The North West Co Inc (NNWWF) Q2 2024 Earnings Call Highlights: Navigating Growth Amidst ...

GuruFocus News
3 min read

In This Article:

  • Consolidated Sales Growth: Up 4.6% for the quarter.

  • Gross Profit Increase: Up 7.5% for the quarter.

  • Net Earnings Decrease: Down 3% compared to last year.

  • Adjusted EBITDA Growth: Increased by 6.1%.

  • Adjusted Net Earnings Growth: Increased by 1.6%.

  • Canadian Operations Sales Increase: Up 5.6% for the quarter; 6.8% on a same-store basis.

  • International Operations Sales Increase: Up 0.8%; 0.9% on a same-store basis.

  • Gross Profit Rate Increase: Increased by 91 basis points.

  • Expense Increase: Up 10.1% for the quarter; 127 basis points as a percentage of sales.

Release Date: September 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • The North West Co Inc (NNWWF) reported a strong top-line growth with consolidated sales up 4.6% and gross profit up 7.5% for the quarter.

  • Sales in Canadian operations increased by 5.6% for the quarter, with a 6.8% rise on a same-store basis, driven by strong food sales.

  • The company experienced increased consumer demand due to First Nations Drinking Settlement payments and programs like Jordan's Principle, which are expected to continue into 2025.

  • The gross profit rate improved by 91 basis points, attributed to a shift in sales mix and improved execution in fresh departments.

  • The North West Co Inc (NNWWF) received the Canadian Grocer Impact Award in the Diversity, Equity, and Inclusion category for its indigenous procurement strategy.

Negative Points

  • Earnings from the investment in Transport Nanuk were down $1.8 million due to higher investment repairs, affecting the bottom line.

  • A $1.8 million net increase in expenses was reported due to non-comparable expenses, including higher share-based compensation costs.

  • The implementation of the global minimum tax resulted in a $1 million increase in tax expense for the quarter.

  • International operations faced a challenging economic environment, with only a 0.8% increase in sales, impacted by weaker conditions in tourism-dependent markets.

  • Expenses increased by 10.1% during the quarter, driven by inflationary headwinds, labor costs, and foreign exchange impacts.

Q & A Highlights

Q: Regarding the higher same-store sales in Canada, particularly on the food side, is this part of the $48 billion child welfare reform, or is it something separate? A: Daniel McConnell, CEO: It is more aligned with Jordan's Principle, focusing on providing healthier living options in Northern Canada. It's not entirely clear if it's part of the settlement, but it aligns with the overall initiative of Jordan's Principle.

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