Description: Grocery chains have been among the winners during the pandemic. With more people working at home, and restaurants either operating under restrictions or not operating at all, grocers are growing their sales. Loblaws has decided to bump up its dividends to shareholders given that profits were up in the most recent quarter. Left on the sidelines are the Loblaw in-store employees who have lost their $2/hour bonus from the early “hero” days of Covid-19. Loblaws, along with two other major grocery chains, Empire and Metro, all cut these bonuses for front-line staff on the same day.
Date: November 12, 2020
1) What is your reaction to this story?
2) Why do you think Loblaws would make this move given the possible reputational risks?
3) Chapter 11 in Wiley’s Financial Accounting: Tools for Business Decision-Making discusses how to evaluate dividend performance. What ratios might the shareholders of Loblaws be using to evaluate this latest dividend increase?