Loblaw Companies Limited

Kalkine’s Global Tariff Report provides fully independent analysis and data-driven analysis of major global sectors affected by tariff changes, evaluating the implications these shifts may have on equity valuations across those industries. The report concentrates on trade-sensitive sectors that typically experience heightened investor scrutiny during periods of tariff uncertainty. It also identifies defensive and countercyclical segments that demonstrate relative resilience or may even outperform, amid disruptions to global trade flows.

As illustrated in the table below, several key sectors in different countries are directly impacted by the recent tariff announcement from President Trump.

Latest Updates on Global Tariffs by Trump’s Administration

1. Baseline Tariff Structure and Temporary Suspension:

• 10% Baseline Tariff: Under IEEPA, a 10% levy on all imports was enacted to offset trade imbalances and non-reciprocal foreign tariffs.
• 90‑Day Suspension of Reciprocal Levies (Apr 9, 2025 – Jul 9, 2025): Newly calibrated surtaxes (11% - 50%) were stayed for most partners, preserving only the 10% baseline; Canada, Mexico and China remain subject to pre‑existing elevated rates.

2. Sector-Specific Exclusions and Separate Tariff Regimes:

• Energy and Minerals Exclusion: Oil, gas, potash, and copper exempt from 10% baseline tariff; subject to tailored Section 232 duties (e.g., 10% ad valorem on Canadian crude outside USMCA).
• Pharmaceuticals Carve‑Out: All FDA-approved drugs excluded from baseline but may face 25% tariff pending Section 232 security review.

3. Targeted Tariffs on Key Trade Partners

• China: Tariff raised to 145% (from 125%) on all imports effective Apr 10; China responds with 125% U.S. tariffs and rare earth export controls.
• Canada and Mexico:
  • Automotive Sector: 25% tariff on non-USMCA vehicles/parts (e.g., engines, transmissions); reciprocal Canadian duties on U.S. autos.
  • Energy: Non-USMCA oil and gas face10% tariffs.
• EU Reciprocal Threat (Suspended until Jul 9): A 20% retaliatory tariff on U.S. steel, agriculture, and spirits is paused, though subject to reactivation if negotiations falter.

4. Other Update

• Film Industry Tariff (May 5, 2025): A 100% tariff is proposed on all foreign-made films, citing national security concerns and the decline of the domestic film industry due to international tax incentives.

What are the different types of Tariffs?

A Snapshot of Canada’s Trade Size

Canada closed 2024 with a trade surplus of USD ~14.11 bn. Total exports for the year reached USD ~568.23 billion, while imports stood at USD ~554.12 billion, supported by strong commodity exports and softened import demand. Sectoral gains in energy, mining, USMCA-compliant autos, and domestic services highlighted resilience amid evolving trade dynamics. While goods exports rose modestly YoY, pre-existing U.S. tariffs on steel and aluminum, along with uncertainty over future measures, particularly in the automotive sector.

Global Implications of Tariffs

Impact of US Tariffs on Various Sectors

While some Canadian manufacturers express cautious optimism about market stabilization within the next year, the prolonged trade tensions pose risks of recession and inflationary pressures in both countries. Ongoing negotiations and policy adjustments will be critical in determining the future trajectory of US-Canada trade relations.

Why does the Canada’s Consumer Staple Sector look Attractive Amid Tariff Concerns?

Amid elevated Market Volatility and Tariff pressures, Loblaw Companies Limited (TSX: L) stands out as our defensive pick within the Consumer Staples sector, supported by rigorous fundamental and technical research 

Kalkine’s Global Tariff Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the Loblaw Companies Limited (TSX: L).

Section 1: Company Overview and Fundamental Insights

1.1 Company Overview:

Loblaw Companies Limited (TSX: L) is one of Canada's largest grocery, pharmacy, and general merchandise retailers, operating the most expansive store footprint in Ontario and maintaining sizable presences in provinces like Quebec and British Columbia. Key grocery banners include Loblaw, No Frills, and Maxi, while its pharmaceutical operations are the product of its 2014 acquisition of Shoppers Drug Mart. The firm carries a robust private-label assortment, with top sellers like President's Choice and No Name. In addition to its retail operations, Loblaw oversees a financial-services business, which provides credit card services and guaranteed investment certificates, and also operates its PC Optimum loyalty program. The firm's controlling shareholder is George Weston Limited, which owns 52.6% of the equity.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders:

The top 10 shareholders together form ~62.41% of the total shareholding. George Weston Ltd and TD Asset Management Inc. hold a maximum stake in the company at ~­­­52.88% and ~1.82%, respectively.

1.4 Key Metrics:

The company announced financial growth in the first quarter of 2025, as well as an industry-leading margin profile, which is a significant plus. Furthermore, the group recorded a modest increase in its cash from operations and also clocked healthy liquidity ratios compared to an industry median.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of the company’s recent activities, such as an announcement regarding dividend distribution.

2.2 Insights on Q1 2025 Financial Performance:

Section 3: Key Risks, Company Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed an upside of ~3.97% and ~10.00% over the last 1 week and 1 month respectively. Moreover, the stock is trading above the average 52-week high price of CAD 226.25 and 52-week low price of CAD 10.00, providing an opportunity to ride the trend.

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on May 2, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavorable movement in the stock prices.