Loblaw, based in Brampton, Ontario, reported increased profits in the second quarter as it continued to attract budget-conscious shoppers to its discount chains No Frills and Maxi. The company revealed that its pharmacy unit experienced the strongest sales growth, largely attributed to the popularity of generic GLP-1 weight loss medications.

For the three months ending June 20, Loblaw disclosed that its revenue reached over $15.3 billion, marking a four percent increase from the previous quarter. Profit available to common shareholders also saw a five percent rise to $751 million.

The retail giant noted a 1.6 percent increase in same-store sales for its core retail food business, while its drug retail unit, which includes Shoppers Drug Mart, reported a 4.6 percent growth in same-store sales, driven by a 7.5 percent surge in pharmacy and health-care services.

During a conference call with analysts, Loblaw’s chief financial officer, Richard Dufresne, highlighted the growth in specialty prescriptions, particularly due to the impact of generic GLP-1 drugs. Dufresne stated that despite lower generic drug pricing, higher volumes are offsetting the decline, leading to expectations of increased revenue and profitability.

The company’s executives also mentioned that sales of GLP-1 drugs have increased by 40 percent year-to-date, a trend observed since the previous quarter. CEO Per Bank mentioned that customers are opting for frozen vegetables over fresh produce due to rising inflation, with significant price hikes noted in fresh tomatoes.

Loblaw’s No Frills and Maxi stores are positioned to cater to customers seeking value amidst food price inflation, with the company continuing to gain market share in the hard discount sector and outperforming competitors in conventional retail. The company’s internal food inflation metric remains lower than the national grocery CPI.

Statistics Canada reported a decrease in the inflation rate to 2.8 percent in June, with grocery price increases moderating to 3.9 percent, down from 4.3 percent in May. Loblaw’s Toronto-listed shares remained relatively stable on Thursday, showing a year-to-date gain of approximately six percent.