable, and it is clear that Choice stands apart. We are Canada's largest REIT with nearly 800 properties nationwide. We have an unmatched retail platform with 83% or 44 million square feet of our portfolio anchored by grocery, pharmacy and other necessity-based tenants.

We have a clear growth runway with a development pipeline of over 18 million square feet. We have the most capable team in the real estate industry, one that is highly experienced, diverse and deeply focused on delivering exceptional service to our tenants. And finally, a true differentiator, an unmatched foundation, including a strategic relationship with our largest tenant, Loblaw. Our journey has been deliberate. Choice has never been stronger and the opportunity ahead of us is significant.

Thank you. I'll now turn the meeting back over to Galen.

Okay. Terrific. So thank you very much, Rael. That was fabulous. And Per, I think you're up next.

Thank you, Galen, and good morning, everyone. Looking back on 2025, I'm very pleased to report that it was another strong year for Loblaw. Throughout the year, we stayed focused on what matters most, delivering quality, value, service and convenience to help Canadians live life well. At the same time, we are executing against our 5-year commitment to invest $10 billion into the Canadian economy.

This will create approximately 8,000 jobs while supporting new stores, modern supply chain infrastructure and expanded health care services. This is about building for the future while continuing to deliver value today. And we did that in an environment that remains challenging. Canadians are feeling the impact in their everyday spending. Inflation is being driven by multiple forces from global conflicts to higher input costs and supply chain pressures.

We see it every day in our stores, and we have always felt a responsibility to respond in a meaningful way. Every decision that we make starts with one question, how do we deliver more value for our customers. Over the past 12 months, our internal food inflation has been significant below the CPI. Customers, they are noticing. They are looking for value, and they're finding it in our stores. In '25, we made meaningful progress across our business. We introduced new programs and refined existing ones, all grounded in what customers are telling us they want.

We expanded our promotional programs, and we delivered even more value and excitement back into our stores. We also continue to invest in how and where we deliver value. Over the last year, we expanded our hard discount footprint, opening Maxi and No Frills stores in new and underserved communities, helping bringing lower prices to more Canadians. And at the same time, we are applying that same value mindset across the entire business, combining lower pricing with the service and selection customers expect from our full network.

When conditions changed last year, we moved quickly. As tariffs began impacting a wide range of products, we made it transparent to customers, allowing them to choose Canadian-made alternatives, both in stores and online. At the same time, we strengthened our sourcing. We onboarded over 200 new local companies onto our small supplier program in last year, expanding our local assortment, improving value and increasing the resilience of our supply chain. This is a really good example of how we operate, moving quickly, staying transparent and always putting the customers first.

Customers are responding. We saw strong traffic growth, market share gains and continued momentum across the business. And our new stores outperformed our own expectations. In '25, we surpassed $64 billion in revenue for the first time in our history. That is one of the milestones that reflects the trust Canadians place in us. Our growth continues to be driven by a powerful combination of assets. Our hard discount supermarket formats remain at the core of our food business.

Our pharmacy network continues to expand access to care. And all of this is connected through PC Optimum, our digital platforms and our broader ecosystems. As Richard mentioned, we also announced the sale of our PC Financial business to EQ Bank, and this allows us to sharpen our focus on retail and health care, while maintaining a strong long-term relationship with EQ Bank that will continue to deliver value to the PC Optimum platform.

PC Optimum remains a key differentiator with more than 18 million active members and over 1 billion in points redeemed this year. We're also seeing strong momentum in e-commerce with more than $4.5 billion in annual sales. These are powerful drivers of engagement and growth. Over the many things that makes Canada unique and by extension Loblaw is the diversity of the people in this country. Canada is one of the most multicultural markets in the world, and this is reflected in our stores and in the people that we serve. We continue to expand assortment from everyday essentials to international and multicultural products.

T&T is a great example. It is one of our fastest-growing banners with more than $2 billion in sales -- $2 million. Sorry, not $2 billion yet, Tina. Last year, in April, we opened our 37th Canadian store, and we are bringing more T&T products into our other banners to meet the growing demand that we're seeing. For many new Canadians, T&T stores are a place that feels familiar, a connection to home. And for others, they offer something new.

That diversity is a strength, and we continue to lean into it. We're also seeing strong momentum as we expand T&T into the United States with 2 stores opened last year and 9 more already internally approved. Our Shoppers Drug Mart and Pharmacy business remains a key contributor with a balanced model that combines prescription management, health care services and a strong front store offering.

In pharmacy, we're seeing steady growth driven by prescription volumes, expanded scope of practice and continued demand for accessible health care services. Our network of pharmacy-led clinics has grown to approximately 250 locations, improving access to care while supporting the broader business. Our health care professionals continue to serve millions of Canadians every year. In fact, our pharmacies filled more than 180 million prescriptions in 2025 alone. Front store performance continues to be led by the strength of our beauty offering.

At the same time, we continue to invest in pharmacy services, digital capabilities and workflow improvements, enhancing both the patient and the customer experience. We're also continuing to invest in our network. In '25, we expanded our reach to serve more communities across Canada. We opened 77 new stores, including 27 pharmacies, 48 hard discount grocery stores plus 1 new T&T store in Toronto, our second T&T opening in the U.S. We continue to modernize our supply chain, improving efficiency, reliability and how we serve our customers.

These investments are so critical to building the foundation that will support our long-term growth. Across all of this, our focus remains clear. We are delivering value to more communities across the country. That's how we continue to earn customers' trust. As proud as we are of our results, we know there's more to do. We'll continue to invest in our business by opening new stores and clinics, expanding our digital capabilities and strengthen our value proposition to deliver greater value to our customers.

These investments will also create jobs and opportunities for Canadians and build stronger partnership with the suppliers and communities that grow with us. We're also making meaningful progress on our environmental and social commitments that benefit both the business and the communities where we operate. We continue to advance our net zero ambitions, reducing our enterprise carbon emission by 16% from our 2020 baseline alongside continued progress on reducing food and plastic waste. I'm proud to share that 98% of our controlled band plastic packaging is now recyclable and/or reusable.

At the same time, social impact remains a key focus. Last year, over 1 million children received access to in-school meal programs through our President's Choice Children's Charity. We also surpassed $50 million in funding support for women's health and expanding access to care in communities across the country through Shoppers Foundation for women's health.

Together, these efforts reflect a clear focus delivering value to Canadians across our operations and in the communities we serve. Finally, and most importantly, I want to thank our colleagues across the country. More than 220,000 colleagues bring our purpose to life every day, serving customers, supporting their communities and continuously improving how we operate. Their commitment is what drives our success and gives me confidence in our future. Please join me in recognizing their incredible work.

And I'll now turn the meeting back to Galen. Thank you.

Thank you so much, Per. Your passion for providing great value to our customers is always so incredibly clear, and your team continues to work so hard and do such a great job trying to help Canadians live life well.

Okay. We're now on to the next phase of the meeting, which is the formal elements, and we're starting with George. So everybody who is a George shareholder, this is your time. So just as a reminder, George Weston shareholders who wish to vote online must be logged into the meeting using their George Weston control number. If you don't do that, your vote will not be counted. Also, if you have questions regarding the formal items of business, please proceed to the microphone prior to voting on that matter or identify online that your question relates specifically to the motion that is being considered.

I'd now like to place before the meeting the annual audited consolidated financial statements of George Weston, together with the notes and auditor's report for the year ended December 31, 2025. These are included in the annual report, which was provided to shareholders and can be retrieved from George Weston's website or SEDAR. Are there any questions in connection with the financial statements?

Okay. Hearing none, we'll continue with our next item of business. We'll now move to the nomination and election of directors. With us today are all of George Weston's Director nominees, and I ask that they stand to be recognized. There are 6 director nominees standing for election at this meeting. All of these nominees are current directors of George Weston. George Weston's Management Proxy Circular contains detailed biographies setting out the valuable qualifications and diverse backgrounds of the nominees, and I'm pleased to report that based on the proxies received by the scrutineer in advance of the meeting, each director nominee received votes in favor from at least 97% of votes cast.

We will now consider the election of directors. I declare the polls open to all George Weston resolutions. Before proceeding to voting, I'll address any questions related to the nomination and election of directors first in person and then online.

Nick, are there any questions related to the nomination and election of directors?

I'm a shareholder, a very small shareholder, a shareholder nonetheless, of George Weston Limited. And I do want to register one important point. You -- pretty well, actually, I have 2. I miss the presence of Sabi Marwah. He was the smartest by far, financial manager I have ever met in my long career, and he did yeoman service for you, and he has retired, and I miss him.

I'll pass on your well wishes, Bob. I'm going to have lunch with him in a week or 2.

Okay. Now just a brief comment. The Weston board doesn't meet very often, but it gets paid better than the Loblaw board. And that doesn't make sense to me. I know that Board service is more than the formal meeting, but it seems to me that the workload of the Loblaw Directors is more significant than the workload of the Weston directors, and the pay should be commensurate.

Okay. Now can I have a nomination for the election of directors?

My name is Salma Sahibzada, and I am a shareholder. Mr. Chairman, I nominate the following persons for election as directors of George Weston to hold office until the next Annual Meeting of Shareholders or until they resign or their successors are duly elected or appointed. M. Marianne Harris, Nancy H.O. Lockhart, Gordon M. Nixon, Barbara G. Stymiest. Galen G. Weston, and Cornell Wright.

My name is Jeff Gabe, and I am a shareholder. Mr. Chairman, I second the motion.

Thank you, Jeff. I'll now call for a motion to move that the nominations be closed.

Mr. Chairman, I move that nominations be closed.

Mr. Chairman, I second the motion.

Thank you. I ask shareholders or their appointees to cast their votes by completing their blue George Weston ballots or through the online portal. Okay. We'll now move to the next item kind of business, the appointment of our auditor. Are there any questions related to the appointment of the auditor? Thank you. I'll now ask for a motion for the appointment of the auditor of George Weston and the authorization of the directors to fix the auditor's remuneration.

Mr. Chairman, I move that PricewaterhouseCoopers LLP be appointed as auditor of George Weston until the next Annual Meeting of Shareholders of George Weston and that the directors be authorized to fix the auditor's remuneration for the 2026 fiscal year.

Mr. Chairman, I second the motion.

Thank you. If you've not already done so, I ask shareholders or their appointees to cast their votes. The next item of business is the advisory resolution regarding George Weston's approach to executive compensation. The resolution is more fully described on Page 19 of the George Weston Management Proxy Circular. Are there any questions related to the advisory resolution regarding to George Weston's approach to executive compensation?

Hearing none, I'll now entertain a motion to approve on an advisory basis, George Weston's approach to executive compensation.

Mr. Chairman, I move that the advisory resolution regarding George Weston's approach to executive compensation be approved.

Mr. Chairman, I second the motion.

Thank you. If you've not already done so, I ask shareholders or their appointees to now cast their votes. Thank you. This brings us to the end of voting on George Weston's items of business before the meeting, and I therefore declare the polls closed. Please raise your hand now so that a representative of the scrutineer can collect your George Weston ballot. Otherwise, your vote will not be counted. Thank you. Any others up here on...

Yes? Don't be bashful. Wave your ballots. Okay. Terrific. All right. We've received already the preliminary voting results from the scrutineer on George Weston's 3 items of business. On the election of directors, the voting results show that each director nominee received votes in favor from at least 97% of the votes cast. On the appointment of the auditor, the voting results show that more than 99% of the votes cast were in favor. And on the advisory note on George Weston's approach to executive compensation, more than 97% of votes cast were in favor of George Weston's approach to compensation.

I declare all motions to be passed.

The final voting results will be available after the meeting and posted on the SEDAR profile of George Weston Limited. As there is no further business, can I have a motion to terminate the George Weston meeting?

Mr. Chairman, I move that the George Weston meeting terminate.

Mr. Chairman, I second the motion.

I now declare the meeting of George Weston Limited terminated. It's now time to proceed with the Loblaw meeting. So if you're a shareholder of Loblaw who is currently logged in using the George Weston control number, now is the time to log out of the Lumi platform using the icon in the top right corner of your screen. Once logged out, then please log back in using your Loblaw control number. If you're not a Loblaw shareholder, you don't need to do anything.

While we give shareholders a moment to log back in, I want to thank all shareholders and guests who have taken the time to join us here today for these meetings. We look forward to engaging with you each year and are pleased to be able to provide an opportunity for you to participate here in person or virtually. We'll now proceed with the formal part of the Loblaw meeting. If you have any questions regarding the formal items of business, please proceed to the microphone prior to voting on that matter of business or identify online that your question relates to a motion being considered as part of the formal business.

I'd now like to place before the meeting the consolidated financial statements of Loblaw Companies Limited, together with the notes and auditor's report for the year ended December 28, 2025. These are included in the annual report, which was provided to shareholders and can be retrieved from Loblaw's website or from SEDAR. Are there any questions in relation to the financial statements? Thank you. We'll continue with our next item of business. We'll now move to the nomination and election of directors. With us today in person and online are all of Loblaw's director nominees. I ask that those here today, please stand to be recognized.

There are 13 director nominees standing for election at this meeting. All of these nominees are current directors of Loblaw. Our management proxy circular contains detailed biographies setting out the valuable qualifications and diverse backgrounds of our nominees. I'm pleased to report that based on the proxies received by the scrutineer in advance of the meeting, each director nominee received votes in favor from at least 97% of votes cast. We will now consider the election of directors. I declare the polls open on all Loblaw resolutions. And before proceeding to voting, are there any questions related to the nomination of the election of directors.

Thank you for the opportunity, Mr. Chairman, Robert Gregan, shareholder. This is a massive company and -- but its success depends on millions of people making small decisions every week for the necessities and the wants of their life. So it's very important that we have directors who are customers of our food and pharmacy divisions. So I'd like to do a little exercise if the share -- if the directors of Loblaw would raise their hands, please? Come on, get them right up. Now how many you can keep your hand up if you've got more than 4 million PC Optimum points accumulated since 2018.

I can. I can, Bob, I can do it. I can do it.

Okay. Well, I've got 4,300,000 something, so I'm a serious shopper. And I love shoppers. And some of the reasons why I'm still standing tall at 77 with good knees and all my teeth are products that I buy at Shoppers.

Good to hear you, good to hear you. You hear that, Gregers, a loyal customer.

So that's my point. I want my directors shopping so that you know what's going on in this company and you can relate to the millions of people who are essential to our success.

Thank you, Bob. It's terrific feedback, and I can say with certainty that we have very avid shoppers on the Loblaw Board of Directors and on the George Board as well. They always have a tip, don't they, Per, for you or for me or for -- Mel, are you laughing. Well, you get them as well. So there's a constant stream of constructive feedback from our directors as shoppers and of course, as fiduciaries. So it's well called out and I think well represented on the board.

Okay. So could I please have a nomination for the election of directors?

My name is Emma Race, and I am a shareholder. Mr. Chairman, I nominate the following persons for election as Directors of Loblaw Companies Limited to hold office until the next Annual Meeting of Shareholders or until they resign or their successors are duly elected or appointed. Scott B. Bonham, Shelley G. Broader, Christie J.B. Clark, Daniel Debow, William A. Downe, Janice Fukakusa, M. Marianne Harris, Kevin Holt, Claudia Kotchka, Rima Qureshi, Sarah Raiss, Galen G. Weston, Cornell Wright.

My name is Richard Pattack. I'm a shareholder. Mr. Chairman, I second the motion.

Thank you. I'll now call for a motion to move that the nominations be closed.

Mr. Chairman, I move that nominations be closed.

Mr. Chairman, I move the nomination be closed.

Thank you. I ask shareholders or their appointees now to cast their votes by completing their yellow ballots or through the online portal. We'll now move to the next item of business, the appointment of the auditor. Are there any questions related to the appointment of auditors? Thank you.

I'll now entertain a motion for the appointment of auditor of Loblaw and the authorization of the Directors to fix the auditor's remuneration.

Mr. Chairman, I move that PricewaterhouseCoopers LLP be appointed as auditor of Loblaw until the next annual meeting of shareholders of Loblaw and that the directors be authorized to fix the auditor's remuneration for the 2026 fiscal year.

Mr. Chairman, I second the motion.

Thank you. If you've not already done so, I ask shareholders or their appointees to now cast their votes. The next item of business is the advisory resolution regarding Loblaw's approach to executive compensation. The resolution is more fully described on Page 20 of the Loblaw management proxy circular. Are there any questions related to the resolution regarding Loblaw's approach to executive compensation? I'll now entertain a motion to approve on an advisory basis, Loblaw's approach.

Mr. Chairman, I move the advisory resolution regarding Loblaw's approach to executive compensation be approved.

Mr. Chairman, I second the motion.

Thank you. If you've not already done so, I'd ask shareholders and their appointees to now cast their votes. I think we'll just wait, Bob.

While we're waiting, I want to give you a compliment. I want to give you an A plus on your conduct of this meeting. It has been flawless.

Okay. Thank you. Thank you.

And the format works perfectly, and it saves a lot of money to have one assembly. And I also thank you for bringing us in this hall. I realize it was not your first choice, but I haven't been here for a while, and I'm happy to see the Weston name out in the lobby. I was here in the 1960s with a lot of hair and to hear the great Pete Seeger perform here. So -- and this is a special place, and I'm glad to know that the Weston family is supporting it so generously.

Terrific. Thank you. Well, it is a pleasure to be here. Thanks, Bob. Okay. So the next item of business is a shareholder proposal submitted by the B.C. General Employers Union. The shareholders' proposal and supporting statement are included in Schedule B of Loblaw's management proxy circular.

I'd now ask Emma Pullman of the BCGEU to please present the proposal. Please go ahead, Emma.

Thank you, Mr. Chairman, and good morning, fellow shareholders. I'm here as the Chairman said, on behalf of the B.C. General Employees Union, a long-term shareholder, to introduce our resolution, which can be found on Page B1 of the Loblaw management information circular. Loblaw has made headlines recently for a data breach, overcharging for meat once again, promoting imported food as Canadian and as having failed to delete PC Optimum accounts in a timely fashion.

In 2025, Loblaw made headlines by committing to end property controls, restrictions that limit how a property can be used by others. In the grocery industry, property controls may harm competition by making it difficult for businesses to open new stores or by limiting the food products that can be sold in a food retailer store.

For years, Canada's Competition Bureau has scrutinized these practices. This announcement was welcome. However, Loblaw's commitment is conditional and depends on competitors acting first. There are no fixed time lines, no public milestones, no reporting on progress. A recent CBC marketplace investigation found that Loblaw had released just 150 controls across the country and would do more when other competitors followed suit. A commitment to ending anticompetitive practices that is contingent on competitors' behavior is not much of a commitment at all.

Investors deserve measurable time lines, not moving goalposts. And there's a second issue. Loblaw's principal landlord is Choice Properties REIT, Canada's largest REIT, as we've just learned and a vehicle originally spun out from Loblaws, the controlling shareholder, George Weston Limited, also controls Loblaws. This vertically integrated structure raises questions about whether Loblaw's commitments to end property controls apply to properties it effectively owns through Choice Properties. And we don't know this. Loblaws hasn't said.

Meanwhile, regulators are moving, the Manitoba provincial government has taken action against Loblaw and its competitors passing legislation requiring the disclosure or expiry of property controls, targeting predatory pricing and requiring the public disclosure and elimination of property control. The Alberta government and others are considering similar measures. As a long-term investor, we have engaged with Loblaw on several important issues over the years, and we attempted to engage with the company on this issue. We were unfortunately not given the opportunity.

The resolution is simple. We are asking the Board to publicly disclose how many properties still carry controls, what the time line is to end them and whether the commitment extends to assets held through Choice Properties. Transparency and accountability are the basics that any long-term investor expects. The Competition Bureau is still watching this issue. Regulators are and the absence of disclosure in our view is not neutral. It is a risk that builds quietly until it isn't quiet anymore. We encourage all shareholders to vote in favor of this resolution. Thank you so much.

Thank you, Emma. The Board and management recognize the importance of food affordability, and we're committed to operate in a manner that supports competitive markets and complies fully with applicable laws. Loblaw publicly committed to eliminating property controls in the grocery industry and has announced concrete steps to do so. Since then, it has released over 150 restrictive covenants and lease exclusivities granted numerous waivers, ceased enforcing radius restrictions and aligned all new lease practices with Competition Bureau guidelines.

The Board does not believe that additional disclosure is necessary or would accelerate progress beyond the work underway. The Board of Directors recommends that Loblaw shareholders vote against this shareholder proposal. Schedule B of Loblaw's management proxy circular provides a detailed explanation for this recommendation. Are there any questions in connection with this shareholder proposal? Okay. Hearing none, I'll now ask that the motion be made to put this shareholder proposal to a vote.

Mr. Chairman, to facilitate the business of the meeting, I move that the shareholder proposal as more fully described in Schedule B of the management proxy circular be put to shareholders for voting.

Mr. Chairman, I second the motion.

Thank you. If you've not already done so, I'd ask shareholders or their appointees to cast their votes by completing their ballots or through the online portal. Okay. Thank you. This brings us to the end of voting on the Loblaw items of business before this meeting, and I therefore declare the polls closed. Please raise your hand now so a representative of the scrutineer can collect your yellow ballot in person. And otherwise, your vote will not be counted.

A few yellow ballots up here, one in the back, one over here on the left. Okay. Terrific, Making a way around, I think, here on the left and then at the very back.

All right. So we have received the preliminary voting results from the scrutineer on Loblaw's 4 items of business. On the election of directors, voting results show that each director nominee has received votes in favor from at least 97% of votes cast. On the appointment of the auditor, voting results show that more than 99% of the votes cast were in favor of the appointment of PwC as auditor of Loblaw. On the advisory vote on Loblaw's approach to executive compensation, approximately 94% of votes cast were in favor of Loblaw's approach.

I declare these motions passed. On the shareholder proposal, the voting results show that approximately 94% of the votes cast were against the proposal. As there are a greater number of votes against than in favor for the proposal, this motion is not passed. The final voting results will be available after the meeting and posted to the SEDAR profile of Loblaw Companies Limited. As there is no further business, can I have a motion to terminate the Loblaw meeting.

Mr. Chairman, I move that the Loblaw meeting terminate.

Mr. Chairman, I second the motion.

Thank you. I'll now declare the meeting of Loblaw Companies terminated. Okay. So we made it through our second combined Loblaw and George Weston AGM. Bob thinks it's going very well. And hopefully, it felt a little bit quicker than last year. We tried to tighten it up in a few places, but I know there is a lot to get through, and we've got a lot to share. As you heard from Richard, from Rael and from Per, our businesses are performing very well.

Choice Properties has announced this major real estate transaction while continuing to serve their tenants in ways that uplift communities with an eye towards sustainability, creating places where people thrive. At Loblaw, helping Canadians live life well remains at the very heart of their strategy. Having now opened 250 pharmacist clinics while bringing dozens of new discount supermarkets into underserved areas, Loblaw is making health care more accessible and food more affordable for Canadians.

Both Choice and Loblaw did so while delivering another year of steady and consistent growth. And it's that strong performance, which allows us to go even further in supporting the hundreds of communities that we serve. You'll recall that last year, I announced my family's commitment to dedicate $1 billion towards strengthening Canada. A year later, I wanted to share a little bit of progress. We've been focused in areas that we understand well in health care and in our nation's food systems with an emphasis on philanthropic investment anchored in market-based principles that help to build prosperity for all Canadians.

In food, we've set up a $100 million Made in Canada fund to support local manufacturers and growers. It includes more greenhouse capacity for radishes, so we no longer have to import them in Eastern Canada during winter, something radish lovers like myself are celebrating even if a few radish critics who no doubt are in the room may be rolling their eyes. We have several other investments in the works, ranging from Apple storage in British Columbia to aquaculture in the Great Lakes and cherries in Toronto.

And we're extremely appreciative of the sourcing and procurement team. Danny is in the room. She's partnering with our folks very closely on this. And it's really exciting to see the kinds of opportunities that are coming our way because of our depth of understanding of what's happening in the supplier community and our opportunity to invest not just to -- into start-ups, but actually to scale up sustainable production in areas that we would otherwise be quite vulnerable to as a country that spends so many months under ice and snow.

We've committed $50 million towards regenerative agriculture through Canza's Million Acre Challenge, partnering with farmers to bridge the gap from the adoption of sustainable practices to financial sustainability. Starting with corn in Ontario. That project aspires for regenerative techniques to be employed across 85% of the crop in this region. And the Weston Family Foundation's homegrown innovation challenge, an exprise-like project where teams are competing to optimize the year-round cultivation of produce indoors.

We are now scaling 4 finalists, including a team at Simon Fraser University who are growing blackberries, raspberries and blueberries simultaneously by staggering their dormancy windows to create year-round harvests. And here in Toronto, where TMU researchers are shortening plants from 8 feet to 4, creating a faster-growing crop that aims to make indoor raspberry production commercially viable. Spanning every stage of the innovation curve from novel breakthroughs to scaling production, these efforts are making Canada's food system more sustainable and more secure.

In health care, the challenge is no less significant. Our $100 million innovation fund is helping to bridge Canadian discoveries all the way through to commercialization. Last year, we announced a $12 million investment in Grey Matter Neuroscience to commercialize noninvasive focused ultrasound that will allow patients to manage cognitive disorders like dementia and depression outside of the hospital. And last week, after 12 months of work, the team showed me their latest prototype. Put simply, it is transformational technology and very, very cool. They wouldn't let me put it on my head, but it was really pretty amazing.

I think there's a couple of people in the room who've seen it, and it is pretty sensational. And they are headed to clinical trials very soon. It's a great example of the capability we have right here in Canada. But too often, that progress through clinical trials as an example, is slowed by fragmented and inadequate infrastructure. That's why we've also launched a major partnership with Sunnybrook Research Institute to accelerate clinical trial activations, shrinking it from 200 days to activate a clinical trial to just 45, which would be a world-leading speed if we can achieve it.

More trials mean more Canadian innovation coming to market and importantly, most importantly, better care for patients. And lastly, we're proud to back the recently launched nonprofit, nonpartisan media outlet Be Giant. Its purpose is to shine a spotlight on the amazing Canadian companies and people whose passion and innovative spirit are making our communities and our country more prosperous. And it's off to a great start using the highest quality independent Canadian journalism to bring these kinds of stories to life.

Stories like Melanie Bitner and Alex Delorier, who turned the tragedy of losing their family's generational cabin to a wildfire in 2003 into a water-bombing drone startup that is now extending for the firefighting effort during the forest fire season into the night where planes and helicopters are otherwise grounded. It turns out that fighting fires at night is the most potent time to do it because the wind drops and the temperature drops, but pilots don't fly into those danger zones at night. Drones, of course, can.

And so imagine swarms of water-carrying drones heading out over the British Columbia forest at exactly the right time. Led by one of Canada's foremost journalistic editors and with no advertising, Be Giant is designed to be freely accessible and widely shared, widely shared. So now is your queue to get your phones out, you can do that now and scan the QR code on the screen, and that will take you to a window where you can sign up for the Be Giant newsletter, which if you haven't done, you all must do because it will provide for you a weekly dose of optimism around Canada's incredible potential and progress, and it will support one of Canada's newest media outlets. Come on guys. If you haven't -- maybe you've already done it. There we go. Okay. Good.

And then finally, just by way of wrapping up, I'd like to take a moment to thank all of those who are in this room who've been working on these projects. It's been a pretty sensational year of momentum and achievement. I'd specifically like to call out my Aunts, Camilla and Wendy, who continue to lead our efforts in an inspiring way at the Weston Family Foundation, where so much of this work and other work is being done.

Now there are President's Choice -- Well, good. Yes. There are President's Choice treats to be had. So that's one of the reasons so many of you come to this meeting, I know. And a few questions to be answered, hopefully. So let me end it where it all started and with the success of our group of companies. and the hundreds and thousands of colleagues who work hard every day. It's their hard work and the work of the management teams in this room that enable us to do all of these additional things.

And so as I prepare to open the floor for questions, let me just say thank you. Thank you to them, and thank you to you for your wonderful and continued support. Thank you. Okay. So we'll now move ahead with the question-and-answer period. So we will first answer questions from those in person. And then we'll also -- we've got a system set up so that we can answer any questions that are submitted online in real time. We're certainly going to try and do that. And then if there's anything we don't get to in this Q&A period, we'll address them after the meeting through members of management or we'll follow up with any of your e-mail questions we don't get to. So let's start with the in-person questions. And where are we over -- do we have anybody? There we go, Bob.

Although I have to say after that impressive report, it's a hard act to follow. I don't think I can come up with anything that matches the importance of what you've just told us about. Thank you very much. But I do have a challenge for each of the 3 major divisions. And I'm going to start with Choice Properties because it's very close to my heart, even though I was a newspaper man, I started my education in civil engineering. And after I sold my newspapers when I was 50 years old, sold them in just in time to the Toronto Star before the Internet grew in the business.

I went into the hotel development marketing business. But if Choice Properties had existed then as it does now, I'd have been knocking on your door begging for a job because that's the kind of company I would love to work for as a younger man. It's -- I've watched amazing things done in the last few years. So I have a specific challenge for Choice. I've raised this informally in the past, but I'm going to make it formal this time. I live in Stratford, where we have a once-in-a-lifetime opportunity for the wisdom of this company to be put to work and really do something with the Choice brand.

Stratford was built as a railway town. The steam engines were serviced there. There was a massive building in the middle of the city. It is massive. And it's been sitting idle for more than 20 years. And finally, the city has gotten its act together. It's been cleaned up enough that it can be presented to a savvy developer. The asbestos is gone. The frame of the building is of a scale that you can't imagine. It was big enough to bear cranes that carry the steam engines around like toys. And so it's the strength of that frame. It's sitting there.

It's bigger than any industrial building you've ever built. It has enough room inside for 2 layers of parking. And it's just waiting for -- and I think this is the only company that can do it. And the city is...

For a creative developer.

They're looking for a responsible creative developer. They're looking responsible creative developer There will be charitable opportunities, but I'm presenting this as a shareholder saying, this is a profitable opportunity that will really raise the profile of the choice brand. So I'll be happy to talk to Rael after the meeting and arrange.

Let's do another deal, Stratford.

Okay. So that's my challenge to Choice. Now Loblaws, I've raised this before, and I'm going to raise it again. You're doing a lousy job with low salt food. And there's an awful lot of us baby boomers who need low-salt food. We struggle with fluid retention. So you've got the best rotisserie chicken in the world, but it's not available most of the time. It's called Portuguese style. Now Portuguese is not a recognized cuisine. So I can see where it doesn't sell well. It needs rebranding. This creative company should be able to rebrand that.

Wait, so hold on. Is the question -- we can't only do one. Is the question about the chicken or the question is about low sodium? Or is it?

Well, the question is generally about more good low sodium food.

Okay. Where is April? Is she here? April, where are you? Are you waving -- you get that note? Okay. Perfect.

Well, so I can tell you, Bob, you have a kindred spirit in April, who has recently joined us as the Head of Loblaw Brands and healthy food. And what do you say healthy and -- what's your -- now I've really put her under...

Healthy food that tastes amazing.

Now yes, healthy food that tastes amazing, that's what we want, right?

Okay.

Okay. So April is there, and she's worth having a chat with actually, she should be pretty inspiring.

Her name is April?

April.

April, would you find me after the meeting, please.

All right. That matter resolved. We're doing really good. Okay, the challenge...

Last one. The students, they're getting tired. They're not used to standing up for very long.

Yes. Okay. The challenge for Shoppers, I'm in Shoppers at least once a week. And I know it tremendously well. I know your strengths and your weaknesses. But the one thing I have observed is that you've had total control now for 8 years. You have not done with pharmacy products, what you do with food products. I'm waiting for some serious innovation as you do with President's Choice because I'll give you the example.

Here, here. I totally agree with you. And by the way, April -- in addition to doing -- she's putting her head in her hands now. In addition to being a rock star when it comes to great food products, she's also worked in one of the big health and beauty companies over in the U.K. before she came here. And Gregers is the new President of Shoppers Drug Mart. And what we were just talking about this yesterday, weren't we, about the opportunity to bring some real differentiation and innovation to Shoppers Drug Mart, perhaps even through the Life brand. I mean, Life brand is a pretty fabulous name. And so we need some fabulous innovation to go with it. So that's a strong yes. Gregers, that's a strong yes, okay? And if you want to talk to Gregers, he's right there. And he's...

Let's get serious about this because I mean I've been Shopper's shopper since the thing came to town. I knew David Bloom, I watched the place grew like crazy. And I thought what a brilliant move when you bought it?

No, no. Bob, you're right, and it's on our hit list. We needed new management to get on with it. It's exciting. We're going to expect some big things. So hopefully, next year, we'll be able to bring you a couple of products that really do it for you. By the way, I will say there is one product. The packaging isn't great, but the quality is amazing, which is the Life brand masks, face masks. So if you tried those and then sent me a picture with one on, that would really be awesome. Bob, thank you, let me move to these.

Okay. On your Weston. I'm Helea, and we're all from Bloor Collegiate Institute. And we're all taking accounting right now. So I was wondering as the Chairman of Loblaw Companies Limited, how the information and financial reports are used in your decision-making?

Richard, do you want to take that one?

Sure. Financial reports are crucial. They are really important. Everybody who is at Loblaw looks at financial reports on a daily basis, whether it's our sales or margin, like that's how we make decisions. That's how we figure out what's going well versus not, what is challenging. And so it helps us make those decisions. Financial statements also provide accountability and transparency to the public, to customers and to shareholders. So that's also key.

But also, it's important to note that all these financial reports or financial statements, they look in the past. So we spend a lot of time here trying to predict the future. And so we use that past financial information to try to build models that allow us to predict the future. And I would say that is what's most important for us because if we can build good plans for the future, that will allow us to come here every year and have good results to present to all of you.

My name is Prakridi. We understand that Loblaws has begun using driverless trucks for some deliveries, and we are wondering how this was working out. And will robots be used more for automation in stores, too.

Noted that one?

Yes, I can take that one. So yes, it's very exciting with our driverless trucks. So our supply chain, they are ahead of the game. So right now, we have 10 so-called street trucks running daily around Toronto. And we have 15 more by end of June. And end of this year, we will have 50 in total. We'll still have a person in the cabin. So we still have -- it's not completely driverless yet, but it will be over time. It's driving on its own. And then we have one of these Class 8, is one of the big trucks.

We're testing it for another 3 weeks between Toronto and Cornwall. But in 3 weeks' time, it's going to run on its own still with a person in there trying to survey and making sure everything is okay. But over time, we will definitely be driverless. So no, it's very, very exciting. But about the stores, I still believe that grocery stores are very, very people focused. So our colleagues, they play a vital role in serving our customers. So I don't foresee any change with that regard in the near future. Thank you for the question.

We understand that Loblaws has made a big commitment to fighting climate change. What are some of the areas where you see the greatest improvements happening?

Do you want to take that one, too?

Yes. So thank you, very important for all of us. So fighting climate change is a very important priority for Loblaw. And we are really focused on making some practical improvements across our business. It could be reducing emissions through LED, it could be smarter heating and also within our refrigeration systems.

And then food waste is probably the biggest contributor to climate change at all. So we're doing a lot on food waste. For example, in our discount business, we have removed multi-buys. So you don't force customers to buy more than one and thereby reducing food waste also at customers' home. And then we have that target to reduce zero food waste to landfill by 2030, and we are well underway to achieve that target as well. On plastic, it is another great example. In our control brands, we're more than 98% where we use reusable plastic. So we are well on our way. But again, in so many other aspects, there's so much more we can do. Thank you.

We saw -- I'd say we saw a great picture yesterday, didn't we. We were up at the new warehouse up in East Gwillimbury. And it's a big, big building, and they showed us sort of the imprint of, was it, 7 football fields on top of this building, all of which will be covered with solar panels, and it will be the largest solar panel installation in Canada.

And I think they think it might be the largest solar panel installation in all of North America and all to take the energy from the sun and to use it to power that distribution center. So there's that type of project that's going on throughout the company as well. And I have to compliment the team. They're really superb, particularly in energy management and reducing our carbon footprint that way. Thanks. Good questions.

Yes, over here.

I'm a proxy for Michael Tysowski. Now his question is the T&T grocery store expansion in U.S.A. cities, have you thought about Portland or Boston?

Tina, have we thought about Portland and Boston. You don't need to stand up. We'll -- so the short answer is yes, we've thought about both. But the focus is on the West Coast right now. And as Per said, we've got -- is it 9 stores approved? Tina, is that 9 stores approved and the next one is opening when in June.

Yes.

And where is that one?

So we're focused on Greater Los Angeles and Greater San Francisco.

So West Coast, T&T, San Francisco, Seattle and L.A.

Okay, good. Over here in the middle.

My name is Daniel. I am a proxy holder for myself. I have 2 questions. The first one, going back to the automation in the stores. A few years or quite a few years ago now, Takeoff Technologies like automated Micro Fulfillment was announced. Is there any future plans? or is that still being used?

So no. So the Takeoff Micro Fulfillment facility, we decommissioned. It wasn't -- it didn't work, not from a cost-effective perspective. And what we see now is that far and away, the best way to pick and deliver groceries to Canadian consumers is through the stores themselves. And so that is the basis of our business model. And Frank Gambioli, who's here, who's responsible for most of that in-store fulfillment, he tells me that productivity and accuracy are going up every day. And he's laughing at me because I give them a hard time about this. We're getting -- we're really good, and we're getting even better. So that will continue to be the focus for online picking and delivery.

My second question is about PC Optimum customer service. personally, myself, I've defined it as having a lot of friction. One point of contention I have is I feel like there's a 5-minute minimum wait time to talk to someone before you even know how long that wait time is, whether it be 30 seconds or 40 minutes. Is this something that the company is purposely adding to drive people to online channels?

What a great question. So who wants to answer that. I'm going to -- I'll answer the first part of it. No, it's not a purposeful effort to drive people to online channels. But we are trying to maximize the efficiency of the way that we deliver customer service and online is getting increasingly capable of directly addressing customer concerns. It's one of those things where I imagine, I think I know the general statistic, like 90% of phone calls that come in to our call center would relate to people concerned that they didn't get the points that they thought they should have gotten at that recent shopping trip that you can automate pretty quickly. You don't have to have a person answer the phone.

And we want to maintain the capacity of those operators to deal with particularly nuanced or complex issues. But it is a real -- it is a frustration of mine. I think for everybody who calls into a call center, that struggle to get to a person and they struggle to have their complex issues resolved. So suffice to say, it's an important priority for us. And I don't know if Dax is in the room, but we have an absolute superstar managing that part of the organization for us. And she's working both with people and with technology to really step change the way we deliver service through those call centers. Thanks. Great question.

Okay. Bob, are there any more questions? If not, well, maybe, Bob, you can be our last question, and then...

Is there anybody online?

Yes. Is there anyone online? Thank you for asking.

Okay. Don't want to leave them out.

You're right about that.

Yes. I wasn't going to raise this, but I think it is important. There is a problem with the customer service with Optimum. It doesn't happen very often, but I got gas the other day, put my card in, it acted like it had received it, got my receipt, but it said, if you were a PC Optimum member, you would have got 940 points.

So we're talking about $0.94. Now I tried to do it online, and I couldn't make it work. And then I phoned and waited 35 minutes. And I got somebody who said, "Oh, yes, we'll take care of this." And he was a bit too efficient and hung up before he got enough particulars. I got an e-mail saying that the matter had been settled, but the points didn't show up in my account. But we're still talking about $0.94. So -- but that's the kind of thing that can drive people crazy. And the point of the loyalty program is not to do that.

Yes, you're absolutely right. And I can tell you, hygiene around points has been an issue for us over the years. It's vastly, vastly, vastly improved, but there are still too many incidents where small amounts like that don't get resolved quickly. And frankly, I don't -- honestly, I don't understand why any point would ever go missing in sort of a digital system like ours. But there are a few -- it's very complex and all sort of mechanisms need to fire at the right time in the right place. Esso is a partner of ours. The interface between us and them is just yet one more part of the system. But suffice to say, we're much better than we were and we are continuing to prioritize it.

And I want to agree with you. Yes, it is much, much better than it was. So you're going in the right direction.

Terrific. Thank you. Okay. All right. So I think that is the end of our question-and-answer period. And thank you, everyone, for your very thoughtful questions. You folks in from Bloor Collegiate. Those were terrific questions. Really appreciate that. And so on behalf of George Weston and Loblaw, I'd like to thank you all for having taken the time to join us today. I wish you the best to you and to your families. And I hope that those of you who are here in person will take some time to join us for the refreshments provided by the team at President's Choice.

There's lots of President's Choice snacks. There's lots of President's Choice beverages, and there is a skin hydration machine upstairs, so you can test your skin hydration. It's very cool and everybody should do it. It's upstairs on the third floor. So one up from where we had the welcome reception. So make sure you get up there and test your skin hydration. Apparently, Per's is perfect. So -- but now he has to maintain it, right, Per? Okay. Thank you, everyone. Please enjoy some refreshments. I appreciate it very much.

Good morning, ladies and gentlemen, and welcome to the Loblaw Companies Limited 2026 First Quarter Results Conference Call. This call is being recorded on Wednesday, May 6, 2026. [Operator Instructions]. I would now like to turn the conference over to Roy MacDonald, Vice President, Investor Relations.

Great. Thanks very much, Colby, and good morning, everybody. Welcome to the Loblaw Companies Limited First Quarter 2026 Results Conference Call. As usual, I'm joined this morning by Per Bank, our President and CEO, and by Richard Dufresne, our CFO.

And before we begin, I want to remind you that today's discussion will include forward-looking statements, which may include, but are not limited to, statements with respect to Loblaw's anticipated future results. These statements are based on assumptions and reflect management's current expectations, as such, are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from expectations. These risks and uncertainties are discussed in the company's materials filed with the Canadian securities regulators. Any forward-looking statements speak only of the date they are made and the company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than what's required by law.

Also, certain non-GAAP financial measures may be discussed or referred to today. So please refer to our annual report and other materials filed with Canadian securities regulators for a reconciliation of each of these measures to the most directly comparable GAAP financial measure.

And also note, following the sale -- the announced sale of PC Financial to EQ Bank and our ongoing partnership, PC Financial results are presented under discontinued operations, and it's important to note that we are not getting out of the Financial Services business. As such, unless otherwise indicated, our remarks today will focus on the comparable total adjusted consolidated results.

And with that, I'll hand the call over to Richard.

Thank you, Roy, and good morning, everyone. I'm pleased to report another quarter of consistent financial and operational performance, carrying on the momentum from last year. 2026 is off to a strong start. Our business continues to perform well, reflecting our ongoing focus on retail excellence and our commitment to deliver value, quality, service and convenience to Canadians.

In the first quarter, revenue growth was strong at 4.5% when normalized for the exit of our optical business and the divestiture of Wellwise. Our top line growth was supplemented by the opening of 13 stores in the first quarter, 8 Shoppers and 5 hard discount in underserved communities. Total company adjusted EBITDA increased by 6% to $1.7 billion and margin improved by 20 basis points to 11.5%. Adjusted diluted net earnings per share grew by 10.6%. On a GAAP basis, revenue grew $600 million or 4.2% and diluted EPS was $0.50, up 19% in the quarter.

In Food Retail, we delivered traffic and basket growth on a same-store basis. Absolute sales grew 3.9%, and our food same-store sales grew 2.4%. Our investments in the right-hand side of our stores are seeing positive results in apparel and most GM categories. However, we see ongoing pressure in liquor and tobacco. Normalized for this right-hand side impact, our food same-store sales grew 2.7%. Our internal CPI-like food inflation metric continues to be significantly lower than Canada's grocery CPI of 4.4%. Customers are seeking value and are finding it in our stores. This is a function of the effectiveness of our loyalty programs, promotional offers and value on shelf.

Our efforts to push back on unjustified cost increases from global suppliers has delivered results, helping to reduce the inflationary pressures on Canadians. This shows up in our inflation measures at the cash register, which was more or less aligned with our same-store sale growth. As consumers continue to focus on value, our hard-discount banners remain a key driver of absolute sales growth. We opened 5 new hard discount stores in the quarter and we'll open about 30 stores in total this year. We are pleased with the performance of our new stores. Included in this quarter's food comparable sales growth results are 28 hard discount stores that have opened since 2023. These stores are averaging double-digit same-store sales growth. We are looking forward to bringing more No Frills and Maxi stores into more communities across Canada.

We're also pleased with the momentum and performance of our conventional stores. This growth continues to be led by our Fortinos, YIG and T&T banners. In Drug Retail, absolute sales increased 4.8%, while same-store sales grew 4.1%. Pharmacy and Healthcare Services grew same-store sales by 6.7%. Our Specialty Prescription growth continued to lead our Pharmacy performance. Within this category, our GLP-1 sales growth continues to outperform and has further accelerated in the quarter. Across our pharmacy network, patients continue to respond positively to the convenience and expanded level of primary care we offer through our more than 1,800 pharmacies across the country. We opened 8 new drugstores in the quarter and remain on target to open more than 30 new locations in 2026.

Front store same-store sales were up 1%. Beauty remained strong, while OTC was affected by the timing of the cough and cold season and inclement weather. Online sales continued to perform well, growing by 20.3% in the quarter. E-commerce sales were driven by growth in PCX delivery, along with the successful integration of third-party delivery options. Retail gross margin of 31.4% was stable. While our food margins were flat, our drug retail gross margins were down. This was driven by changes in sales mix in drug retail categories, timing of the cough and cold season, partially offset by continued improvements in shrink.

Retail SG&A was better by 40 basis points, primarily driven by operating leverage from higher sales and timing benefits on certain costs. I'm very pleased with our ability to reduce this rate despite the additional costs associated with opening new stores and ramping up our automated DCs. Retail adjusted EBITDA grew 6.5% and retail EBITDA margin increased by 20 basis points to 11.1%. The ramp-up of our first automated DC in East Gwillimbury continues to progress well. Both costs and operational improvements have been better than planned. We remain pleased with our progress and expect to be fully ramped up later this year.

Construction on our second automated DC in South Caledon is progressing very well. The project remains on plan, with automation installation beginning at the end of this year.

PC Financial's revenue increased 3.9% driven by higher insurance commission and higher interest income. The Bank's adjusted net earnings increased by $9 million or 40.9%. This was primarily driven by higher revenue and favorable impact from lower expected credit loss provisions. The previously announced sale of PC Financial to EQ Bank has obtained all required regulatory approvals and we now expect the deal to close in the third quarter. We are very excited about this transaction, and it will expand the benefits of our PC Optimum Program and offer more ways for Canadians to earn rewards.

As previously stated, Loblaw would unlock approximately $600 million in cash related to this transaction. We expect to deploy a portion of these proceeds to increase our share buybacks in 2026 and the balance to purchase EQB shares in the market. Free cash flow from the Retail segment was strong at $432 million for the quarter. We repurchased $648 million worth of common shares and announced a 10% dividend increase, our 15th consecutive annual increase.

Our balance sheet is strong, and we continue to improve our key return metrics, as shown by our recent credit rating upgrade by DBRS to a A-Low. Our return on equity sits at 26.8% and our return on capital at 12.4%, reflecting our strong capital allocation discipline, focused on cost management and proven strategy.

Looking ahead to the balance of the year, performance should closely resemble what we're seeing in Q1. As mentioned earlier, 2026 is a year with the ramp-up of our East Gwillimbury DC and our investments in T&T U.S. have the greatest negative impact on our earnings growth. Despite that, we feel confident in our ability to deliver on our outlook for the year, as we've shown in Q1. Our focus on retail excellence and on the execution of our strategic initiatives will allow us to keep delivering value to our customers while continuing to reward our shareholders. I will now turn the call over to Per.

Thanks, Richard, and good morning, everyone. We are very pleased to report a strong first quarter for '26, making a robust and successful start to the year. We delivered solid financial results, including strong revenue and adjusted EPS growth, and I'm delighted that we are able to achieve this while making significant investments to grow our pharmacy and discount presence, expand our T&T banner into the U.S. and advance 2 new technology-enabled distribution centers. Our performance reflects the successful execution of our strategic priorities and our unwavering focus on the customer.

Our strategic and deliberate investment in opening new stores are clearly resonating with Canadians. We are listening to our Canadians need and investing where it matters. Our everyday focus remains steadfast on providing quality, value, service and convenience for customers across our coast-to-coast network. These efforts are clearly resonating as evidenced by continued strong customer engagement and increased traffic levels across our business. From the strong performance and the continued growth of PC Express delivery to the consistent strength of our pharmacy services, we are demonstrating our commitment to being there where and when our customers need us most.

We have momentum in our Food Retail segment, marked by the contribution from our new store investment and our same-store sales growth. Increased customer traffic was underpinned by our compelling everyday value offering, personalized PC Optimum loyalty offers and impactful promotions. The ongoing performance of -- outperformance of our hard-discount banners, Maxi and No Frills was a key driver of this success reinforcing their vital role in helping Canadian manage affordability. We're also very pleased with our conventional performance where our multicultural and preferred food delivered a very strong growth.

Our conventional stores gained tonnage and share gains against our peers. We also achieved strong e-commerce sales growth led by PCX delivery and the successful integration of third-party delivery options. This growth was significantly driven by our discount customers as they are increasingly choosing the convenience of delivery, highlighting the broad appeal and accessibility of our digital offering. In Drug Retail, Shoppers Drug Mart and Pharmaprix continued to demonstrate resilience and growth. Pharmacy and front-store growth reflected positive trends in prescription volumes, specialty drugs and beauty categories underscoring the vital role of our pharmacies and health care professionals play in Canadian health care. This performance proves the strength of our health care services and our commitment to meeting the evolving needs of Canadians. The strategic investments we have made across retail to expand and enhance our network continue to pay off.

During the quarter, we're expanding Canadians access to both nutritious food and essential health care services. We opened 5 new hard discount stores and 8 new drug stores, further solidifying our commitment to being where Canadians need us most. Our commitment to modernization and -- was also evident with the introduction of a new look for our No Frills banner marked by the opening of a new store in Komoka, Ontario, a modern design delivered at an efficient build cost. And for everyone living in the DTA area, I hope you are able to visit our newly opened T&T supermarket in Erin Mills, which we celebrated with a wonderful opening ceremony that was really, really well attended by many stakeholders. These investments are crucial to strengthen our foundation, expanding our reach in key growth areas and providing the best possible shopping choices for our customers.

Last quarter, we launched the PC Express integration with OpenAI's ChatGPT, turning previously dead-end recipe searches into transactions. Customer adoption is already ahead of plan, and we are continuing to advance our leadership with a 2.0 version coming soon. And earlier in this week, we are proud to announce that we are partnering with Canadian technology firm, Shakudo, providing our team with a common platform that will enable us to manage and scale AI machine learning across our data infrastructure. In addition, we're starting to roll out AI productivity tools across our teams to support them in their day-to-day work. There's more to come here, and we're just getting started.

As a proud Canadian company with more than 2,800 locations and 220,000 colleagues, we remain deeply committed to supporting the communities we serve and providing their lives everyday essential to families from coast to coast. As we look ahead, we remain confident in our outlook for '26. We have a strong portfolio of businesses that are really exceptionally well positioned to meet the evolving needs of Canadians and successfully navigate the macro environment.

I want to once again express my sincere gratitude to all our colleagues for their unwavering dedication, commitment and focus on our customers. Their hard work is the cornerstone of our success. With that, I'll now open the floor for questions.

[Operator Instructions] Our first question comes from Irene Nattel with RBC Capital Markets.

I was wondering if you could talk about what you're seeing in terms of consumer behavior in the store? And notably, as you went through the quarter and we saw the spike in gas prices, did you see any sort of notable changes in how people are trying to adapt and where are we at Q2 today?

Thank you, Irene. And a great question that, of course, we are thinking a lot about. But honestly, what we are seeing right now is more of the same. And we are fighting back on the price increases from our suppliers. So far, we are not seeing any price increases due to that reason, and customers, they are still doing what they did in the last quarter. So they are trading down.

For example, I just got an example this morning on chicken, where our customers, they are buying more into the opening price point of chicken, and they're buying less of the free from. And it's a double-digit decline in the free form and it's a double up in our opening price point. So more growth in chicken. The same for steaks. Customers are buying less steaks, but they're buying more minced beef. They're still buying more on promotion. So we are not worried about the customer sentiment because we do believe that the offering we have across our entire portfolio actually plays well to the customer sentiment. So more of the same than the last -- in the last quarter. And it's also proven in that our internal inflation is lower than the external inflation.

Yes. The only thing I'd add, Irene, is like definitely we saw nothing in Q1 because actually, when you look at gas prices, though, it's definitely more in Q2, Q2 is a slight change, but not material. So -- but the example that Per mentioning are what we're starting to see now, but like the trajectory of our business continues to be going in the same direction.

Your next question comes from the line of Chris Li with Desjardins.

Maybe a couple of questions on the front store sales performance. I was wondering, in addition to the factors you mentioned, was that also impacted by any pricing adjustments you might have made to further enhance the value proposition to consumers at Shoppers?

So our Q1 front-store sales were impacted by a number of events and not the one that you mentioned at all. On the positive side, we had Prestige continue to do well. There was some Easter shift that drove a bit of sales, while the cough and cold timing, inclement weather and slow food sales in some regions moderated our performance. So there was more than negative than the positive in the quarter. But I stay very confident on the Shoppers front-store performance going forward.

Okay. Perfect. And maybe just a follow-up here. I know you mentioned before, you've been doing some testing on the new food concept at some of the Shopper stores. Wondering if you can provide us an update on how those pilots are performing so far?

Yes. So what we are doing, we are adding about 1,500 products into the mix of Shoppers front store where we're doing a relay. So what we have done now, we have finished the first 3 tests. It's only 3, so we have agreed to do another 40. And I'm sure that by the end of next quarter, we will be able to give you some insight on the 40. And if that goes well, then we are ready to deploy that to a significant number of stores. And if it goes well, it will give us an uplift.

Your next question comes from the line of Mark Carden with UBS.

This is Mat Rothway on for Mark Carden. So I was hoping you could touch on the drivers of gross margin a little bit. You called out drug retail mix as a headwind. Can you just detail a little bit more about what the driver was there?

Yes. It's actually pretty clear like first of all, on food, it was flat, okay? Very likely flat, like no difference versus last year. On the drug front, it was, I guess, twofold, what we're talking about on front store like cough and cold. Like if you remember, we mentioned that cough and cold was -- happened this year in December, whereas last year, it was in January. So we didn't get the same margin that we had in front store this year. So that was the other factor to mention.

Great. Very helpful. And as a quick follow-up on SG&A, you mentioned the timing of certain costs as a benefit in the quarter. How should we think about that impacting subsequent quarters?

Yes, that was a onetime thing associated with the way the year ended. There were some costs that actually were booked in Q4 that were not in Q1. So therefore, that improved our SG&A rate. So -- but the bulk of the benefit came from operating leverage from higher sales.

Your next question comes from the line of Michael Van Aelst with TD Cowen.

You talked about a ramp up on the new store growth, and it's been pretty strong for about the last 6 quarters. And we know that there's always that drag in the -- particularly in the first year on the new stores. But what -- where do you think you are in that cycle? And where do you see this effort to increase your square footage growth rate becoming more neutral to earnings and may be even positive?

First of all, we have built a little bit fewer stores this year than last year, but it's more of the same stores. So those from last year, they are now in the base. So it's not dragging us down further. Normally, a new store in discount would be profitable within 3, 4, 5 years depending on the location. About the new store growth, we're confident that we continue to build about, I don't know, 30 to 40 new No Frills and Maxi's per year and about 70 total, including the Shopper Drug Mart. But what we're looking at what we are doing, and that's why we believe so much in our plan is that we are building in under-served areas. I can take as an example. So in the beginning of 2025, we only had one No Frills in Vancouver Island. At the end of this year, we have 4, and we have planned and approved another 3, so that would be 8. Another one is when I started in September 2023, I visited Shoppers of all places with 166,000 inhabitants. We had zero No Frills there. Today, we have 2 and they are doing very, very well. So it's really, really working for us.

Yes. So financially, Michael, like you're right, like the drag on new stores is no longer a factor. That's actually not -- that's not what's dragging. Like what's dragging now it's essentially a ramp-up of East Gwillimbury, which is going to be completed like, let's say, around Q3 and T&T U.S. that's still dragging. What's not yet contributing is like, as you know, like a grocery store takes, I don't know, 3 years before it starts to contribute to earnings, and that's probably going to start a year or 2 from now. So when these new stores start to contribute to earnings, like this less drag is going to become a positive. So we expect to see that over the next 24 months.

That's what I was looking for. And then just clearly -- just to be clear on the DC side, when do you see that becoming -- turn from a drag to a positive?

It's going to be a positive in the second half of the year. Like the drag on EPS of both T&T U.S. and East Gwillimbury this year in our plan is about 1%, slightly more than 1% EPS growth. So that will be gone next year.

And then when the new -- when the second DC ramps up, is that just going to replace the drag that we're seeing?

Yes. So in '27, you're going to get a year of calm. And in '28, you're going to have the same thing we live with the first one. But by that time, hopefully, like our new stores are starting to drive earnings and the drag of T&T will be behind us. So it should be a better position than we are in right now.

Your next question comes from the line of Vishal Shreedhar with National Bank.

With respect to the buyback, you suggested that some of the $600 million would be used for buyback. So relative to the [ 1-9 ], how much of that $600 million do we put in? And what should we anticipate the cadence being given that you were stronger than usual in Q1?

Yes. So I'd say, Vishal, like we haven't landed yet, but like [ 2-1 ] is probably as good a number for you to put in your model right now.

Okay. And -- with respect to genericization of GLP-1 molecules and the developments that have happened, can you just clarify any updated thinking in terms of the impact to same-store sales growth and when that may begin and the impact across the P&L and how you see that unfolding to the extent you're getting better info now?

So it's too early to tell. Like what -- I think what we know today, 2 manufacturers have been approved. And we told you that we thought it would be in P8, which is August, that we should be getting supply. So that may come a few weeks before, okay? The truth of the matter is, is when we release Q2 we'll know a lot, okay? So we'll be able to give you more specific guidance. We won't be able to give you a trajectory of how it's going to get adopted by the market, but we'll have a better sense.

Having said all that, like clearly, what's going to happen mathematically is you're going to have an impact on same-store sales, but you're also going to have an impact on margin. Like we talked about the drag on gross margin of Shoppers because of sales mix is because like GLP-1 drugs right now are accelerating, but when the price is going to fall, it's going to go the other way. So it's too hard right now to pinpoint it, other than to say that we feel good about our gross margin. We feel good about our SG&A rate and your guess is as good as mine as to what's going to be the impact on top line of generic drugs when they do become available.

Yes. And I would say this is really, really good for Canadians because they're getting this drug much more cheaper. It's about $350 depending on the doses today, and it's -- we don't know yet, but maybe it's going to be -- the cost is going to be 1/3. So it's definitely going to be a tailwind for us. And it is growing about 40% year-to-date, which is a lot. And think about the growth when the price is going to be much, much cheaper. And again, as Richard said, we can only be guessing right now, but for sure, it's going to increase, but again, looking forward to informing you more in the next quarter.

Your next question comes from the line of Mark Petrie with CIBC.

I just wanted to ask about -- actually just follow up on the line of questioning that Michael had around store investment costs. And I know you've been working to get efficiencies in the upfront investments. I think you mentioned that with the new format No Frills store. And so just hoping you could potentially quantify any of that? How does that affect the economics and the payback?

Well, the way it's very simple for every dollar that we reduce our construction costs and just drive up our IRR. So we've been working hard on this, as we've told you in the past, like construction costs are a number that have been moving up a lot over the last 10 years. But like the areas that are big for us are refrigeration, and we found ways to cut costs on refrigeration. We're trying to find ways to build store faster, with semi-assembled panels, which reduce the time, therefore, reducing the cost, and we're also testing a bunch of other initiatives where we can reduce it even further.

So the point I want to leave you with is this is a relentless focus on, like we're not -- we're happy where we are, but we're not satisfied. We keep working on it, and we want to find ways to reduce it even more so that will just drive more IRRs and allow us to have stores that deliver great return with a lower sales threshold to start with.

And think about that -- if we and when we get cost down to build and what we have done and with the team have done that until now, we can get into smaller towns with a catchment area that's significantly lower than today and still make the same IRR. So meaning that the accessibility to discount stores, of course, the country will increase, and that's just basically solidifying our strategy.

I think we're very happy, Mark, like all our performance of our new stores, like we said we opened a bunch since the beginning of the year, and we -- all of that -- all of the ones we opened are doing really well. So for us, like we just keep on going here.

Yes. Okay. So more about expanding the markets that you can get into as opposed to necessarily improving or materially improving the paybacks. But are you able to quantify at all or just give us a sense ballpark about how much the construction costs have fallen with all of your efforts so far versus, I don't know, 3 years ago?

Well, without throwing an absolute dollar number, I'd say we've been able to reduce construction cost by 30% so far.

And to your other question, it's not only about expanding. It's also about improving the IRR where we can get new stores. So it's not only going into smaller catchments There's also lots of places with the big catchment areas where we can build more discount stores. Again, back to the example of Sudbury. We only have 2 stores in the city with 166,000 inhabitants and there are many, many places similar to that.

Your next question comes from the line of Etienne Ricard with BMO Capital Markets.

This is Emily for Etienne. Just wanting to focus back on any differences between discount and conventional. And we know that discount growth is really driving sales. So are you seeing any different behaviors within each of them? And are you seeing more or less trade down within discount or conventional?

It is still more of the same, and we are positive both in our conventional business and in our discount business. And our discount business comp sales is significantly higher than the conventional business. But still, it's not accelerating. Customers, they are staying cautious. They are. And as I said before, maybe it's a more conventional entry price point for chicken, exactly free from, the organic barriers might see a decline and then the conventional barriers is increasing. So it is like buying more on promotion. So it's kind of the same mechanics that our customers are using, but we are not seeing it's increasing. It is more of the same.

Yes. And I want to add that our conventional business remains very healthy. We look at our same-store performance, our total growth, despite the fact that we're not adding much square footage, if any, and that business continues to perform really well for us. So that with the strong growth in our hard discount business, which because we're adding stores on top of higher same-store performance is growing really fast is helping us deliver the results that you're seeing today.

Okay. And just a follow-up. How should we compare the competitive dynamics in Quebec versus other provinces? And are you seeing any better or worse contribution from the new stores in Quebec versus the other jurisdictions?

The Quebec market is as competitive as the rest of the country. And so we're very happy with the performance of our stores in Quebec as we are happy with all of our stores across the country. So no notable differences.

And your next question comes from the line of John Zamparo with Scotiabank.

I wanted to come back to the GLP-1 side of the business. And I believe you said you're seeing this accelerate and that Shoppers is taking share and that's even before generics were announced. I wonder what you attribute that to? It's obviously a dominant player nationwide, but -- and then you can say about why you share has increased so much and whether that's the result of any intentional efforts or investments from Shoppers?

I don't know whether we said that we were gaining shares on GLP-1. Probably, we are, we're growing by 40%, but we don't have the same Nielsen data as we have on food so we can say something with the exact knowledge. But we are seeing a significant gain in GLP-1, not gain but the growth in sales.

And I don't know why, to be honest with you, just like we were surprised when we saw the acceleration in growth in Q1. So -- and as you said, we're not even generic yet.

Yes. Okay. Understood. And then back to the state of the consumer, and in particular, trade down metrics. I appreciate the color on discount versus conventional. Is there any other color you can add on promotional intensity and performance of national brands against private label?

Yes, I still see an outperformance on our own brands. They're doing really, really well, and we have an enhanced focus on our PC and our no name. So we're doing well there, and customers, they like it and it's a good alternative to the brands when they want to save money and have better quality.

And with no further questions in queue, I'd like to turn the conference back over to Roy MacDonald for closing remarks.

Great. Thanks very much, everybody, for your time this morning. If you have any follow-up questions, drop me an e-mail or give me a call. And then please mark your calendar for the Thursday, July 30 when we'll be releasing our Q2 results. Have a great day.

This concludes today's conference call. You may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Loblaw Companies Limited 2025 Fourth Quarter and Full Year Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, February 25, 2026. I would now like to turn the conference over to Roy MacDonald, Vice President, Investor Relations. Please go ahead.

Thank you very much, and good morning, everybody. Welcome to the Loblaw Companies Limited Fourth Quarter and Full Year 2025 Results Conference Call. As usual, I'm joined here this morning by Per Bank, our President and Chief Executive Officer; and by Richard Dufresne, our Chief Financial Officer.

So before we begin today, I'll remind you that today's discussions will include forward-looking statements, which may include, but are not limited to, statements with respect to Loblaw's anticipated future results. These statements are based on assumptions and reflect management's current expectations. As such, are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from our expectations. And these risks and uncertainties are discussed in the company's financial materials filed with the Canadian securities regulators.

Any forward-looking statements speak only of the date they are made. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than what's required by law. Also, certain GAAP -- non-GAAP financial measures may be discussed or referred to today. So please refer to our annual report and the other materials filed with the Canadian securities regulators for a reconciliation of each of these measures to the most directly comparable GAAP financial measure.

And I will add that following the announcement of the sale of our PC Financial business to EQ Bank and that ongoing partnership, our PC Financial results are presented under discontinuing ops. It's important to note that we are not getting out of the financial services. As such, unless otherwise indicated today, our remarks will focus on the comparable adjusted consolidated results, excluding the impact of the extra week this quarter. And with that, I will hand the call over to Richard.

Thank you, Roy, and good morning, everyone. I'm pleased to report on another quarter of consistent financial and operational performance, reflecting our ongoing focus on retail excellence and our commitment to deliver value, quality, service and convenience to Canadians. As Roy mentioned, with the announced sale of PC Financial to EQB, the results of the bank are now presented in discontinued operations. It's important to highlight that we're not getting out of financial services by virtue of our interest in EQB, so we will continue to focus on our consolidated results.

When the transaction closes, the current discontinued operations business will be replaced by Loblaw's proportional ownership share of EQB profits. In the fourth quarter, on a 12-week basis, revenue growth was 3.5%, reaching $15.5 billion. Our top line growth was supported by the opening of 30 stores in the final quarter of the year. In the year, we added 1.5% square footage to our food retail stores and 2.1% to our drug retail portfolio. This growth was primarily focused on adding Hard Discount stores and pharmacies to underserved communities.

Adjusted EBITDA increased by 4.8% to $1.8 billion and margin improved by 10 basis points to 11.5%. Adjusted diluted net earnings per share grew by 10.9%. On a reported basis, revenue grew 11% and adjusted EPS was $0.67, up 22% in the quarter. In Food Retail, we once again delivered traffic and basket growth, resulting in tonnage market share gains. Absolute sales outpaced same-store sales by 160 basis points at 3.1%, reflecting our new store growth. Absolute sales also outpaced our internal inflation, which reflects our market share gains.

Our food same-store sales grew 1.5%. It's worth indicating that we are lapping a strong Q4 last year when we increased promotional activity. As we progress through Q4 2025, our same-store sales growth accelerated, and this has continued in the first quarter of 2026. We continue to see positive momentum across key categories in the right-hand side of our stores with continued accretive growth in toy, apparel and home and entertainment.

That said, with continued pressure in liquor, tobacco and HABA categories, right-hand side resulted in 20 basis points of pressure on food same-store sales. Our internal CPI-like food inflation metric was significantly lower than Canada's grocery CPI of 4.4%, and that gap widened over the final 2 months of the quarter. So customers are seeking value and are finding it in our stores. This reflects our effort to push back on unjustified cost increases from suppliers and the effectiveness of our loyalty and promotional offers.

As consumers continue to focus on value, our Hard Discount banners remain a key driver of absolute sales growth. We opened 15 new Hard Discount stores in the quarter, bringing our total opened in the year to 48. These stores are meeting expectations and will start rolling into comparable sales throughout 2026. In fact, 20 of the new Hard Discount stores opened in 2024 are already in our comps and are averaging healthy double-digit same-store sales.

We're also pleased with the momentum and performance of our conventional stores. In the quarter, this growth was led by our Fortinos and YIG banners. Across conventional, multicultural, natural value and prepared foods continue to be growing categories. In drug retail, absolute sales increased 4.4%, while same-store sales grew 3.9%. Pharmacy and health care services grew same-store sales by 5.6%, driven by broad strength in prescription and new health care services.

Our specialty prescription growth continued to lead our pharmacy performance. Patients continue to respond positively to the convenience and expanded level of primary care we offer to our more than 1,800 pharmacies across the country. I'm happy to confirm that we've achieved our target of opening 250 in-store clinics this year, improving access to health care services for Canadians in underserved communities.

Our front store same-store sales continued to improve, growing 2.2%, reflecting the ongoing strength of our beauty category. We saw an increase in our OTC sales as Canada was hit hard by the cold and flu season with influenza cases reaching a 3-year high. Flu season peaked in December, a shift from last year when it peaked in our first quarter.

We continue to be pleased with YIG's underlying strength and profitability in our front store business. Online sales continue to demonstrate strong growth, reaching over $4.5 billion last year. In the fourth quarter, our digital sales increased by 19.6%, highest growth in the year. Delivery continues to be led -- to lead that growth, particularly in discount. In November, we launched another third-party delivery partnership across our grocery banners and early results are very positive.

Our retail gross margin improved by 10 basis points to 31%, driven by improvements in shrink and drug, while food trading margins remained stable. Our retail SG&A rate was flat with operating leverage from higher sales, offsetting incremental costs related to the opening of new stores and the ramping up of our automated distribution facilities.

I'm very pleased with our ability to maintain a flat rate despite the additional costs associated with this growth. Retail adjusted EBITDA grew 4.6% and retail EBITDA margin increased by 10 basis points to 10.9%. The ramp-up of our first automated distribution center in East Gwillimbury continues to progress well. Both cost and productivity improvements came in better than planned. This allowed us to roll out our ambient sections 2 months ahead of schedule. We are pleased with our progress and expect to be fully ramped up later this year.

Construction on our second automated DC in South Caledon is progressing very well. The project remains on plan with automation installation beginning by the end of this year. PC Financial's revenue increased 3.1%, driven by higher insurance commission income and higher interest income. The bank's adjusted net earnings increased by $12 million or 36%. This was primarily driven by higher revenue and the favorable impact from lower expected credit loss provisions.

The previously announced sale of PC Financial to EQ Bank will streamline the company's operation. We expect the transaction to close later this year. Free cash flow from the retail segment was $1.9 billion for the year. And in the quarter, we repurchased $592 million worth of common share for a full year total of $1.9 billion. Our balance sheet remains strong, and we continue to improve our key return metrics. Our return on equity sits at 26.3% and our return on capital at 12.4%. On a full year basis, our consolidated revenue grew 4.4% to $63.7 billion, net earnings of $2.8 billion and EPS grew 10.7%. Including the impact of the 53rd week, EPS grew an incremental 2.9% to 13.6%.

Turning to 2026, we have a solid plan in place, allowing us to continue delivering consistent financial and operating performance while advancing our growth initiatives. New store investments will be similar to last year with an increase in Shoppers Drug Mart stores. We plan to grow our grocery square footage in line with 2025. However, our drug footprint is expected to increase by 3%.

In 2026, we expect the timing of the closing of the sale of PC Financial and the lapping of the 53rd week to impact the company's financial results. Excluding these impacts, we expect our retail business to grow earnings faster than sales and adjusted earnings per share growth in the high single digits. We plan to invest approximately $2.4 billion in capital expenditures. Again, we plan to return most of our free cash flow to shareholders through dividends and share buybacks.

We're more than halfway through the first quarter, and same-store sales are showing continued momentum. Looking ahead, our focus on retail excellence and on the execution of our strategic initiatives will allow us to keep on delivering value to our customers and performance to our shareholders. While early, 2026 is off to a good start, I will now turn the call over to Per.

Many thanks, Richard, and good morning, everyone. I'm very pleased to share our solid fourth quarter results, which caps a very successful year for Loblaw. We delivered revenue growth of 3.5%, reflecting both the success of our strategic investments in new stores and strong operating performance. This top line growth enabled us to deliver the 10.9% adjusted EPS growth in the quarter.

We accomplished this earnings growth while increasing our spending to support the opening and ramp-up of our two 1 million square foot DCs and our new stores, including the successful opening of our second T&T store in the United States. This past year has truly showcased that we have the right strategy, we are executing well, and everything is grounded on an unwavering focus on our customers.

More than ever, we have seen Canadian prioritize value. We know that affordability is so important for many households, and that's why we are expanding our Hard Discount network. We opened 48 new No Frills and Maxi stores this year. These new locations were strategically placed in underserved communities. This year, we also invested to expand our e-commerce service for our Hard Discount customers and are very pleased to see our digital penetration rate doubled in these banners compared to last year. This highlights the vital role that our Maxi and No Frills stores play in helping families stretch their budgets without compromising on quality, selection or convenience.

Our commercial banners, including the high-performance Fortinos and T&T stores continue to attract and delight shoppers. Fortinos, which focus on fresh, local and premium offerings remained a community favorite, while T&T Supermarket continued its impressive growth trajectory. We saw really strong performance in areas of strategic focus, including our multicultural assortment and our right-hand side refresh.

We have now updated 34 stores and are seeing high single-digit sales growth in these stores led by apparel, cosmetic and toys. I'm actually especially excited by how well our toys category performed with sales increasing almost 50% in Q4. Beyond value, we recognize our customers' desire for choice, quality and a superior shopping experience, including a strong preference for supporting local manufacturers. I'm proud to share that in '25, we added 267 new Canadian supply to our network, reinforcing our commitment to Canadian businesses.

When Canadian businesses grow, communities grow, when local producers win, we all win, and we're actually just getting started. In Drug, we continued our trajectory through quarter 4 as we delivered our fourth consecutive quarter of positive sales growth momentum in front store. This reflects continued strength in Beauty and strength in our HABA OTC and baby categories. We're also seeing early shoots from our initiatives to bring more value and sales productivity to front store.

In Pharmacy and Healthcare Services, we continue to deliver solid performance led by growth in the specialty drug category. In line with our commitment to being where Canadians need us the most, we are actively building new pharmacies and clinics to provide essential health care services, especially in underserved communities. Q4 was very busy as we opened a record of 15 new pharmacies in the quarter, bringing our total to 27 for the year.

Our pharmacies and health care professionals play an increasingly important role in the health and well-being of Canadians, and we are committed to supporting them with the tools and resources they need to provide exceptional care, making it easier for Canadians to manage their health closer to home. For Loblaw, investing to be at the forefront of innovation has always been key to building customer loyalty.

To support growth and enhance our customer experience, we made record investments in the future this past year. These strategic capital deployments were focused on strengthening our foundation and expanding our reach across key growth areas. We significantly grew our store network with investment specifically directed towards new discount stores, additional pharmacies and the continued expansion of T&T.

These investments are not just about stores, they're also about strengthening the backbone of our operations and investing in innovation to serve our stores and customers more effectively. I previously highlighted the significant success of our [indiscernible] program. Building on these achievements, we remain deeply committed to continuous product innovation. This year, our investment in this crucial area have successfully brought more than 250 new products to Canadian households under our private label brands like the President's Choice, no name and Farmer's Market. These exciting new additions have not only enhanced our offering, but have also generated nearly $400 million in sales.

Beyond our core retail operations, we also strategically grew our alternative businesses, including retail media, our logistics as a service offering and significantly enhanced our health care services through clinics, and the expansion of our Lifemark business. We have talked about media and logistics in the past, but I would like to spend just a moment on Lifemark. With over 4 million customers visits each year, Lifemark offers a range of rehabilitation services through 320 locations across the country.

Lifemark is another small, but quickly growing business that we expect will deliver $100 million in EBITDA this year. Technology too, plays a crucial role in our differentiation. We are not simply adopting AI, we are building an AI-enabled organization. We are experimenting with intent and discipline, focusing on practical use cases that create real value for customers. Our recent partnership with OpenAI and Google were first in Canadian retail and great examples of embedding AI into the tools Canadians already use every day while also building purpose-built application where it makes sense.

We also continue to deploy AI inside our organization, optimizing operations, improving forecasting and assortment decisions, simplifying workflows for colleagues and enhancing the shopping experience. None of these achievements would be possible without the incredible dedication of our 220,000 colleagues. The uniqueness and strength of our culture is a cornerstone to everything we have accomplished. To each and every one of you, in stores, distribution centers, pharmacies, clinics, offices, I extend my sincerest gratitude. Your hard work, commitment and passion for serving our customers are incredibly important to our success.

As we look to the future, we remain optimistic and determined. The foundational investment we made, coupled with our resilient business model, unwavering focus on the customers and being where Canadians need us the most, positioning us exceptionally well for sustained growth and continuous market leadership.

We will continue to innovate, adapt and evolve to meet the changing needs of Canadians, whether that's through expanding our value offering, supporting local suppliers or bringing essential health care closer to home. Our commitment to delivering unparalleled value, quality and convenience remains steadfast, as does our dedication to our communities and helping Canadians live life well. With that, I will now open the floor for questions. Many thanks.

Thank you, Per. Operator, if you'd please introduce the Q&A process.

[Operator Instructions] Your first question comes from Mark Carden with UBS.

So to start, I just wanted to see how the consumer is faring overall. Are you guys seeing any shifts in spending patterns, any incremental trade down occurring? And then has anything changed in the competitive landscape in your core markets?

Thank you, Mark. And I would overall say that customers are behaving a lot like they have done in the past. So not that much has changed. I would say, though, that the discount strategy for us is working very well. Promo penetration still stays high. And private label in the quarter 4 is outperforming national brands. And we are seeing some category trade downs. I just looked at an example the other day where an impulse category like berries, the organic berries is down double digit, where the conventional berries would be up.

So more of the same. Maybe one flavor more if I look at the discount. So our discount, which I mentioned in my script, the penetration in e-commerce and discount has doubled. So we are seeing more customers now that they have more access to our discount e-commerce, they're choosing that. But within the stores, it stayed the same. So the gap between conventional and discount, I would say, staying the same. So still value-conscious customers, but more of the same.

That's great. And then as a follow-up, you guys noted that retail same-store sales steadily improved throughout the quarter. How did the cadence play out month-to-month? I know there's some promo compares in there. And how have you trended thus far in 1Q?

Yes. As I mentioned in my remarks, in 2024 in Q4, we were a little bit more aggressive than we were this year. And so that affected especially the first month of Q4. And so as we started to lap that month, we saw a sequential improvement in same-store sales. And we're actually seeing further improvement as we begin 2026. So definitely, we feel good about our same-store sales performance.

Your next question comes from the line of Irene Nattel with RBC Capital Markets.

Just continuing with consumer behavior, how should we be thinking about the cadence of same-store sales and margin evolution as we move through 2026 and we normalize for some of the headwinds, notably at Shoppers and perhaps see some of the headwinds from the right-hand side starting or continuing to diminish?

So what I'd say, Irene, if you -- our outlook, the way we see it, like big picture is you're going to see above normal top line growth, as we've talked about because of new stores. So you're going to see that. You're going to see stability in gross margin, stability in the G&A rate, maybe a little bit of increase in gross margin rate as the year progresses as we continue to find more shrink benefits in Shoppers. And that, together with all of the other efforts should allow us to be delivering our high single-digit EPS growth.

Yes. And I would say that we are confident in our comp sales and our total sales. Our new stores are working really well for us, and that's both our Shoppers and our Hard Discount. And when we look at the second year comp, we are seeing some really, really good numbers, actually better than we expected. So again, we feel confident about our strategy. But whether comp sales will be a little bit up one quarter and down another quarter, I don't think it's that key to our overall performance. So we will keep our guidance no matter whether it fluctuates a little bit because, of course, it can and have done, but we stay very confident in our sales projection.

And just as a follow-up to that, how would you describe the spending in some of the more discretionary categories at Shoppers? I mean, Per, you made the comment just a second ago about organic versus regular berries, which is interesting. What are you seeing at Shoppers in front store...

We're seeing that prestige continues to -- prestige beauty continues to be up. So that's good. But when that is said, there's not a lot of difference in Shoppers. Maybe I think in the beginning of the year, we are seeing that GLP-1 has increased a little bit in sales because prices are coming down, which is really good for customers because now more customers have access to that drug. And of course, we all know that it goes generic in the second half. So hopefully, more to come. We just don't know precisely when that's going to happen.

And then, of course, spending, if you look at a big picture, it is also depending on inflation. And I'm just looking at an interesting store map here that we got some information from Nielsen on inflation. So it differs from area to area because when we look at produce inflation, it's flat to 1% only for quarter 4, where dry grocery is up by 4%, impacted by, in our opinion, the unjustified price increases by the big CPGs. And then meat, of course, because of commodity increase in general is up by 7%, where frozen is at 2%. So I thought that will be interesting. And, of course, also impacting customers. But what customers they do, they actually mitigate that inflation by shopping differently.

Your next question comes from Chris Li with Desjardins.

Just at a high level, Richard, as you look at your EPS outlook for this year, are there certain areas where there might be some conservatism being embedded? And vice versa, what areas do you see having a higher variability or risk?

For us, when we look at the 2026 plan, it looks a lot like the 2025 plan. So it's pretty -- if you look by quarter, it should be pretty similar all quarters and not much volatility amongst quarters. That's how we're seeing it for now. There's going to be all the noise regarding when the PC Financial deal closes for sure. And -- but we'll deal with that when we know when that happens. But other than that, like it's going to look a lot like '25.

One detail to add to that would be that this is the second year where we're opening around 70 stores. Last year, it was 77. This year, we project around 70. So while we are ramping up, of course, it costs us a little bit more also because the new stores, they don't really in food and drugs for that example, don't get profit before like between year 3 and 5. So we will have incurred a little bit more cost in the beginning, and we're seeing that this year as well. But the 76 stores from last year, they're now in the base.

Yes. So tailwind we talked about last year are more or less the same, like new stores and T&T U.S. So that's -- those are the tailwinds in our plan, and we've accounted for them.

On sales.

Yes.

And my follow-up is just on -- with CapEx going up a little bit this year and it looks -- doesn't look like there's any sort of funding from asset sale to partially fund the CapEx like previous years. Do you expect to maintain a similar pace of share buybacks this year versus previous years?

Yes. We've actually were saying it would be around $1.8 billion for '25. We did $1.9 billion. And so we have -- we plan to do about $1.9 billion in '26.

Your next question comes from the line of Vishal Shreedhar with National Bank.

Just a quick clarification. When you talked about the same-store improving through the quarter, was that a comment specifically to food? Or was that also related to Shoppers?

It was food.

And it was basically because we lapped in the beginning in our P11, we lapped a very high promotional period last year that we, for many obvious reasons, didn't want to repeat.

And with respect to Shoppers, the comment regarding the change in timing of the flu season, the implication is that it could be softer in Q1 for Shoppers on same-store?

It could have a bit of an impact. We'll see as the quarter progresses. But definitely, last year, P1 in cough and cold was very strong. And this year, it finished in December. But the business continues to be strong.

Richard, obviously, 2025 has a high number of investments in terms of dollars flowing through the P&L and Loblaw continues to hit its framework. I was wondering if you can give us some context on a dollar value of the cost, if not a dollar value, just some qualitative commentary on the costs related to the new stores, the DC, the T&T ramp-up and how these all might impact and the degree to which you have to implement offsetting plans in order to grow.

No, I won't give you numbers, but like we expect that '26 will be the worst year from a drag on T&T U.S. So i.e., the drag will be more in '26 than it was in '25. Having said that, the ramp-up cost of East Gwillimbury is going to be less. We think Q1, maybe a little bit of Q2 of ramping up costs and then we will be done. So all in all, the drag should be a little bit less than it was last year. Having said all that, we've accounted for that when we did our planning for '26. I don't know if that's helpful.

Your next question comes from the line of Mark Petrie with CIBC.

You guys both touched on it in your script, but I wanted to ask more about Prepared Foods. It seems notable that the 2 best-performing full-service banners are leaders in that area. Could you just talk about where Prepared Foods ranks in your list of priorities? Obviously, some nice tailwinds in your favor as consumers look for value in food, but still want convenience and accessibility.

That's a really good point, and that's something that we are doubling down on at the moment, and it was accretive to our comp sales in quarter 4. And when I look at the beginning in this quarter, it's also accretive to our overall business. So customers, they are looking for meal solutions more and more. I don't know whether it's because they eat less out for others to judge. But we are seeing that it's really helpful for us.

And we are planning some good stuff that you will all see in our stores this quarter. I remember that we have some one-pan meals supporting customers who want a single-serve meal or for smaller household, I think that's important that we support singles and smaller households even more. And then we have the Korean Fried Chicken and Bao Kit program. That's innovation in the Korean kitchen to create more convenience and excitement in our stores. And then the last example I can remember, we have Halal Chicken now expanded to all our stores across the market. So meaningful, and I'm curious to see how that develops over the next year.

Yes. Okay. I also wanted to just ask about Shoppers at a very high level. I know it's early in Gregers tenure as leader there, but curious to hear any comments on his initial take on the business and opportunities that he sees and focus areas.

Yes. I think there's not a lot of news since we spoke last time, but it's still an opportunity about online. Our penetration for online shoppers is very low. So I'm sure over the next years, we'll be able to do better there. And then Gregers, he comes with a wealth of experience within beauty. So that will also add to the experience for our customers in Shoppers. But it's not something you will see because it takes time before you look at the assortment, before you go to change the stores, but we aim to have a few stores with a new layout being ready within this first year, but it's 3 weeks in. So I'm only quoting what we have discussed so far. But we are really positive on Gregers and his start in Shoppers and what he brings to the table.

Your next question comes from the line of Michael Van Aelst with TD Cowen.

You've been talking about AI and specifically agentic AI more in recent quarters. Can you get into a little more specifics in terms of discussing the most rewarding applications of agentic AI to date and how it's helping you either drive your sales higher or lower costs and things like that?

Yes. So big credit to our digital team who have made 2 collaborations, both with OpenAI, which is the Food part and then with Google, which is more the Health and Beauty and in apparel. So on the OpenAI, remember, if you go in and search and try it out, write at PCX and then you can state what you want and what you're looking for because then with one click, you'll be taken through and you will be watching going from app to app and from product to product. So it's more seamless for customers and actually very convenient for customers to use that.

And when we look at it, there's like millions of Canadians who are searching more and more for meat solutions and products on OpenAI. First of all, for us, it's important to be first as I'm aware of that we at Loblaw, we were first when we started the e-commerce and food. And that we are still benefiting from today because we have a significant higher market share on food e-commerce than we have in the past.

So that's good for us, good for customers. So being first is meaningful. I don't think it will be something that we can read in the numbers in the next quarter or 2. But over time, I think that's important. So that's one part. That's what's great for customers, and that's how we help customers. Another thing is our internal use of AI, which I think is going to be more and more important as we go forward.

It's how do we make it better for our colleagues to serve and doing the right thing for customers. We have a tool called Robin internally, where I think I mentioned that on some of our previous earnings call that where the district manager, the store managers have access to data, they can search and they can make things right in stores faster than we have ever done before. So all in all, I think it's going to be meaningful over time. It's not something you will see in the next quarter. We are first in Canada with a lot of it, and we will continue to drive that agenda very hard.

And then just a separate question. Can you explain how the tax holiday impact or how the tax impact -- holiday is having an impact on same-store sales in the food side?

Like it's hard to measure with precision. But obviously, like the price of certain items went down, okay? And then now when they record the price this year, it's much higher. And so that's how it's affects CPI. So I suspect that unlike other retailers, the number of categories that were taxing them for us were not as significant. So that's why probably there's a big gap between our internal inflation measure and the CPI food that's measured by StatCan. Because as we said in our remarks, the gap has expanded significantly over the last 2 months, and our internal inflation is not materially higher than what it was like a few months ago.

Your next question comes from the line of Etienne Ricard with BMO Capital Markets.

So to follow up on the transaction with EQB, I recognize it's still early in the process. How meaningful is the potential for additional PC Optimum Point issuances? Because the way I see it, it depends on offering a wider range of payment services to the EQ Bank customers or maybe also having a broader banking service to the PC Financial customers. So what gives you the confidence that these customers would be willing to own more than one product in the new entity?

I think, Etienne, you're right, but that's more in the long term. Like the key driver for us is more credit cards. Like we are not bankers, we're grocers. And so the way we've been managing the bank has been very conservative. Like a normal banking institution will be a little bit more liberal in its issuance of cards and EQ Bank was quite confident that they could be issuing more credit cards than we did historically. So -- and we know that customers who have the PC Mastercard are better customers from a customer long-term value perspective.

So for us, that's what's most strategic. And we have a number in mind that they think that they can increase the number of annual cards with, and that's going to be the biggest driver. So more cards, more points, more loyalty. And over time, yes, you will see expansion in other products. But like initially, expect to see more credit cards, and that's what's going to drive the sales conversion in Loblaw.

And I appreciate the willingness to simplify the financial reporting at Loblaw. Now if we look past closing for this deal, should we expect long term the ownership in the EQB shares to remain at the Loblaw level? Or could you still have a say in the program without directly owning within Loblaw?

There's no plan to do anything for the moment, yes. We're very -- we haven't even closed the deal yet. And -- but suffice to say, there is -- there needs to be the building a very strong and tight relationship between EQ Bank and our loyalty program. And so that's going to be the first task at hand. And so that's what we'll be focused on for the short to medium term.

Your next question comes from the line of John Zamparo with Scotiabank.

I wanted to ask about the real estate picture. I guess, first, a clarification on the planned openings for '26, are we right to assume that's going to skew a bit more towards the smaller format? But then the broader question is when we're seeing grocers increasingly taking up expectations for square footage growth, are you seeing any change in the quality of locations you're finding or the attractiveness of the lease terms?

First of all, in 2026, we opened a little bit more conventional, and I think we're opening one of our bigger superstores as well. But looking at the discount stores, it's a good mix of normal size 32,000 square feet or down to 15,000 square feet, down to 10,000 square feet. I would say that in some of the underserved areas, we are doing more of the smaller stores. And if you look at the mix, we open a little bit less discount, a little bit more Shoppers this year. And it's just basically a coincident. And going forward, we are looking to do about the same number. And I said, it's quite easy to find good sites in Canada. And there's many, many underserved areas around the country where customers they want discount.

The only thing I'd add is our pipeline for '27 is already pretty much full on both food and drug. So we still see a lot of runway for opportunities to build stores.

And then my follow-up is on the PC Express OpenAI announcement. I wonder if taking a step back, is there anything you can say about the state of profitability of Loblaw's e-commerce operations now to help us better understand the bottom line impact of the overall greater shift to e-com, not necessarily the OpenAI announcement, but the broader shift e-comm.

Yes. No, it's a good question because when we go back a few years, it was diluting. Now it's not diluting anymore. So it's a good support both to customers who want more of it, but also to our profitability. So it's actually okay for us now. It's not diluting.

And the key driver for it is us using third parties to do delivery. And so that is dramatically altering the financial equation to our favor. So that's why we like it.

And also because we don't have any fulfillment centers around the country, we pick in store. So not only is it helping our efficiency, it's also helping the waste and food waste that we have in stores because customers who buy online, they buy more deep into the range. So it's helping the overall store productivity when we see more online sales, and that's not something that you normally think of.

Your next question comes from Chris Li with Desjardins.

Just maybe a couple of questions on Pharmacy. First, is there any update on the genericization of GLP-1 drugs? Is the expectation that it's going to be around the summer?

It has moved a few times. So we're actually not certain. Our best guess now would be around August. That's August, September, that's our best estimate right now when it will go generic because they still need those approval, and it's hard to say when they will get them.

And then my second question is just around the Pharmacy Clinics. How is the performance so far? And I noticed the pace of the new openings is slowing a little bit this year. Is that because you're taking a more measured approach to the rollout to see sort of how the regulatory landscape evolves? Or are you starting to reach a bit of a saturation point in terms of the number of clinics?

I'm glad that you asked that question because there's a good sound reason for why we slowed down because we heard up to do it in the provinces where we had expanded Care scope, so -- which was Alberta and Nova Scotia. So there we are -- we've done. And then we're basically waiting for the other provinces to come up so where we can prescribe for more, then there we also meet the clinics.

So we are not in urgent need in the other provinces. When that sets, all our new stores are built with clinics, and we are good in the provinces where we are. So you will see more of it. The performance we are seeing is following the plans that we had. So we're really pleased with the performance. There's just no urgent need to hurry up. And since we have a very healthy nice different divisions who are competing for the CapEx, then we allocate the CapEx elsewhere because CapEx is -- we are fighting for that, which is good because they're all giving us a very good return.

[Operator Instructions] your next question comes from Mark Petrie with CIBC.

I just wanted to ask about T&T and the growth plans there, both for Canada and the U.S. I guess, specific in the U.S., 2 stores you've called out performing very well. How aggressively can you pursue that opportunity?

So there's been no change in plans since we last saw you. So we have 11 stores approved. There's a few more that are -- that we're looking at. But for 2026, there are 3 U.S. stores planned to open, 3 in Canada. I hope we opened all the 3 because the last one is scheduled to open like mid-December. So that could slip. But if it doesn't slip, like there's going to be 3, one in San Jose, one in San Francisco and one in L.A., and the last one is the one in L.A.

And with no further questions in queue, I would like to turn the conference back over to Roy for closing remarks.

Great. Thanks, everybody, for your time this morning. You know where to find me if you have any follow-up questions. And put a circle on your calendar for Wednesday, May 6, when we will be releasing our Q1 results. Have a great day, everybody, and thank you again.

This concludes today's conference call. You may now disconnect.

Good afternoon, ladies and gentlemen, and welcome to the EQB Inc. Conference Call and Webcast. [Operator Instructions] This call is being recorded on Wednesday, December 3, 2025.

I would now like to turn the conference over to Lemar Persaud. Thank you. Please go ahead.

Thank you, Ina, and good evening, everyone. Thank you for joining us on short notice during a busy earnings season. Your hosts for today's call are Chadwick Westlake, President and CEO; and Richard Dufresne, President and CEO of George Weston Limited and CFO of Loblaw Companies Limited. Also in the room are EQB's CFO, Anilisa Sainani; CRO, Marlene Lenarduzzi; and Chief Strategy and Growth Officer, David Wilkes.

After prepared remarks, we will open the lines for questions from our prequalified analysts. Please note that this evening's call is to discuss the announced agreement to acquire PC Financial and establish a long-term partnership with Loblaw Companies Limited. We will be happy to answer your questions related to EQB's Q4 and full year results and outlook at the regular scheduled earnings call tomorrow morning at 10:30 a.m.

For those on the phone lines only, we encourage you to also log into our webcast and view the presentation covering this transaction, which will be referenced during the prepared remarks.

On Slide 3 of our presentation, you will find EQB's caution regarding forward-looking statements, which involves assumptions and has inherent risks and uncertainties. Actual results may differ materially. I would remind listeners that all figures referenced today are on an adjusted basis where applicable, unless otherwise noted.

With that, I will now turn the call over to Chadwick.

Good evening, and thank you for joining us at this incredibly exciting moment of change for Canadian Banking. As you've likely seen, after market close, we announced that EQB and Loblaw Companies Limited have agreed to a transaction, where EQB will acquire PC Bank, PC Financial Insurance Agency, Inc., PC Financial Insurance Brokers, Inc. and certain other affiliated entities of PC Bank. During this presentation, we'll refer to all those aforementioned entities collectively as PC Financial.

We also announced that we'll enter a new long-term strategic partnership to become the exclusive financial partner for Loblaw and the provider of one of the country's largest and most beloved loyalty programs, PC Optimum. This is precisely on strategy for EQB and our Challenger Bank purpose for Canadians. We partner with the best organizations to innovate faster and what we'll be able to achieve together is so much greater than what we could do alone.

We are acquiring 100% of PC Financial for 1.15x book value. This translates to a total consideration of $800 million at today's estimate. In exchange, Loblaw will receive approximately 7.2 million shares of EQB issued from treasury, which is expected to represent about 17% of EQB's outstanding shares on closing. The balance of the consideration will be paid in cash. This will be subject to customary adjustments at closing, which we anticipate will occur within calendar 2026, pending the required regulatory approvals.

This transaction unites 2 of Canada's most innovative banks, with aligned visions for better banking for all Canadians. It redefines the sector by scaling the delivery of extraordinary products and services and brings the value of challenger banking to new audiences, with EQB expanding to serve nearly 3.5 million customers combined at closing. It also presents a highly compelling opportunity for long-term value creation for our shareholders.

Our mission at EQB is to drive change in Canadian banking to enrich people's lives. The acquisition of PC Financial will fuel our mission by cementing EQB as the challenger in Canadian banking, by growing our position to become one of the largest digital banks by customers and introducing Loblaw as a long-term strategic partner and shareholder. I'm proud to say that this is now a joint mission of our EQB and PC teams.

Today, PC Financial is part of Loblaw. They provide everyday banking services to millions of Canadians, including their deposit account and their beloved MasterCard credit card program, one of Canada's largest credit card portfolios and most recognized card brands, with PC Financial serving 2.5 million customers.

Some key metrics to highlight are its $4.4 billion in average credit card receivables, $5.8 billion in total assets, $32 billion in transaction volume and $1.1 billion in revenue reported as of September 2025 on a trailing 12-month basis. Alongside the transaction, we have agreed to a long-term commercial partnership in which we will become the exclusive financial partner for Loblaw.

We'll also become the only financial services partner where customers can earn rewards through the PC Optimum loyalty program, Loblaw's marquee rewards program. This program is held in high regard by over 17 million Canadians, many of whom redeem rewards and receive exceptional value on a daily basis.

I'm thrilled about this last point, and we'll expand more on the unique power of PC Optimum in the loyalty space in a moment. This partnership creates the competitive banking option that Canadians deserve. EQ Bank customers will be able to earn PC Optimum points, open a credit card and gain benefits from new in-person access to a banking on their teams -- on their terms as part of Loblaw's extensive retail footprint, a footprint that spans 2,500 stores, over 180 in-store pavilions and a nationwide 600 ATM network.

PC Financial customers will be able to seamlessly access EQ Bank's broadest suite of banking products, such as our Notice savings account, gain access to our leading digital platform and enjoy the PC Optimum rewards they know and love. This partnership not only benefits our shared customers, it will benefit all Canadians by giving them greater access to better banking products and compelling innovations in the future from 2 banks with agile technology stacks, capable of bringing better products to market faster than our incumbent peers. Together, Canadians will benefit from increased opportunities to save, borrow and manage their money.

Now let's take a deeper dive into what this acquisition unlocks and how it fits into our strategy. When we look at the strategic rationale of the acquisition, it fits into 5 broad categories as a transformative and financially compelling transaction.

First, EQB's strategic priorities are each directly accelerated with the addition of PC Financial. Our first strategic priority is reigniting our core franchises. We're channeling significant time and energy into what makes us a true challenger. We're renewing focus on businesses where we have a competitive advantage, becoming more efficient and rigorous in our capital allocation. This transaction is a tremendous growth catalyst for our combined direct personal banking Challenger platform.

Second, we're growing our product offering and ability to serve our customers. One of the biggest and most exciting pieces here is the PC Optimum linked MasterCard portfolio. The ability to offer our customers a leading credit card product is nothing short of transformational and precisely on strategy. Our complementary strengths allow us to even better -- are even better for our shared customers.

PC Financial excels in spend, products and loyalty, while EQ Bank excels in everyday banking and deposit products. Together, our product shelf is diverse, digital first at the core and fiercely competitive. In addition, this partnership brings exclusive access, as I've said, to the award-winning PC Optimum program, the extended retail footprint of Loblaw stores and the totality of the ubiquitous brands and digital infrastructure, all of which prepare the Launchpad for future innovation.

And then finally, the third strategic priority is expanding our capabilities in challenging the market. PC Financial brings experienced leadership with deep expertise in lending and payments as well as exceptional capabilities and hyperpersonalization. This will drive a more bespoke experience to our customers once we come together post close.

Importantly, this expands our capabilities when we welcome the over 300 talented members of the PC Financial workforce to the EQB Challenger team. Their skill sets and culture complement ours perfectly, and we're excited for how our teams can learn from each other and innovate faster together.

The second driver of our strategic rationale is the expansion of our customer base and how we believe this partnership can accelerate our growth. Growing to nearly 3.5 million combined customers and gaining exposure to the more than 17 million PC Optimum customer base is a reason to celebrate, but the fit of PC Financial's customer profile with EQB's existing ecosystem is what makes this growth so valuable.

PC Financial customers are digitally engaged and aligned both geographically and from a risk perspective, with most accounts concentrated in prime and super prime borrowers. Their high pace of digital deposit uptake should bode well for growth in our direct deposit and savings account offerings.

Banking is a scale business, and this deal delivers both scale and diversification. Our fiscal 2025 revenue was $1.26 billion. But when combined with PC Financial, it nearly doubles to more than $2.3 billion on a pro forma basis. The additional noninterest revenue is a significantly positive change for EQB and a long-standing strategic priority. Of PC Financial's $1.1 billion trailing 12 months revenue, 53% is noninterest. The noninterest revenue primarily consists of interchange transaction fees and card-related fee income, which will continue with EQB.

The rapidly growing deposit base at PC Financial is currently over $800 million, and the addition to our EQ Bank model materially diversifies both our funding and revenue. Combined, we'll accelerate our focus on growing EQ Bank core deposits, progressing its position to become the largest component of our funding stack. This will be an eventual net interest margin tailwind.

EQB has historically been referred to as a mortgage lender. This has matured to that of a Challenger Bank, and this transaction represents a significant strategic evolution and what it means to be a Challenger Bank.

We'll continue proudly running our strong mortgage lending franchise in commercial bank, but we will become a far more competitive and multifaceted bank. We'll have a lending profile closer to those of our peers, but the capability to introduce new innovations and products faster. While the customer revenue growth will have a meaningful impact in the short term, it's just the beginning. This is the start of a long-term partnership with some of Canada's most recognizable brands, an intangible asset with massive potential.

Many of the stores, ATMs and pavilions across Canada will introduce the EQ Bank brand. The tangible assets of this new partnership will be used to expand and diversify our marketing capabilities, opening avenues to reach customers and dramatically scaling our household awareness in Canada.

With the acquisition of PC Insurance, which will be operated under EQB Inc. outside of the bank, EQB will continue to run the existing brokerage arrangement under the PC Financial banner in partnership with its underwriter. This offering provides everyday home and auto insurance solutions for Canadians. Importantly, it does not introduce property and casualty insurance risk to EQB as all policy risk remains with the underwriting partner.

The business generates revenue primarily through gross written premium referral commissions paid to PC Insurance, translating to approximately 800 -- to $8 million and growing in annual earnings. It represents a simple, higher earnings stream for EQB.

We're excited by the opportunity to add another financial services product to our shelf, expand our stable fee-based revenue and bring in a uniquely skilled and highly capable team. This is all compounded by EQB becoming the exclusive financial partner of PC Optimum.

I want to expand on this for a moment because the impact of PC Optimum can't be understated. It's one of the largest loyalty programs in Canada, but the depth, power and sophistication of the technology is what really sets it apart. So not only will we have the opportunity to administer PC Optimum points, we'll have the privilege of working alongside the team that made it.

The final category of how this transaction fits into our strategic rationale is about our joint financial profile and growth curve. This is a financially compelling transaction. Revenue synergies are expected from the significant cross-sell opportunities to our expanded customer base, but they are not required to make the transaction attractive. We also expect to realize funding and capital synergies through EQB's banking expertise and improvements in CET1 and RWA metrics, respectively.

The cost synergy target is modest, representing just 7% of the cost base relative to the significant strategic benefits and acceleration of customer growth. Transactions like this are only successful with the right team in place. This will be our primary focus as this is about growth, not cutting, and we intend to create as much value as possible.

Year 1 is expected to be mid-single-digit accretive to adjusted EPS and accretive to ROE in the first full year post closing on a run rate fully synergized basis. To be clear, we're talking about being accretive to the lower end of EQB's 15% to 17% ROE objective on a fully synergized basis, with PC Financial simply running at a more appropriate capital ratio. Additional upside is expected from cross-sell, capital and securitization and funding opportunities.

We will continue our prudent capital management strategy and maintain strong capital ratios. As part of our capital management plan, we intend to submit our application to renew our normal course issuer bid in January 2026, an ongoing component of our capital allocation framework. We expect those annual pretax run rate cost synergies to be greater than $30 million and onetime pretax integration costs of $105 million. Most of the cost synergies and integration costs are anticipated to occur within the first 2 years of closing.

On purchase accounting impacts, we estimate a gross credit markdown on credit card receivables of $300 million pretax, which will be amortized over 3 years and largely offset by future expected credit losses. Fair value increases on deposits and long-term notes are estimated at $50 million pretax, which accretes substantially to earnings over 3 years. And the identifiable incremental intangibles are estimated at $230 million, $200 million of which will be amortized over 8 to 10 years.

This acquisition and our long-term partnership will deliver meaningful scale and diversification to EQB. This is illustrated by the pro forma metrics below, derived by EQB's adjusted fiscal 2025 results and PC Financial's reported September 2025 results trailing 12 months. Using these numbers, our assets increased 11% to $59 billion, and our combined customer base quadrupled to nearly 3.5 million. Revenue nearly doubles and in line with our stated objective of diversifying revenue, noninterest revenue increases by more than 4x to $759 million.

It's clear that this transaction establishes a strong foundation for the accelerated growth we expect in the years ahead. In fueling this accelerated growth, we expect to close the deal in the second half of calendar 2026 subject to regulatory approvals and customary conditions. This transaction will not require EQB or Loblaw shareholder approvals, and the transaction has unanimously been approved by the Boards of EQB, Loblaw and George Weston Limited.

On behalf of our Board, the leadership team and everyone at EQB, I can't wait to welcome the amazing, talented and innovative people at PC Financial to our Challenger team.

Now I'd like to turn the call over to Richard Dufresne.

Thank you for giving me the opportunity to join your analyst call today. As Chadwick emphasized, this transaction is strategic for EQ Bank, but is also strategic for Loblaw. For Loblaw, it offers a new home for some of our best customers, but it will allow us to attract more customers going forward. It will, over time, offer an enhanced suite of products to further improve our customers' ability to live life well.

EQ Bank has an impressive track record, which, combined with our great suite of products, should drive more shareholder value going forward. PC Optimum as one of Canada's leading loyalty programs will help drive EQ Bank's business. We have reviewed EQ Bank's strategy and are excited by the potential it offers to grow the business long term.

The transaction consists in the sale of our PC Bank business in exchange for cash and equity. We will get 2 Board seats and the ability over time to increase our ownership to 25%. EQ Bank does not offer credit cards currently, and we will benefit from their scale and depth. Together, we offer a unique opportunity to accelerate the growth of Canada's leading digital bank, while allowing us to increase our focus on our core retail food and drug businesses. This will simplify our operational structure and balance sheet and will be accretive to earnings in our first full year post transaction.

From a financial perspective, we will simplify our reporting structure, eliminating the bank segment. We will realize total value of about $1.3 billion. This includes our equity position, the cash portion of the transaction, the unlocking of excess capital associated with the conservative capitalization of our credit card portfolio, plus some other benefits. We intend to use a portion of the cash proceeds to increase our ownership in EQB up to the agreed level of 25% over time. The balance will be deployed toward our share buyback program.

We have built a very loyal base of 17 million active PC Optimum cardholders. We also touch over 6 million Canadians every week in our stores and online offerings, and Canadians earn and burn more than $1 billion in PC Optimum points every year. We know that the more engaged a customer is, the more valuable they are, they spend more across our network and are more loyal. PC MasterCard holders are amongst the most loyal customers to Loblaw.

As EQB accelerates the growth of PCO-linked financial products, more PC Optimum points will be issued, driving engagement and top line growth for Loblaw. From Loblaw's perspective, I believe this transaction represents a clear path to greater operational efficiency, financial strength and ultimately, superior shareholder returns.

This is a strategic relationship designed to deliver transformational benefits to customers, creating one of Canada's largest loyalty linked banking ecosystem and offering more ways for Canadians to earn rewards.

I will now turn the call back to Chadwick.

Thank you, Richard. With that, operator, can we please take questions from the line? We ask that you limit yourself to one or two questions, then requeue.

And your first question comes from the line of John Aiken from Jefferies.

Chad, you mentioned the cost synergies. I think it was around 7% of the cost base. But in terms of your EPS accretion, is there any assumptions in terms of revenue synergies? Or is that surplus that we may see down the road?

That would be surplus that you would see down the road.

Perfect. And if I may add one on since that was an easy question. The overlap in terms of the customer base, the 3.5 million that's going to be coming in from PC Financial and 17 million in terms of the loyalty members on PC Optimum. What is the overlap? And what -- how does a PC Financial customer look versus an EQB legacy customer?

Yes, sure. Thanks, John. I'd say it's very, very minimal overlap. This is net new opportunity. And I'd say that the makeup is actually very similar when you think of how digitally engaged the PC Financial customers are, where over 57% are digitally engaged. And when you look at the -- what the customers are looking for and value and product offerings and also the propensity of PC MasterCard customers to want a deposit account is very high, especially for the PC Bank digital offering now. So that bodes very well for cross-selling to the EQ Bank digital everyday account. So we see very significant upside.

And then as I mentioned, we think the quality of the PC Financial customer, obviously, is extraordinarily high, right? This is a business that's been operating for over 25 years. The majority of accounts in the portfolio are concentrated in prime and super prime, as I mentioned, very high income earning in many cases. There's just -- there's a very good complementary growth opportunity here when you add all the 3.5 million together.

And your next question comes from the line of Gabriel Dechaine from National Bank Financial.

Congrats on the deal. Just a question on the financing here. So 7.2 million shares issued to a Loblaw Company, that's around $625 million or so at current price. I'm assuming it's the current price we should reference or something else.

Yes.

Where does the extra $200 or so million come from? Is that coming out of your excess capital, you'll dip down into the 12s for your core Tier 1? I guess, well, on close, you would have the new shares issued that would put you back in the other direction. Is that kind of how it would work though mechanically?

That's right, Gabriel. So it would be -- we have a VWAP that you would have seen for the current share price peg and then the residual in excess cash that we have on hand, yes.

Okay. And then that cash gets replaced essentially by the shares issued -- well, the capital, I guess, rather. Now about this cross-sell opportunity, what's -- when you're game planning this, what's more likely to work from this pairing?

EQB with its new and improved over the past year, deposit business, selling that into the Loblaw customer base, maybe mortgages, I don't know about that one, or PC Financial MasterCards to the EQB customer base? Because I can draw that on a PowerPoint slide, but I mean, the PC Financial customer base is loyal, but it looks like they're single product customers primarily.

So a couple of questions there. So we do see material growth potential, right? We're going to be very focused with a complete EQ Bank product shelf, more complete now, and that's part of what's been missing. It's a little bit too early to give detailed specifics on all the cross-sell potential, but you got to think of a few ways where, yes, PC customers will gain access to the broader EQ Bank product suite. So we do have the savings, registered accounts, the digital platform. Yes, could you see mortgages at some point? Absolutely.

We obviously have a significant mortgage business, including an offering through EQ Bank. And as I mentioned earlier, we see a high propensity for the PC MasterCard customers to be engaged in getting a deposit account, over 10% do now. And we see -- and that's really been ramping up as the team has been working on that more and more. So we do see a lot more growth for EQ Bank deposits and both sides to really have a complete offering.

When you don't have complete product shelves on both sides, it's more difficult. And now really important as well, I think, is the distribution gate with this being, again, making us more omnichannel. So we have the digital, and we can actually be there in, say, for example, 180 pavilions and -- where EQ Bank can be. That will also help with advice and also help with more cross-sell of EQ products over time. So there's actually a pretty full shelf that we can sell on both sides.

And the brands are going to be distinct as well. So if I'm in a PC kiosk, I'm not seeing an EQB deposit, it will be labeled PC Financial or branded or whatever. And if I'm an EQB customer, you just try to sell me a PC Financial labeled credit card? I don't know if that's been -- maybe down the line.

It will all become EQ Bank. That's the brand that we're investing in. So that will be very simple and clear. You'll see PC Financial for insurance, which is -- but it's all going to be -- those pavilions, the ATMs, everything will become EQ Bank, but PC Optimum will be that lead brand with us, but there will be brand simplicity.

Yes. All our pavilions -- Gabriel, sorry, all our Pavilions will turn yellow and -- but you'll continue to see the PC logo on our card and the EQ Bank logo on it, too. So I think it's going to be great.

All right. Well, my wife might -- she collected at the Shoppers Drug Mart, so she might get on this stuff.

And your next question comes from the line of Stephen Boland from Raymond James.

I think a couple -- there was a few good questions. Chad, look, I mean you've got some several big shareholders already. I know you don't need shareholder approval. But I'm just curious, have you reached out and seeing how supportive they are because you are issuing stock at probably -- I haven't looked at the chart, but maybe a lower valuation than you wanted 3 or 4 months ago. I'm just curious if you've had any reactions from your 3 big shareholders.

Thanks, Steve. I appreciate you calling in. We -- I can't offer a perspective on our shareholders, but I could say I have spoken with a couple of our shareholders. And I would say that -- I'd say, with great support, and this deal is a great deal for Canadian Banking, for EQB, for Loblaw, and that's what we focus on most. This is there's great value exchange here and huge value creation. So we're not as focused on the share price today. We're focused on creating the best value possible for shareholders, and that's what we're doing here.

Okay. And second question is when I look at the Slide 17, PCLs, I mean, you're grabbing a large unsecured book, a fraction of your size, but the PCLs at PC Financial are a lot higher than what you've delivered. I'm just wondering, is your accretion include similar levels of PCLs in post-closing?

Yes. Yes, we have looked at the churning on PCLs. And I'd say, again, we believe this portfolio is a really strong quality, Steve. Higher FICO credit scores than the Canadian average, high household income, high digital engagement provides an attractive customer base. And on the customer behavior, customers are revolving and charge-off at rates we would expect and are in line with peers. So absolutely, we've thought that through, and we've modeled that accordingly.

And your next question comes from the line of Graham Ryding from TD Securities.

You flagged $800 million of direct retail deposits within PC Financial. How is the rest of the PC Financial business funded?

Want to try, Richard?

With equity. Like...

Yes, securitization.

Securitization and equity, that's how we've been funding our business. Like we're a grocer. So we -- we're not expert bankers. So we've, over time, been very, very conservative because it's not our expertise. So we've always been very conservative on all aspects of running this business, whether it was on credit, capital and any other thing that revolves around banking. So it was all securitization facilities.

And I think important too, Graham, the push on PC Financial Digital, it's really just ignited, I'd say, probably over the last year plus, right? The team is really building and gaining velocity there. So I think that $800 million would have a much higher run rate over time as well. But otherwise, it's been the securitization vehicles.

Okay. I assume those will continue going forward?

Yes, yes.

Okay. Great. And my second question, if I could. Just like, how can you describe the sort of the loan book or the credit card loan book, in particular, the growth profile and the earnings profile either over the last year or over the last few years?

Sorry, just the overall assets have been fairly consistent over the past year. So I'd say the PCL ratio, the PCL experience actually over the last 12 months has been a little bit lower. So I think on average, it's around 4.6%. We've seen about 4.2%, I think, on a trailing 12-month basis, which reflects the strong quality of the book. But overall, it's a stable to increasing credit card portfolio.

And your next question comes from the line of Mike Rizvanovic from Scotiabank.

Chad, I want to go back to that credit card, the growth profile. And I'm sure you're going to look to amp it up as time goes on as you sort of get that value proposition to the new clients that you're going to pick up. But when I look at the OSFI data, I do see that the credit card balances have been in and around $4 billion for a couple of years.

It's underperformed versus when I look at the larger banks. And I'm wondering -- I don't know if Richard wants to opine on this, but what's been driving that? But it looks like it's been pretty stagnant for a couple of years here in terms of the actual outstanding balances.

No, I think the growth has been pretty stable, we'd say, and it's been tied to what's been happening on the food side, like -- and that's one of the reasons why we're so excited about this opportunity. Like we think with EQ Bank, we're going to be able to boost that growth. Because as I said in my remarks, for us, like the more credit cards we have, the more PC Optimum points we issue and that translates to our business. So that was ultimately the big driver of us seeking this transaction.

And I'd say, Mike, too -- thanks for calling, Mike. The -- important to remember is there's -- it's how you think of the book, right? Again, a lot of prime, super prime, it's actually very comparable to the DCB credit card portfolio books. And there's certainly a high transactor component. This is not all about a revolving business.

These are high-quality transactors, and that's why the fee-based revenue and the noninterest revenue is a very significant component here, and that's really important and that's stable and sticky and that will continue as well.

Okay. Got it. And then just a quick one on -- just in terms of the distribution capabilities that you're picking up. Obviously, you're expanding it pretty significantly here. And I guess I was always under the impression that your customer base on the uninsured residential was very well catered to by the broker channel. Was there like a missing component where this sort of enhances that where you're picking up customers that you normally would not get through the brokers? Just curious in terms of how this actually expands into helping your other lending categories.

Yes, absolutely. I'd say our mortgage customers are absolutely very well served by the brokers. The brokers are still the best way to get a mortgage in Canada. This will absolutely -- we don't really cross-sell between EQ Bank and the Equitable Bank brands today. That will -- that is a planned evolution really to offer more mortgages to customers. And this brings in millions of more customers that we can target directly. And more of that might come through broker partnership beyond, but this does expand the universe overall of customers that we're engaging with and bring significant analytical capabilities.

And PC Optimum is going to underpin our offerings, and that's going to be very, very unique and foundational. That is the #1 loyalty program in Canada. It greatly expands the value proposition, and that's really important to focus on here.

And your next question comes from the line of Darko Mihelic from RBC Capital Markets.

Just a couple of questions that I'm a little bit unclear on. And the most important of which I think might be the loyalty reward program. So I guess going forward, how does it work? Who calls the shots on the loyalty reward program? And how are the economics around that shared?

Well, nothing changed in our loyalty program, like EQ Bank will have a license to issue points. And so they'll have the whole points and the breakage that comes with it, and that's it. Like we've been tweaking around the edges on our loyalty program over the years, but it's all about making it better, more accessible. And so -- and it's a big driver for our business. So you should not anticipate to see any changes -- any significant change to our loyalty program other than making it more palatable for our customers.

And the feature that's key for PC Optimum and has been the big driver of its success in Canada is the fact that we offer instant redemption. If you own PC Optimum or you have your PC Optimum app, like you know as well as I do that you have cash on your phone that you can use to pay for groceries or stuff at Shoppers Drug Mart day in, day out. And so that's what's really appealing. And so there are no plans to change anything.

And just to reinforce that, we have -- this is about a long-term commercial agreements, right? So there is -- we're very well organized around this in the partnership. That's why it's so important to know this is a long-term partnership.

Yes. And I want to add one more thing, like this loyalty program is not about making money with loyalty. It's about driving sales. If you were to compare our redemption rates versus all other loyalty program, it's extremely high. It's in the high 90%. And we like it that way. We want people to use the program. And so that's how it's been designed, and that's how it's been run for years, and that will not change going forward.

And does EQB have the right and the ability to add PC Optimum rewards to other financial products?

Yes. The more points get issued, the more -- like we're very much aligned, Chad, with an eye on this. So the more points EQ Bank issues, the happier Loblaw is.

Okay. I think I might have some follow-ups on that, Chadwick, afterwards.

And your next question comes from the line of Etienne Ricard from BMO Capital Markets.

Congrats on the deal. My question is for Richard. So why is PC Financial in better hands under EQB's ownership? In other words, why monetize now?

But to us, we're not monetizing. Like we are transferring ownership into the hands of an organization that we think is going to help us grow it even faster. As I've said earlier, these are our best customers and -- but we want more of those. And we feel EQ Bank strategy is best positioned to increase the number of credit cards that get issued year in, year out. That's ultimately what we seek. And so for us, monetizing PC Bank is not significant financially, but it's very important strategically. And so that's why this process was not a competitive process.

It was a friendly process that lasted quite long because we wanted to get to know EQ Bank, the culture of the organization, their strategy and the people we will have to deal with. And we're very pleased with the outcome that is being announced today because we think this is a great fit for us, and EQ Bank will benefit as we benefit ourselves. So I think this is great from our perspective, and that's why we're so excited about the potential of this deal.

Okay. I appreciate the details. And Chadwick, this is a meaningful transaction for EQB in terms of scale. So how do you think about the integration complexity and the time line on potential revenue synergies?

Yes. It's right on strategy for us. So that's very important. The integration will be key. You've heard us speak about payments and completing our product shelf for a long period of time. So this will be a top priority. It's right -- I think the timing is excellent for us. I think for closing, when you think ahead to how this will accelerate our vision for accelerate the potential of the Challenger Bank after closing, you can start to see revenue synergies, I think, in short order.

We'll be able to realize -- we believe we'll realize those cost synergies within the first 2 years. That's what we weighted to. And then the revenue synergies, the capital synergies, the funding synergies will start to scale, I think, reasonably quickly after closing.

And we have a follow-up question from Stephen Boland from Raymond James.

And this is more for the Loblaw side. I mean I presume the size of your portfolio is desirable from -- for every Canadian bank. So why Equitable? Like you said, it was not an option, I presume, but like why Equitable? Why not National, why not one of the other big 6 banks? Why did you choose Equitable?

Well, we felt from the get-go when we started to think about this a while back that we wanted an institution that would be best to house our customers. And when we look at EQ Bank strategy, we looked at their track record. And when we started to talk with them, like we felt that this was something that felt where we could work well together.

Obviously, we're going to have 2 Board seats. So we'll have a little bit of influence on what's happening versus if we would have sold to one of the big banks, it would be very difficult to have any influence, I would say. So therefore, we think it's a great fit. But I think the more important point, as I said earlier, is like the strategy and the culture is one that fits really well with us. And so that was the key driver ultimately.

And I'll just reinforce. We feel the exact same way. This is such a close cultural alignment and mission alignment and focus on Canadians and the Canadian banking system improving. We couldn't be more aligned and thrilled our entire Board and management team, all of us, we couldn't be more excited than to work with Loblaw companies.

And your next question comes from the line of Gabriel Dechaine from National Bank Financial.

Just a couple of follow-ups here. When you talk about funding synergies and Mr. Dufresne's comment earlier about the funding strategy using securitization, I see about $3 billion of securitization assets and then you got a $4.4 billion receivables book. So is part of the plan just securitizing all of that as opposed to using equity for funding?

We'd securitize more, yes. But -- and then part of the funding synergy is also growing the core digital deposits as well, which we think we can do very well. And then you have -- it's kind of RWA release as well. Gab, I think is an important part of that.

Yes. That actually segues into my other question. The RWAs, I believe, is PC Financial on the advanced approach?

No.

No. Okay. All right. I see operating risk RWAs on the OSFI filings. That's all. Then...

That was standard I should say.

Okay. Cool. Last one I swear. Who asked for this -- I think it's called the change of control provision, the scenario where if there's somebody comes to acquire EQB, and it's successful, you have to pay $40 million to Loblaws. Who asked for that? I guess, Loblaws?

We just want to make sure like that our loyalty program is well treated if something like that were ever to happen. So we decided to partner with EQ Bank because we like their strategy. So we just want to have a say if someone else is interested in EQ Bank. Just between the announcement.

Of course, but it also signals that your intent is to close the deal, and you want to build a long-term partnership, and that's why you're putting that security in there for your protection.

Yes. We want to get married with EQ Bank, not with anyone else.

Sounds great. All right. And then what -- under what conditions would you -- I don't know if you can comment on that, but you're below that 25% cap when the deal closes. Is that -- what conditions would -- have you considered what conditions would need to be existing before you decide to increase that to that level?

No, there's no specific condition. That's our objective. So we'll do that over time. And -- but there are no conditions. So that's a level we think would be adequate for us. And so we're going to do that over time, yes.

Thank you. And I will now hand the call back to Chadwick Westlake for any closing remarks.

All right. Well, thank you so much, everyone, for joining us this evening and for following EQB story. We could not be more enthusiastic about our future with PC Financial and the close collaboration with Loblaw to fuel our next phase of growth. We look forward to keeping you updated and welcome you to join us tomorrow morning to discuss our Q4 remarks at 10:30 a.m. Eastern Time. Thank you, and good night.

And this concludes today's call. Thank you for participating. You may all disconnect.

Good morning, ladies and gentlemen, and welcome to the Loblaws Inc. Third Quarter 202 Results Conference Call. [Operator Instructions] This call is being recorded on Wednesday, November 12, 2025. I would now like to turn the conference over to Roy MacDonald, Vice President, Investor Relations. Please go ahead.

Great. Thanks very much, Danny, and good morning, everybody. Welcome to the Loblaw Companies Limited Third Quarter 2025 Results Conference Call. As usual, I'm joined in the room this morning by Per Bank, our President and Chief Executive Officer; and Richard Dufresne, our Chief Financial Officer. So before we begin the call, I'll remind you that today's discussion will feature forward-looking statements, which may include, but are not limited to, statements with respect to Loblaw's anticipated future results. These statements are based on assumptions and reflect management's current expectations. As such, are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from our expectations.

These risks and uncertainties are discussed in the company's materials filed with the Canadian securities regulators. Any forward-looking statements speak only of the date they were made. The company disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than what's required by law. Also, certain non-GAAP financial measures may be discussed or referred to today. So please refer to our annual report and other materials filed with the Canadian securities regulators for a reconciliation of each of these measures to the most directly comparable GAAP financial measure. And with that, I'll turn the call over to Richard.

Thank you, Roy, and good morning, everyone. I'm pleased to report that we delivered another quarter of consistent financial and operational performance reflecting our ongoing focus on retail excellence and our commitment to deliver value, quality, service and convenience to Canadians. Top line growth continues to be very strong, supported by the opening of 76 stores over the past 12 months, an increase in our retail square footage of 2%. On a consolidated basis, revenue grew by 4.6%, reaching $19.4 billion. Our drug retail business grew at 3.8%, and our food retail business grew at 4.8% in the quarter.

Adjusted EBITDA increased by 7.2% to $2.2 billion and margin improved by 20 basis points to 11.4%. Adjusted diluted net earnings per share grew by 11.3% to $0.69. And on a GAAP basis, our net earnings per share increased by 4.8%. In food retail, we delivered higher sales, traffic and basket growth, once again driving significant tonnage market share gains. Absolute sales outpaced same-store sales by 280 basis points at 4.8%, reflecting our new store growth, while our food same-store sales grew 2%. The impact from the stores we opened so far has been in line with expectations. We continue to see positive momentum across key categories in the right-hand side of our stores, notably in apparel, cosmetics and H&E. That said, headwinds from liquor, specifically in tobacco and our exit from the optical business led to a net 30 basis point negative impact to same-store sales this quarter.

Our Q3 internal CPI-like food inflation was lower than Canada's grocery CPI of 3.6%. Our average article price data, or AEP, which reflects our customers' actual basket mix and includes nonfood items not included in the CPI basket was also lower than CPI. Our lower internal inflation metrics demonstrate that Canadians who shop our stores are finding more value. Cost increase requests from large global vendors continue to trend well above historical levels. In response, we're pushing back harder than ever to ensure that any increases we accept are justified. Our Hard Discount banners continue to deliver strong sales growth based on consumers' ongoing focus on value.

Momentum continues to build across the Hard Discount stores we added to our network through conversions and new builds, proving that our strategy is resonating very well with Canadians. We're also pleased with the momentum and strong performance in our conventional stores, which improved tonnage market share within the conventional sector. This quarter, we announced that Specsavers would be opening 111 locations within Loblaw stores to replace our Theodore and Pringle optical business. Exiting this business resulted in a $30 million adjusted charge this quarter. Going forward, we expect it to negatively impact food same-store sales by an approximate 20 basis points until we lap this transaction, while the exit from the Theodore and Pringle business, coupled with our new agreement with Specsavers is expected to generate approximately $10 million in annual run rate earnings accretion.

In drug retail, absolute sales increased 4.3%, excluding the impact of the sale of Wellwise, while same-store sales grew 4%. Pharmacy and health care services grew same-store sales by 5.9%, driven by broad strength in prescription and new health care services. Our specialty drug prescription growth continued to lead our pharmacy performance. Patients continue to respond positively to the convenience and expanded level of primary care we offer through our more than 1,800 pharmacies across the country, including our 209 in-store clinics. We're on track to reach our target of 250 in-store clinics opened across Canada by the end of this year.

Our front store same-store sales continued to improve, growing 1.9%, reflecting the ongoing strength of our beauty category. This more than offset the impact from the exit of certain electronics category in the prior year, which will no longer be a headwind to same-store sales after the fourth quarter. We continue to be pleased with the underlying strength, profitability and sales momentum of Shoppers Drug Mart front store business. Online sales in the quarter increased by 18% across our retail businesses. Delivery continues to lead growth in the online grocery channel, and we continue to be pleased with our online sales penetration in both food and pharmacy.

Our retail gross margin improved 20 basis points, led by drug retail, reflecting improvements in shrink in both drug and food. Food trading margins remained stable. Our SG&A rate as a percentage of sales was stable with operating leverage from higher sales, offsetting incremental costs related to the opening of new stores and the successful ramp-up of our new automated distribution facility in East Gwillimbury. This new DC continues to ramp up ahead of plan. Costs remain lower than budgeted, and we are on track to ship significantly more cases than planned this year. We have begun fulfilling orders in our ambient section, which is ramping up a full quarter ahead of plan.

We're making considerable progress on the construction of our second automated DC in South Caledon, Ontario. The project is on schedule. In the quarter, retail adjusted EBITDA grew 6.8% and EBITDA margin increased by 20 basis points to 11.1%. PC Financial's revenue increased 5.5%, driven by higher sales in our mobile shop and higher insurance commission income. Our PC money spending and savings accounts are performing very well. Customer account deposits increased by $174 million in the quarter. This increase in deposits is evidence of strong customer engagement and helps us lower our bank's funding costs.

The bank's adjusted earnings before tax increased by $13 million or 36.1%, primarily driven by higher revenue, lower operating costs and favorable impact from our ECL provisions. We remain very comfortable with the risk profile of the bank's portfolio. We continue to take a conservative position in our loss provisioning with a strong and very well-capitalized balance sheet. Free cash flow from the Retail segment was $325 million in the quarter. And in the quarter, we repurchased $450 million worth of common shares. Our balance sheet remains strong, and we continue to improve our key return metrics. Our return on equity is 24.8% and our return on capital is 11.9%.

Looking ahead to Q4, while it's still early in the quarter, we are confident our results will be in line with our financial framework. Reflecting our strong performance year-to-date, we now expect full year adjusted EPS growth to increase slightly from high single digits into the low double digits, excluding the impact of the 53rd week. Our assets are well positioned. We are executing well, and we are investing for the future, all while delivering consistent operational and financial performance. I'll now turn the call over to Per.

Thanks, Richard, and good morning, everyone. I'm really pleased with our third quarter performance. We continue to generate strong revenue growth through a combination of same-store sales strength and the positive impact of our strategic investment in new stores. This top line growth of 4.6% allowed us to deliver 11.3% adjusted EPS growth this quarter and will help us support our long-term earnings expansion. As Richard discussed, we accomplished this while increasing our spending to support the opening and ramp-up of our new stores, the accelerated transition to our new 1 million square foot DC and the lapping of some real estate gains from last year. This is a clear demonstration of the strength of our business and our ability to deliver consistent financial results.

With our broad footprint, we know many Canadians are looking for opportunities to get the most out of their budgets in this challenging economic environment. And we believe it's our responsibility to deliver the quality, value, service and convenience across every corner of our business. Every day, we fight to earn our customers' business, whether that's through competitive pricing, meaningful promotions, through omnichannel service or personalized rewards through our PC Optimum program. As a result, more Canadians shopped our stores, and we generated $857 million in additional revenue.

In drug retail, we delivered another quarter of positive momentum in our front store sales. Our prestige cosmetics continued to be very strong, supported by fragrance and derm categories. Beauty categories remain strong. In Pharmacy and Healthcare Services, we saw ongoing strength in acute and chronic strips and in our specialty drug and new prescribing services categories continue to deliver strong double-digit growth. In drug retail, we're enhancing our omnichannel presence, offering our customers more choice and speed. We're growing delivery through Skip and now Uber Eats and scaling our buy online, pickup from store network to cover 750 stores by early next year. This delivered even greater convenience supporting several customers promise to help make lives easier.

Across the country, we have now opened 12 new pharmacies and 55 new pharmacy clinics this year, providing expanded scope of care service to Canadians. In food retail, same-store traffic was up and basket growth was positive. This contributed to tonnage market share gains. Our Hard Discount banners also continued to outperform same-store sales growth and drove the majority of our absolute growth. In the quarter, we opened 19 Maxi and NoFrills stores. With 16 of these being small format stores, we are bringing Hard Discount to underserved urban markets as well as suburban communities. We see this as an investment to strengthen our position in what is a long-term consumer trend towards value. Similar, we saw higher same-store sales growth rates in our Superstore banner. Within the right-hand side, we saw strong growth from our general merchandise refresh, and we're also showing very positive results from the right-hand side inspired refresh in our medium-sized stores.

Turning to tariffs. Following the removal of Canadian counter tariffs in September, the related cost increases and corresponding tea labels were removed from our shelves as we sold through the inventory. During this time, we received a lot of positive feedback that our efforts were helping our customers make informed decisions. As always, from every challenge comes opportunity. More customers are discovering quality Made in Canada products. So we continue to support these customers and have now sourced and onboarded more than 200 new Canadian vendors since the start of this year. We actually believe that this is good for both our customers and good for Canadian producers and manufacturers and good for the economy.

Our digital sales growth remained very strong, and our weekly engaged users hit an all-time high as we continue to differentiate ourselves by enhancing customer experience with more personalization and choice. We're excited to have begun launching Uber Eats across our network. This provides customers with optionality across third-party delivery providers, which already includes Skip, Instacart and DoorDash. And some of you may have noticed something new on your last shop, 3 of our GTA NoFrills stores have implemented PCO Go. This is a new feature and is designed to provide a faster shopping experience, enabling customers to scan grocery as they shop with a real-time estimated total of the bill and streamlining the checkout process.

Of course, this has only been less than a week, but we are seeing a 90% OSAT for the customers who have tried this new feature. So -- so feel free to take it out. It's great. We are pleased with the strategic foundation that we have built and are excited about the opportunities that lie ahead. The strength and diversity of our business provides differentiation, unique growth opportunities and allows us to deliver consistent operational and financial results. This provides the foundation to make substantial investments today and to accelerate our longer-term growth ambitions.

Freight as a Service is a great example. Today, we are leveraging our existing supply chain delivery infrastructure, enabling us to rent out our empty trucks as a return from the store delivery routes. Next year, this business is expected to generate more than $200 million in EBIT, delivering another year of more than 20% growth. Similarly, our Advanced Media business is expected to generate over $100 million in EBIT next year. So we're scaling this business with the rollout of more in-store digital screens in partnership with STRATACACHE.

Customers like the immediacy and relevance of in-store screens, where it's a beauty tip, seasonal promotions or a great product worth trying, the content feels personally and useful in the exact moment it matters. So advertisers value the ability to reach 4 million plus in-store shoppers every single day at the point of decision with measurable impact. A visible example of this growth opportunity is that you will start to see more screens with new content in our stores over the coming months. And we're very pleased with the strategic advantage our rich first-party data provides. It seems every week we are implementing a data-driven solution that allows us to better understand and serve our customers, improve our operations, make smarter decisions and deliver even more relevant offers. For example, we are now aggregating customer data to guide and optimize space planning for our store network.

This initiative is driving a material sales lift and it ensures each store better reflects the needs and preferences of its local customers. Our data assets will be a key differentiator for Loblaw's continued success and growth. These examples plus our PC Optimum loyalty program and our expanding e-commerce business supports higher growth, higher-margin business opportunities that should have a flywheel effect across everything that we do. This year and next will mark an important milestone in our future growth. We're well on our way in the construction of the second 1 million square foot DC in South Caledon, an identical trend to the East Gwillimbury DC that we are currently ramping up.

We remain encouraged by the success of our new small format discount stores and the new clinic [indiscernible] pharmacies. And tomorrow, November 13, we will be excitedly watching the new opening of our second T&T in the Seattle area. And by end of next year, we expect to have another 5 T&T stores open in Washington and California. So our strategy remains anchored by unmatched core assets, excellence in retail operations and consistent operational and financial performance. So looking ahead, we are well positioned to serve the everyday needs of Canadians today and in the future. I'm excited about the launch of our Holiday Insiders last week. This has been a holiday tradition for more than 40 years in Canada. Our team and I do take great pride in showcasing innovative products crafted so Canadians can celebrate and share the spirit of the season with family and friends. I'll just invite you to try my personal favorite this year. I know it's probably always ice cream. So it's the Santa's Milk and Cookie ice cream that has been received very well by our customers.

I'd also like to call out the amazing generosity that happens every day in all of our grocery stores across the country. I'm very proud to share that each of our stores is partnered with at least one local school to help support the students with their access to nutritious food, removing a significant barrier to learning. This year, the PC Children's Charity met its long-term goal of feeding 1 million Canadian children. Thanks to the support of our customers and colleagues, PC Children's Charity is the nation's largest share of direct-to-school food program, where 100% of all customer donation goes to feed the students in their own community.

I like to thank all members of the Loblaw team for, once again, their tremendous efforts. Your passion and hard work are what allows us to consistently deliver the quality, value and service that people in your community relies on every single day. Finally, I will close by letting you know that we have successfully completed the global search for the key role of President for Shoppers Drug Mart. So I'm very pleased to announce the appointment of Gregers Wedell-Wedellsborg as President. Gregers will be joining us January 26 next year, following his transition from Matas Group, where he's currently Group CEO. He will officially take off his responsibilities on March 16 after a thorough onboarding process.

Matas is a publicly traded health and beauty retailer with over 500 locations across Denmark, Sweden, Norway and Finland. And Gregers is an exceptional leader and retailer with a proven track record in driving growth and performance, digital innovation and operational excellence. Shoppers has a well-established strategy and leadership team, and I'm highly confident with Gregers will help take the organization to the next level. In making this announcement, I would also like to acknowledge the significant contribution of David Markwell, Interim President of Shoppers and Head of our Technology and Analytics Group. David himself into this interim role with great energy and enthusiasm and has made a tremendous difference. He will, of course, support Gregers transition until he starts his official accountabilities on March 16 and also continue his role as Executive Vice President, Technology and Analytics as well as supporting several key enterprise initiatives. Yes, that was the end of my script. I know it was long, but I just had so much I wanted to share with you. With that, I'll now open the floor for questions.

[Operator Instructions] Your first question comes from Irene Nattel of RBC Capital Markets.

A lot of great color there. I was wondering if we could please just start with what you're seeing in terms of consumer behavior. Same-store sales growth of 2% in food was consistent with Q1, but admittedly a deceleration from the Q2 level. So just wondering below the surface, how should we be thinking about that? And how should we be thinking about the growth rate on a go-forward basis?

Thank you. Good question. On consumer behavior, I would say that we are seeing more of the same. So our promo penetration stays high. It's higher than last year, but it's actually not higher than quarter 2. Customers are still shopping more and more in Hard Discount, but we are not seeing it accelerating. So basically, we are seeing more of the same with regards to customer sentiment. At least that's what we see right now as we speak.

Our food or our grocery same-store sales number, just trust me, it's continued to be an important number for us, even though that more sales will be coming from our new stores and will help fuel our long-term performance. And also, I think it's important also to look at our same-store sales in 1/3 of our business in Shoppers because there, we saw the drop same-store sales at 3.8% and our front store sales at 1.9%, which was the best quarter in 9 quarters. And adjusting for the electronics, then we are at a 3% kind of growth in front store. So I think that's how I see it. So I'm pleased with our Q3 performance as we are heading into Q4. But maybe you have some more you will share, Richard, on this.

Yes, Irene. So specifically, if you look at same-store sales in Q3, we need to go back to 2024, okay? As you know, we had -- we hit some bumps in Q4 in the first half towards the end of the first half. And so internally, we had to play some catch-up to be able to recover over that bump. And so that led us to be somewhat more aggressive in the second half last year to be able to deliver on our market share objectives. So now we're comping through that. So that's simply us comping over what we did last year.

Having said all that, I think what's key for us is if you look at our total food sales growth of 4.8% and our internal inflation, which is less than 3%, the delta is essentially tonnage growth. So we've been gaining significant tonnage growth. We're on our way to deliver the best market share we've ever had on top of the best market share we had last year. So we feel very, very good about the business. But you're going to see this wonkiness in same-store sales for food for Q3 and Q4 this year.

And I think maybe I'll just add to that, Irene, that how we see customers are not changing, and we saw it a bit in Q2, but also in Q3. If you look at meat, red meat market prices are increasing because of commodity prices increasing. And then customers, they do understand how to navigate that because they're not just buying the same as they did last year. So they're buying more chicken as an example. And you'll see the same in other categories. If berries goes up, then they'll buy the cheaper berries or not buying berries and buying something else. So that's how customers they continue to navigate through inflation and keeping their costs low and of course, as well shifting to discount for some of our customers.

That's great. And just switching to Shoppers. Can you talk through how we should think about the sustainability of that Rx print as we lap sort of year-over-year of continuous sort of, let's call it, mid -- higher mid-single-digit same-store sales?

Yes, Irene, the specialty drug category continues to grow quite significantly. We're going to see the introduction of less generic drugs in that sector next year, which will affect the top line. But if we look historically on the introduction of generic drugs in general for our business, it's actually been a positive because we get more volume. And so that ends up generating more dollar profits for the organization.

Yes. And maybe when the prices come down, we will see sales could increase as well. So what we know right now, it looks like we will continue the trend that we have seen in the past.

That's great. And I'll be sure to try the Santa's Milk and Cookie ice cream.

That's really good, Irene.

Your next question comes from Michael Van Aelst of TD Cowen.

I just want to follow on some of Irene's questions. But -- so you talked about market share gains in both discount and full service. And I think it's clear to a lot of people what you're doing in discount and how you're trying to gain share. But on the full service side, where you're not really adding stores, how are you gaining tonnage share? What do you -- what would you say are the -- is behind those gains?

Yes. So just to be exact, and we say this every call, like the conventional channel share is going down, but we're doing better than our peers. And so we see that very clearly. So we're doing better than our peers in conventional. And obviously, we're doing better than peers on discount.

Yes. And we have a number of initiatives in our conventional business. So in our Superstores, as you know, we are working on the right-hand side adding more brands into clothing, in food, we are increasing our multicultural assortment. We're making a better shopping trip. We are working more with our digital offers. So we're doing a lot when it comes to our market division, whether it's our Fortinos or Zehrs or Loblaw stores. There, we are giving customers more value in the form of better service, better products, but also better pricing. So we're finding that sweet spot of combining value with the quality that we serve in our conventional banners.

Yes. And net-net, just to be very clear, net-net, we're gaining. When you add both of them together, we're gaining share.

Yes. And we shouldn't forget that T&T. It's not in -- we don't know about the share, but we know that if we're adding that, it's not in the Nielsen data, then it's even more because T&T is still a growth engine for us, both in Canada and of course, what we're seeing in the U.S.

Okay. So conventional, I think we've heard in past quarter is that conventional was growing a little bit. But it sounds like this quarter, you're saying it hasn't -- it isn't growing, but you're just...

No, no, it's the same. We've been saying the same thing, Michael. We've been saying the same thing. Conventional channel.

It's not growing at the same pace as the others.

And -- but we're doing better than our peers.

Okay. But is it -- it's not growing at the same pace, but is it growing?

Yes, it's growing. Sales growth in market are up, same-store sales in market are growing, yes.

The next question comes from Mark Carden of UBS.

So to start, you guys called out strength in your Superstore business. Was the contribution from these formats any bigger or smaller relative to last quarters? And then are you seeing many shifts in how consumers are shopping the stores? And then just your thoughts in general on merchandising for the holiday?

So no, I think it's more of the same. And our Superstores have a very, very strong position, especially in the West, where it's driving some significant sales and the DM, so especially in the home. So toys, we're doing very well, home and also clothing. And that's, of course, helping on our overall margin. So in general, Superstores is a good fit to us. And now we also -- so our supermarket division, they combined our Atlantic Superstores and our Superstores in the West into one Superstores from coast to coast. So now we have 180 of those Superstores, which, of course, we'll try to get more of having those combined.

Okay. Great. And then just on the drug retail side, what have your learnings been thus far from the Shoppers locations that have offered some of the expanded health services capabilities? Have you found that it leads to higher spend in the front store as well? And just any quantification on the lift?

Yes. Overall, they're doing better. And by end of this year, we will have met our target of having 250 Shoppers Drug Mart with clinics. So of course, right now, it's mostly Alberta and it's Nova Scotia. And then we are seeing how much more we can do in other provinces as they open up for more scope. So we're really pleased with the performance we're seeing there. And of course, it has a higher the rest of the business.

Your next question comes from Mark Petrie of CIBC.

I just wanted to follow up maybe on the competitive landscape. Just to clarify. Do you think the comment of gaining tonnage market share holds on a same-store basis? Or would you say it's more stable there? And then second, I know CPI is noisy. So when you do your price benchmarking, would that suggest that Loblaw is an outlier with an internal inflation below CPI? Or do you think that's essentially consistent across the industry?

I think -- I don't know what the others have, so I can't comment. But I can tell you like from a market share perspective, year-to-date, we're gaining share, and we're ahead of our plans for last year and on our way to finish very strong. So yes, we are gaining share.

I think on the market, for me, it stays very rational. It's a good competitive market to the benefit of customers here in Canada, but it also stays rational.

Yes. Okay. And then on Shoppers, also 2 questions. Just based on the behavior that you're seeing, how would you characterize consumer confidence? I know you called out strength in beauty, maybe just behavior within that category, if there's any color? And then second, what has the impact been of your shift in [indiscernible] approach on price and promo? Is there any adjustments to how you're positioning on that today?

I think the consumer sentiment, again, as I said before, it's more of the same. And we are seeing some good growth in fragrance and in the derm category. So customers might not buy as many big electronic items, but they buy -- they definitely continue to buy fragrance and derm. So we're seeing a good strong uplift, and that's helping our overall sales in Shoppers Drug Mart. We have not changed the way that we promote in shoppers. We have lower prices. We started that in November last year, and we continue to do so, but we have not really changed the way that we trade in Shoppers.

Yes. Our business in Shoppers is pretty steady like steady as she goes.

Yes. Okay. Fair enough. And then just last one, maybe just on by Canadian. I think last quarter, you had commented that it accelerated from Q1. How would you characterize it as a factor in Q3? And what do you think the momentum is on that?

Yes. No. So after the tariffs have gone, so we in Canada have moved the territory tariffs, then prices on direct imported products from the U.S. has gone down to normal. And of course, we are seeing some customers who are going back to those products that they love now that they are much cheaper than they were, and that will have some impact on Canadian sales. Overall, Canadians just love to buy Canadian products, and that's also why we have added another 200 suppliers this year so far. So it's still up, but it's not up as much as it was before because of lowering prices of those products from the U.S.

Your next question comes from John Zamparo of Scotiabank.

I wanted to ask about private label penetration. And I wonder if you could share the delta of growth rates in private label versus national brands in Q3 compared to recent quarters? And is there any change in terms of response you're seeing from national brands to try to support tonnage growth?

For us, we like growth both in national brands and in control brands. So we like growing with both. Right now, we are seeing that our no name, especially in our discount division is growing ahead of everything else. So customers are seeking the good choices that we have no name. Overall, we don't see any big significant shift to control brand or to the big national brands. But no doubt that the big players, the big national brands, they need more volume. So -- but that might change over time. But for now and also what we see right now is that it's more of the same with a little bit of favorability to our no name plus right now that we're in the middle of our insiders launch, that's doing incredibly well for us.

Okay. And I wanted to ask also about e-commerce growth. It remains elevated. I wonder how you think about this? And if you could talk about the evolution of profitability from these sales because it's good to see the sales growth and market share, but margins are lower on these sales. So I wonder how margins are evolving as this business grows.

Yes. So if I can just talk about the market share and Richard maybe a little bit on the profit. But overall, we're gaining market shares. And we have a market share in online food that are way above our overall market shares. And with having added Uber, I think, 2 weeks ago, we're seeing a really, really good uplift there. And what we are really pleased about is that the penetration of customers shopping online food is increasing a lot in our Hard Discount stores. So in NoFrills, it's up a lot. So we are giving access to online food to many more Canadians and they can access Hard Discount where they get more value for their money.

And just one overall for the profit before I give it to you, Richard, is that we don't have our own trucks. So a man and a van is very, very expensive. And since we use the delivery services, actually margin is okay for us. It's not as good as if it was online, but it's still very, very good. And also customers who shop online, they also tend to shop more in our stores. So overall, it's good for us. So we are pleased, and it was an 18% uplift in online sales. It's a big part of our business. And we do expect that, that's going to -- that kind of growth levels would continue into next year.

Yes. So the drag -- additional drag on earnings is minimal because essentially, the fastest-growing segment for us is PC Express, which means we pick in store and we have a third-party deliver to home. So we're not paying for the delivery. So the impact on earnings is not that significant anymore. So we feel really good about growing this as fast as we can.

So when we are into loyalty and online and digital, I just want to state that last quarter, I talked about AI for the tool we had for district managers and many, many companies, they do a good talking about AI. But due to the excellent team that we have, we're actually delivering because that tool now is out in 43 districts. And in quarter 1, it will probably be out in our entire store network. So we have a lot of great use cases within this.

The next question comes from Vishal Shreedhar of National Bank.

With respect to your real estate program, I know off the top, you indicated that it was in line with expectations. But as you look at your various projects, is there anything that's within the projects, whether shoppers or the small format NoFrills that's coming in better than expected and maybe you'd like to tweak going forward and accelerate one and deemphasize another?

I think everything is going pretty well, Vishal. I think what is clearly very successful is small format urban. Shoppers continue to click along. Each one we opened is doing really, really well. And as we've said in the past, like outside urban areas, we're going to go with a much slightly larger box. And the few we've opened this year, we're very happy with. So, so far, so good. The top metric we're focused on is sales. And so far, when we look at the sales of these stores, we're happy.

Okay. With respect to industry square footage growth, your materials indicated that it was up. Do you have a sense of how quickly Loblaw is growing versus the industry? Are you all in line? Or are you going a little bit quicker in terms of...

Just a little bit, like we said 2% over the last 12 months. In food, it's less than 2%. So -- but we've been playing catch-up. And I was actually looking at this figure this week, like our square footage share in Canada is not yet back to the level that we were in 2019. So we've been playing a bit of catch-up. We're going to catch up to that next year. So for us, it's pretty sensible. And so far, we feel good about all the stores we've opened. And as long as that continues, we'll keep going.

And many of the new stores we're opening, they are about 10,000, 15,000, 17,000 square foot where previously we might have opened them at 40,000, 50,000. So yes, we are opening more, but less square foot and of course, also less sales. So that's also a big difference. So don't only look at the -- and I know that you don't at the numbers.

With respect to e-commerce growth, still very strong. And obviously, we're putting CapEx dollars in new stores. Do you anticipate the e-commerce growth to taper at some point? Or do you anticipate this accelerated growth in e-com to continue for several years?

I think your guess is as good as mine. But if I can just look at other countries, I think that probably that's the best measurement of guessing where it's going to land. I think overall in Canada, penetration of e-com in food, it's about 4%, above that number. We are higher than that. Would it end up being 8% or 10%, I don't know. In the U.K. right now, after many years where everyone they really went for online food, it's about 11%. In Germany and France, it stays about 4%, 5%. So U.S., I'm not aware of the number. So we predict that growth level of whatever, 15% as an industry over the next few years.

And at some point, yes, it is going to take off because so many customers, they want to do both. They also want to go down. They want to touch their produce. They want to look at what they buy. They want to get the experience going to stores. So I think 7, 8 years ago, I think we all in our industry thought that there was no need to build new stores, but there definitely is because customers, they want to shop and many customers, they are not good at planning, and you also need to be good at planning to shop online.

And one thing I would add, Vishal, is a phenomenon that's definitely affecting the top line growth of everybody is the advent of the new gig players, like all the gig players are filling up their channels, whether it's Uber, Instacart, SkipTheDishes. So as everybody sort of fills up their channel, it's going to lead to higher growth. Once that's all filled, like I think you're going to get to a more normal growth. We don't know what that number is yet. We'll figure it out probably 2 years from now.

Your next question comes from Chris Li of Desjardins.

It sounds like there's a lot of interesting and exciting developments within your Advanced Media business. If I heard you correctly, I think you're targeting like $100 million of EBIT next year. I'm just wondering, are you able to share what is the level right now in this year in the Advanced Media business?

Yes, it's lower than $100 million.

How much lower...

We said we would mention it when it reaches that number.

Yes. I think...

So it starts with a 9, okay? And that's all I'll say.

I think over time, also the STRATACACHE deal will help us generate more and more income there. But that's going to be rolled out over the next year. So all the screens in all our stores.

Okay. Okay. That's helpful. And then just you mentioned about Ozempic and Wegovy becoming generic. I guess it's no secret like we're hearing in the media reports that there has been some delays from Health Canada in terms of approving the applications by the generic drug manufacturers. Are you guys seeing that as well? And do you have a sense of like when generic will be available on the shelves?

Yes. We've heard the same thing as you. We know they're coming. Maybe not early '26, but maybe mid-2026. So that's all we know. We know as much as you do probably.

We agree either way. And what we think about is our customers. So when it goes generic, it's going to be so much cheaper for many, many customers. And so many customers now they will have access to that drug, which is good for us, good for customers and good for health care in Canada. So we hope it comes sooner than later.

And then when you mentioned earlier that, obviously, you get the lift in volumes, which makes a lot of sense. Is that good in terms of more dollars from volume, is that good for the top line as well as the bottom line?

Yes. So that's still to be seen. So our prediction would be that we're going to see -- so even though that it's going to be significant cheaper, then we will sell more. So that's the best guess. So right now, the best guess would be that we will still have a good top line growth. And then on the dollar, we'll be fine.

Got it. Okay. And then my other question, just maybe on the supply chain. On the East Gwillimbury DC, is it still on track to be fully ramped up by middle of next year? And I know it's a bit of -- it's an earnings drag right now for you. But as the ramp is complete, is it fair to assume that, that headwind will turn into a tailwind for you in the back half of the year?

Yes, mid-'26, like the ambient section, which is the last section that we've opened, we started fulfilling orders a few weeks ago. So as I said in my remarks, we're a full quarter ahead of ramp-up. So by mid-2026, we should be well on our way, and we should start to get benefits from East Gwillimbury for sure.

And I'm surprised at how much progress we've done at Caledon. Like let's not forget, we started construction on that one in January. Steel is up. We're going to be finishing erecting steel by the end of winter, and it's going to be fully included, I think, by the summer. So that's also progressing well and on plan. And that one will open in '28.

Got it. Okay. And my last question is just maybe on T&T. Obviously, you guys are planning to convert that Loblaw at Empress Walk in North York to a T&T, which I think makes a lot of sense given the demographics there. And I guess my question is, as you look to potentially double the footprint of T&T in Canada over the longer term, do you expect store conversion to play a bigger role than in the past in terms of how you're opening up new T&T's?

No, I think there's the [indiscernible] store that could become T&T and Empress Walk is one. I think most of the growth will come from greenfield sites.

Yes. So overall, I think that's the same for all across our network. We have not planned for a lot of conversions. There might be a few here and there that makes sense. But overall, that's not a big part of our strategy.

[Operator Instructions] Your next question is from Etienne Ricard, please from BMO Capital Markets.

So revenue growth from new stores continues to accelerate. Given that openings appear to be weighted to the second half of this year, should we expect this growth to accelerate further over the next few quarters?

Good question. So what I'll say is if you look at the 2-year stacked growth of absolute revenue for Q3, which is 6.1%, which is like 4.6% plus 1.5%. We expect that the 2-year stack growth of revenue for Q4 will be in line with the 2-year stack growth of Q3, which will answer your questions because it reflects the timing of new stores.

Yes. And we opened a lot of new stores last quarter last year.

It's mostly in [indiscernible]. We opened a lot of new stores in Q4 last year. We're opening a lot of new stores in Q4 this year. So that's going to be the best guide because you can see -- you'll see if you go back that in Q3 of last year, our absolute sales were up 1.5%. And in Q4, they were up 2.9%. So because of new stores. So you're going to see a similar phenomenon in Q4. Hope that's helpful.

Yes. That's helpful. And as you continue to open the new small format NoFrills, I'm curious, are these stores giving you new read-throughs or maybe customer data that would be additive to the Retail Media business?

That mean more of the same, like one more box with one more stream of data with one more opportunity to put screens. So the answer is yes, but it's -- it would be probably similar type data that we get in any of our Hard Discount stores across the country.

Yes. So we have so much data already now that we're working and utilizing even better, and our team is doing an incredibly good job of doing exactly that.

There are no further questions at this time. I will now turn the call back over to Roy MacDonald. Please continue.

Thanks, Danny, and thank you, everybody, for your time this morning. If you've got any follow-up questions, drop me a line. And mark your calendar for Wednesday, the 25th of February, when we will be reporting our Q4 and full year '25 results. Have a great day.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.