Loblaw's T&T California Debut Sets Record Sales as Discount Banners Drive Q2

T&T's California Debut and Loblaw's Second-Quarter Results

Loblaw Cos. opened its first T&T Supermarket in California in June, and the San Jose store immediately became the highest-grossing first week in the company's history, executives said on the retailer's second-quarter earnings call. CEO Per Bank described T&T as one of Loblaw's most exciting growth opportunities, citing strong customer response in both Canada and the U.S. He said Loblaw will open two more California T&T stores this year and is scouting additional sites.

The T&T debut came as value-focused banners carried Loblaw's food business through the quarter. Food retail sales rose 3.3% year over year, while total retail sales, including drugstores, climbed 4.1% to about $10.7 billion (U.S.). Retail operating income advanced 2.9% to $855.3 million. Food same-store sales grew 1.6%, with Maxi and No Frills — Loblaw's discount banners — posting growth of close to 4%, according to CFO Richard Dufresne.

Dufresne said same-store results were driven by gains in both customer traffic and basket size, and ecommerce sales jumped 19.3%. The company opened 11 food stores in the quarter, including seven Maxi and No Frills locations and two T&T Supermarkets — one in the U.S. and one in Canada. Loblaw remains on track to open about 75 stores this year. Its conventional supermarkets also posted positive same-store sales and outperformed competitors, led by the upscale Fortinos banner and T&T, while drugstore same-store sales rose 4.6% and total drugstore sales increased 6.1%.

Executives also highlighted Loblaw's commitment to Canadian sourcing, with more than 70% of food purchases sourced from or prepared in Canada. Bank said the company is onboarding new Canadian suppliers and investing in local production, framing Canadian sourcing and customer value as complementary during the ongoing tariff disputes. Consumers are leaning on promotions, private label and frozen vegetables, which saw a 500-basis-point sales gain at discount stores.

Why T&T, Maxi and No Frills Are Driving Loblaw's Growth

Why T&T Matters for Loblaw's U.S. Ambitions

T&T's first-week result is a company-reported signal that the format can travel to the U.S., but the absence of an actual sales figure means the record should be read as a starting point rather than proof of durable success. California already has a crowded field of specialty and Asian-format grocers, so the real test is whether T&T can sustain early curiosity into repeat traffic. The two additional California openings planned for this year will provide the first hard evidence on that question.

Discount Banners Are Carrying the Food Business

Maxi and No Frills grew same-store sales close to 4%, more than double the food division average of 1.6%, and seven of the 11 new food stores in the quarter were discount-format locations. The pattern matches broader consumer behavior: shoppers are chasing promotions, shifting to private label and preparing for possible future inflation by buying frozen vegetables — a category that gained 500 basis points at discount stores. At the same time, Loblaw said its upscale Fortinos banner and T&T outperformed, suggesting strength at both the value and premium ends of the market.

Tariff Tensions Put Canadian Sourcing in Focus

Loblaw's statement that more than 70% of its food purchases are sourced from or prepared in Canada is both a supply chain fact and a strategic response to the U.S. tariff environment. A higher Canadian-sourcing share reduces the direct exposure of Loblaw's food business to tariffs, while giving the company a reputational message tailored to Canadian shoppers. It also signals to Canadian suppliers that Loblaw expects to keep expanding local procurement as it scales.

An Expansion Strategy Still Anchored in Stores

Loblaw is on track to open roughly 75 stores this year, with 11 opened in the second quarter alone. Even as ecommerce sales grew 19.3%, the company is choosing to invest primarily in physical locations, indicating that management sees convenience and format mix as the main levers for taking market share. The test of a wider low-priced food offer at Shoppers Drug Mart adds another potential format to that mix.

What Loblaw's Earnings and Expansion Mean for Investors and Suppliers

Loblaw's second-quarter report gives investors and industry watchers several specific markers to track as the year progresses.

• T&T's California rollout: Two more locations are scheduled to open this year. The first San Jose store's record first-week sales set a high bar; subsequent openings will show whether early demand is repeatable and whether Loblaw names additional sites.
• Discount banner momentum: Maxi and No Frills same-store sales grew close to 4% versus the food division's 1.6%. Any narrowing of that gap in future quarters would signal that value-seeking behavior is easing.
• Store-opening pace: With about 75 openings planned for the year and 11 completed in Q2, investors can track progress against that target at the next earnings report.
• Canadian sourcing: More than 70% of food purchases are sourced or prepared in Canada. Canadian suppliers should expect continued onboarding efforts, while suppliers outside Canada face a tougher procurement environment as tariff disputes persist.
• Frozen vegetable trend: The 500-basis-point sales gain at discount stores is a concrete marker of pre-emptive inflation buying. Grocery suppliers with capacity in frozen produce may benefit if that behavior continues.