George Weston Ltd.

The growth in grocery retail is partially offset by declining SSS at Shoppers Drug Mart, as social distancing and safety measures reduce sales. In addition, higher-margin general merchandise and beauty products have dropped since the beginning of the pandemic. At Weston Foods, despite strong demand for packaged bread and rolls, revenue growth has been stalled by weaker foodservice demand (20% of sales) and slower sales in certain indulgent categories such as cakes and donuts. In addition, lower rent collection in the short term and macroeconomic pressure in the long term can lead to reduced rental revenue growth for Choice. While the company's revenue growth will be temporary hit in 2020, we expect it to rebound in 2021, supported by Choice's

...George Weston Ltd. subsidiary Loblaw is the largest food retailer in Canada with a good portfolio of stores. George Weston Ltd.'s (GWL) subsidiary Loblaw generates about 95% of GWL's adjusted consolidated EBITDA. With 1,086 corporate and franchise food retail stores along with about 1,344 associate-owned Shoppers Drug Mart stores, Loblaw has significant geographic diversity with about a 30% share of Canadian food market. At the same time, with well-recognized banners, strong penetration of private label, and grocery stores including discount (45% of stores) and conventional formats, Loblaw is able to service the full spectrum of customers. Shoppers Drug Mart sells higher margin general merchandise and beauty products that, along with cross-selling of private label products (President's Choice, No Name), benefits both Loblaw's revenue and EBITDA lines. Choice has a sizable portfolio of well-performing, nondiscretionary retail assets in core urban market, which provides stable operating performance....

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