George Weston Limited (WN) Earnings Call Transcript & Summary

Okay. So good morning, and welcome to George Weston's 96th Annual Meeting of Shareholders. I'm Galen Weston, the Chairman and the Chief Executive Officer of the company. Each year, we look forward to this meeting and the opportunity that it provides to speak in person with our shareholders. At the same time, we are broadcasting the meeting virtually as we have for the past 4 years. This hybrid format provides all shareholders an opportunity to participate regardless of their location. Joining me on stage are Richard Dufresne, our President and Chief Financial Officer; and Andrew Bunston, our Chief Legal Officer and Secretary. Several director nominees, representatives of the auditor and other members of our management team are also here with senior executives from Loblaw and from Choice Properties. I'd now like to call to order this Annual Meeting of Shareholders of George Weston Limited. I'll begin today's meeting by outlining how voting and questions will be addressed in this hybrid format. Usually, and this year is no exception, the majority of shareholders have submitted their proxies or voting instructions in advance of the meeting. Voting during today's meeting will be conducted in person or through the online platform. If you're requested to vote in person, please use the ballot that was given to you when you registered. If you have voted in person with a ballot, please raise your hand. And at the end of voting on all matters, a representative from the scrutineer will come and collect your ballot at that time. To vote online, please use the Lumi platform. And when we're ready to table an item of business for a vote, you will see voting options appear on your screen. If you have voted in advance of the meeting and do not wish to revoke or to change your previously submitted proxy, then you do not need to do anything. The scrutineers will tabulate all the votes cast during the meeting, and we will report on the results of each resolution near very end of the meeting. Questions will be accepted in person and through the online platform. To ask a question in person, please line up in the front. There are microphones, as you can see on either side. If you wish to submit a question online in writing, select messaging tab on the top of your screen. If you wish to address the meeting verbally, please dial the audio line and press Star One or click the Request to Speak icon on the online platform. The operator will verify that you are a shareholder or a proxy holder, and you will be able to ask your question at the appropriate time during the meeting. When asking a question, please identify whether it relates to a motion being considered as part of the formal business of the meeting or whether it is general in nature. We will address questions directly related to a particular motion at the appropriate time of the meeting and save general questions until the end of the meeting. We will first answer questions posed from those in person, followed by those questions submitted online or on the audio line. If you're attending the meeting virtually and logged in as a guest, you will be able to listen to the meeting, but you will not be able to vote or ask questions as only registered shareholders and duly registered proxy holders may do so. Andrew Bunston will read out any written questions submitted online and a member of management will respond. We will make every effort to answer all of your questions during today's question-and-answer period. Today's remarks may include forward-looking statements. Details regarding forward-looking statements can be found in the company's 2023 Annual Report and First Quarter 2024 report to shareholders. Before we commence with the business of the meeting, please join me in extending a warm welcome to the Grade 12 accounting class from Bloor Collegiate Institute. I'd ask you all to please stand and be recognized. Thank you. I hope you enjoy the meeting and that you will take the time to ask a couple of questions, and we will do our best, as always, to answer them. Before proceeding with the formal part of today's meeting, I'd like to ask our President and CFO, Richard Dufresne, to share his perspective on how our group of companies performed in 2023. Richard?

Thank you, Galen. I'm pleased with the strong performance of George Weston and its 2 operating businesses, Loblaw and Choice Properties in 2023. At George Weston, we remain focused on building generational value with actively managed market-leading businesses through expertise in strategy, operations, capital allocation and talent development. This can only happen with an unrelenting focus on the needs of our customers and tenants and industry-leading commitments to environmental, social and governance outcomes. Our people are central to achieve our long-term goals. A key advantage is our ability to attract exceptional people and develop strong leaders. And I would like to take this opportunity to thank each and every one of our colleagues across Loblaw and its network of more than 1,500 independent business owners, Choice Properties and of course, the George Weston team. Your talent and dedication are the cornerstone of our success. Together, we delivered another year of consistent financial performance. This has been reflected in the ongoing strength of our share price, which has continued to outperform the TSX over many years. At a macro level, 2023 marketing increases in interest rates. These global pressures continue to impact our retail and real estate businesses and their customers. As a result, our customers are under more pressure than ever. We believe this provides us with an opportunity to differentiate ourselves from our peers and our businesses work hard every day to provide the best value and service to our customers and tenants. 2023 marked Loblaw's third year of continued focus on retail excellence. In 2021, we refined our strategy, established a shorter list of priorities and put a particular focus on consistent execution against our operational and financial framework. Over that time, Loblaw's total shareholder return has grown at an impressive cumulative average growth rate of 29%. Loblaw recorded over $59 billion in sales on growth of 5.4% from the past year. We saw particular strength in our hard discount banners as Canadians turned in record numbers to our Maxi and No Frills discount stores to take advantage of their lower prices. And pharmacy had another strong year driven by our front store business and growth in pharmacy services. In line with its financial framework, Loblaw delivered essentially flat gross margin, while carefully managing SG&A spending in the retail business. Combined with top line growth and the strength of our bank, this drove a 7.5% increase in adjusted consolidated EBITDA. Retail free cash flow was $1.7 billion on the year. Loblaw repurchased $1.8 billion worth of common shares and invested $2.1 billion in capital back into its business. Last week, Loblaw announced its 13th annual dividend increase. I would like to thank the entire team at Loblaw for their strong contributions this past year. 2023 was another year of positive momentum for the Choice Properties team as they significantly advanced their strategic agenda. Choice continued to demonstrate the stability of its portfolio and strength of its balance sheet made meaningful progress on its transformational development pipeline and adopted ambitious yet achievable targets in relation to its ESG program. In addition, last year, Choice also hit an important milestone, celebrating 10 years since its creation and IPO. Reflecting on the last decade, it's truly remarkable how Choice has become Canada's leading REIT, growing its properties from across 425 to over 700 across 3 asset classes and increasing their -- its total fair value from $7 billion to $17 billion, all while delivering 9% annual return to our unitholders. In 2023, the team delivered strong operating and financial performance. Against its financial framework, Choice delivered same-property net operating income or NOI growth of 4.6% and funds from operations or FFO growth of 4% or $1 per unit. Choice ended 2023 with strong debt metrics and handful of liquidity. Choice's debt-to-EBITDA ratio net of cash at the end of the year was 7x, and it maintained a strong liquidity position with $1.5 billion available on our credit facility and approximately $12.7 billion worth of unencumbered properties. Supported by its strong operating performance and solid financial position last year, Choice once again increased its annual distribution in the first quarter of 2024, demonstrating its commitment to sharing earnings growth with unitholders. In addition to delivering on its financial framework, last year, Choice Properties continued to advance its environmental efforts in fighting climate change and enhance its social impact by focusing on strengthening communities to prosper. It's 2 ESG focus areas. Choice's ESG program remains an integral part of its strategic framework and is fundamental aspect of its support to its tenants, its commitment to strengthening communities in which it operates and building resilience throughout its business. I would like also to acknowledge Rael and the Choice team for a successful year. I'm confident in the team at Choice Properties and look forward to building on that positive momentum in 2024. In 2023, George Weston's business continued to build shareholder value. On a consolidated basis, George Weston increased revenues by 5.4% to over $60 billion and adjusted net earnings per share from continuing operations increased by 7.4%. George Weston continues to build on its track record of delivering consistent performance over a long-term horizon while ultimately deploying its capital, including returning capital to shareholders and when needed, reinvesting capital in its portfolio of companies to further enhance long-term earnings capability. Last year, George Weston generated strong cash flow of $1.3 billion from the dividends received from Loblaw, distributions received from Choice and proceeds from participating in Loblaw's Normal Course Issuer Bid. Combined with its cash balance, this supported the return of capital to shareholders through the repurchase of $1 billion in shares and another annual dividend increase. I'm pleased to inform you that this morning, we announced a 15% increase to our dividend, our 13th consecutive annual increase. Again, I want to thank all our colleagues across the Weston Group. We began 2024 with 2 strong and well-positioned operating companies, confidence in our strategy and a great team. I will now turn the meeting back over to Galen.

Okay. Richard, thank you very much. So -- so look, every year, I enjoy taking the opportunity with everybody together in this room to reflect on the group's performance, the headway of our business, and what we're doing against our strategies and all the different ways that we are serving the essential and everyday needs of Canadians. And I hope based on what you heard from Richard, you'll join me be inspired by the progress we've made over the last 12 months. As we look ahead, I thought it would be good to hear firsthand at this meeting from the leaders of the business about how they're feeling and what opportunities they see on the horizon. And so with that said, in the spirit of welcoming him as the newest addition to our group's leadership team, I'd now like to invite Per Bank, the CEO of Loblaw to share his thoughts on the company. Per?

Thank you, Galen. Thank you, everyone. I am really, really pleased to be here. I was here very, very shortly last year. I'm pleased to be working for Loblaws, working for the family. It's a true pleasure and being in Canada. That's -- I like everything I see, I like everything I experience. Maybe there's one thing that's not that great, the traffic in Toronto. It's like I'm not sure I will ever going to like that. Yes. Just a bit of my path, and I think that's the last time you'll hear about that. So I've been in retail since 2001. I've been a CEO for more than 20 years. I grew up in Coop for 8 years. I was in Tesco for 3 years. And then the last job I had was in Salling Group for 11.5 years. And you learn in every company you work for. At Tesco, I learned about staying really, really close to customers, listen to customers day in, day out. And at that time, when I worked there, they were in 14 countries and probably one of the best in retail around the world. And I was first the CEO of Tesco Hungary, then I moved to the U.K., where I was part of the Executive Committee being responsible for clothing, nonfood and the e-commerce business. Then I moved to Salling Group. I was there 11.5 years. Among other things, we grew our market shares from 29% to 37%. And in the latter part of the journey, we acquired 300 Tesco stores in Poland, and we converted all of them in 1 year to hard discount stores, ending up by having 800 -- sorry, 700 stores in Poland. And I must say that there are many more similarities between European retail and Canadian retail than differences. Then I started my journey in Canada in September last year. And everybody told me that when you travel around Canada, it's really different from the East to the West and yes, the nature is different, but stores are more or less the same. What I actually experienced is that there are more differences within the stores in Toronto than from Halifax to Calgary because of diversity, because of the way that we are able to handle our multicultural assortment, but good, good experiences. I started by visiting a lot of colleagues, a lot of stores. And today, I still do it, and I still encourage all my colleagues to do the same because you get a feel of the business. You cannot run as a CEO, just sitting in your corner office in Branson. That's not good enough. You need to go out, speak to customers, speak to colleague. I think I've been talking to more than 100 customers on the parking lot. In the beginning, I said, yes, hey, I'm new to Canada. Could you please advise me where to do my grocery shopping, and then they got a lot of good insight. Except that the second one I said that was a, hey, but aren't you the new guy at Loblaws and then -- yes, okay. Okay, I am, but that was only one who recognized me. I think it's going to be a little bit different now -- from now on. But you're really getting a lot of interaction with customer. The other day, I was -- there was a couple looking at their phones, and I think I knew what they were doing. They were looking at the ad match. So I asked them. So this ad match, how does it work? Do you really like it and they said, yes, that's the reason we shop in a superstore. It just gives us some comfort, then we're getting the right prices. So ad match is good. So the more we I intact, I think the better. When I look at Loblaws from the outside coming from Europe, big, big credit to Galen and the Management Board and all our colleagues because you have done an excellent job. There are so many places where we are world class. We are world-class in our control brand. Our [ new ] name and our PC. Again, speaking to a customer, they said, one reason to go to Loblaw Store, you need to buy the PC brand. It's so, so good. Our store standards is like outstanding. The other day, I had a visitor. He is the Chairman of one of the world's biggest CPGs. And we went to the Loblaws at St Clair and Bathurst. Going into that store he said, there -- that's the best supermarket I have ever seen in my life. And he's not like a guy that gives a lot of credit, by the way. He was my Chairman for 8 years. So I know. So no. And then our financial controls, our IT, the team is doing great. And I'm so happy that I don't have to implement SAP for the third time in my life. Everything is working. That's great. Our digital and loyalty definitely leading the world, our Optimum program, how we get the digital engaged customers, how they shop more with us is also something that I will credit the team before me because they have just done an excellent job. Not to talk about supply chain. Supply chain is also cost leading. It's less than most places even with the geography that we have here in Canada. And then, of course, not to forget our [indiscernible] colleagues. I am meeting so many great colleagues out there. Whether it's the beauty managers [indiscernible] is so good. They're so engaged, they're so willing to help you. And again, talking to them, you also get some insight because if we are $0.10 off a loaf of bread in a No Frill, customers will give us a hard time. But selling fragrances, if you sell something for $50 or $100, and I've been talking to many of those beauty managers [indiscernible] they don't care. We have the point, if you do this and we have some offers. They never questioned a price from fragrance, but they do of a loaf of bread. So that's always a good insight to have. And luckily, the beauty category is growing over and above the food category. So that's great. Yes. And I'll just say that our staff, they love their customers and the communities that they serve. So if you're a little bit bored -- and the head office, just go out, visit the stores and you'll certainly be in a much, much better mood. If we move on to our 3 divisions. So we made a few changes in the beginning of the year because if I look at the overall market, we are seeing some trends that customers want more value. They want more value and shoppers, they want more value in our superstores and our market division, but also in our hard discount division. So we took and we carved out our hard discount division. We gave that to Melanie Singh, which is a terrific leader. She's going to take our hard discount to new levels. And she is, by the way, sitting right down there, so you can talk to afterwards. Because everywhere in the world, hard discount is increasing, whether it's Australia, whether it's England, everywhere. And I believe the same will happen here. So that's why we have full focus on hard discount. We want to give customers value for money. That's why we have singled it out and giving it full focus. Then we have taken the market division, the real Canadian superstores and combine those. One example for what we're doing there, we are taking the real -- Atlantic Superstores together with real Canadian Superstores. We're bringing them together in one entity. So now we have superstores from coast to coast. This division is led by Frank Gambioli, 29 years at Loblaw's, one of the best, if not the best retailer in the world. So I really, really trust that he's giving customers what they want. They also want value in the market division because if you go to our market stores, we see lots and lots of policy. But I think we can do a little bit more of showing them the great offers that we have. So you will see some changes over the next months. We're just in the midst of intervening them. Then last but not least, Jeff Leger, he is heading up our Shoppers Drug Mart and what a great story, what a good idea to buy them 10 years ago, I benefit from that today. And how our Shoppers Drug Mart are engaging in the local communities, how they're dealing with their customers. it's just really, really good because and the [indiscernible], okay, what is it with the Shoppers Drug Mart, it must be something wrong and -- but anyway, no. The more I look into Shoppers Drug Mart, the more amazed and the more I'd admire the format that we have. And again, it has done well, and I'm sure it will continue to do well going forward. Of course, we are doing a lot. We're also doing a lot of new stuff. Behind me, there's a few [indiscernible] and for sure, there will be more to come. Hit of the month is one example, and this is all about utilizing the skill and scale of the group, and we do need to do more of that. We need to break down the silos. And in all big companies, there's a few silos here and there. So we need to break them down. And we have done that by engaging in a very tactical program where we're selling the same product across 2,400 stores. It's, I'm sure, the biggest promotion ever seen in Canada, starting off with the Kraft Dinner, $0.55, a price never seen before, selling millions and millions of Kraft Dinner, just this one where we had the [indiscernible] will also be selling millions. So again, the more we can utilize the skill and scale of the group, the better for us, but also for our customers who really get value for money. That's always something about brands. When we talk to customers, they said, we really want brands in clothing. So we're getting it to them. Today, we have it in 40 stores. We want to be present in many more stores and first signs of sales is also looking really, really interesting. On our strategic priorities, I think it's important that we are not here to change everything. So 80%, 90% of what we have done already is working very, very well. So we're building on the strategy that we have already. So very, very short. We want to grow with hard discount. We want to grow significantly with [indiscernible]. We want to grow with the market for both superstores and the market division. And by doing that, keeping costs low, growing a little bit more, [indiscernible] out the cost, then I think we are set for the future and we're set to deliver on our financial framework. So retail excellence. So we strive to be the best buyers in Canada. And we did that before, and we will do that even more so going forward. We want to drive growth, again, building new stores but also continue to build the digital engagement with our leading PC Optimum program. We want to continue to invest in the future. And yes, we have been here for over 100 years. And every year, we try to make strategic investments. We try to build on what we have. And this year alone, we're investing more than $2 billion into the Canadian society, honestly, what's not to like about that. And to underline at all our environmental and social and governance initiatives influence, all our strategic decision-making. Last week, we had our 17th ESG report, highlighting an aspiration to be a force for positive social, environmental and governance. So this approach, we are focused on 2 priorities: fighting climate change and advancing social equity. There's a lot to be part of that. So one example would be food waste on farms. So throughout our food distribution network in stores and in our homes has an economic cost of almost $50 billion. Our target is to eliminate 100% of the food waste in our enterprise by 2030. It's not easy, but we're going to get there. In 2023, we diverted 20% more food from landfill compared to 2022, working with partners like Flashfood and Food Charters, a great job to the entire group from Loblaw's because this is not done just by having a group of people in the corner working with these, we need to work together on fighting climate change. So I think that was my 10 minutes. So I hope that you sense that I'm highly motivated and very excited for working for Loblaw's, and I think we have a great future ahead of us. Thank you for listening.

Terrific. So you got a big -- a great sense of Per's enthusiasm. I'm glad you're sitting there, don't go too far because I hope that there will be some questions and that I can get Per to answer them. So that will be very terrific, a little bit later. But before we get to the question period, we got to go through all of the formal procedures of the meeting, we've got to vote for a few resolutions and make sure that we conduct the appropriate processes. Okay. So as we move on to that, I'm going to ask Andrew Bunston to act as the Secretary of the meeting. Computershare Investor Services will act as the scrutineer of the meeting by way of its representatives, Melody Scott and Kate Stevens. I don't know where you guys are, you're somewhere here. Only shareholders of record at the close of business on March 11, 2024, or their appropriate -- or their appointees are entitled to take part in or to vote at this meeting. To make the best use of our time, certain shareholders have been asked to move and second the motions, which are called for in the meeting itself. A copy of the notice of the meeting and proof of its mailing have been filed with the company. The scrutineer's report indicates that a quorum is present. I now declare that this annual meeting has been properly called and is duly constituted for the transaction of the business for which it has been called.

Mr. Chairman, I rise on the point of order.

Bob, go ahead.

Okay. My name is Robert Verdun, I'm duly registered as a beneficial shareholder. And well, I'll begin by saying that I have some very serious concerns about the legitimacy of participation of beneficial shareholders. I was not able to get into the Loblaw meeting despite doing what I thought was the appropriate paperwork in advance and getting a notice from my brokerage that I was duly appointed. And the meeting -- that particular meeting, there was only one question asked and given the intense public interest in grocery pricing these days, I would have expected a lot more questions from shareholders, from the perspective of shareholders, of course, and there was only one. So that's a giveaway. And on the floor at that meeting, there was a shareholder proposal and I want to make sure right up top that you realize that I believe the voting was something like 74% against the proposal. But you realize that means that a majority of the noncontrolling shareholders voted for the proposal that there be an in-person annual meeting for Loblaw. And I believe you have a moral obligation, if not a legal one to implement that proposal next year. Now on with the point of order. But I also have will have to say so right at the beginning, I'm not an enemy of this company, I shop at your stores. I love them. Okay. My point of order has to do with George Weston Limited. So with the education I gained from not getting into the Loblaw meeting, I made sure that I could get into this meeting legally and there are some things that really have to be fixed because it says several times in the documentation, make sure you read everything. And you end up going around in a circle. And finally, you do come to the fact that you have to register twice. But in order to register twice, you have to read something that doesn't make any sense. You also have to get over things like [indiscernible] the 11-digit numbers...

So Rob can I just -- pause for just a second. So do you want to do this right now or...

I want to do it right now. It's the most important thing today, I've got lots of substantial things to do. But the nitty gritty of properly conducting a meeting is something very important. And you should remember that I was at the first shareholder meeting that you ever chaired....

I do -- I do remember.

And you have really improved.

That's great to hear. It's been 18 years. Now that's continuous improvement.

You threw me off by train. I wanted to say that other than the problem of getting into the meeting -- of course, I listened to the meeting, and you conducted it very well. And nothing I could take -- find fault with in terms of how you conduct it. But the point I want to make is, so I go through all this, and I get a notice, from my broker who says, please read the important information regarding this meeting agenda. And that had obviously been there when I tried to register for the Loblaw meeting and I ignored it because I've read all the important information about the agenda 3 or 4 times. So this time, I clicked on it and bingo, a box comes up that says, if completing the appointment box above appointing myself to represent my shares, and your point intends to attend, you must go to Computershare's website and go through it all over again. But you have to click on a box that says that has something to do with the agenda. So that's -- it's almost like you hired the Republican party to set up your votings and stuff. So anyway, that's the point of order. That has to be fixed. It has to be relatively easy for the beneficial shareholder because most people today are beneficial shareholders. We're not carting around fancy and grave share certificates any more. So that's the point of order, and I will trust that your brain trust will deal with it for the future. Because I'm getting old and I do want to be able to participate online and not have to hire a lawyer to figure out how to do the paperwork.

Understood. Rob thank you very much for that. And it's certainly something that we understood and recognized at the Loblaw meeting, the number of shareholders outside of the control group who did vote to have a meeting in person. And so we're certainly -- we rejected the motion. It was voted down, but we are reviewing our approach and our process for Loblaw for next year. And of course, as you know, this is an in-person hybrid meeting here at George. Okay. So I threw you off. You've also thrown me off. So someone with the transcript will know whether I start in the right place again. But let's start here. So a copy of the notice of the meeting and proof of its mailing has been filed with the company. The scrutineer's report indicates that a quorum is present. I did do that, okay. So we're going to be okay. So we will deal with the formal items of business first. And at the conclusion of that business, we will move to the question period, and we will also announce the results of the voting. I should note that during the meeting, we may pause from time to time just to consult on certain questions or comments that might get raised throughout the meeting on the online platform. So please bear with us and be patient as we do so. Okay. I'd now like to place before the meeting the annual audited consolidated financial statements of the company, together with the notes and auditor's report for the year ended December 31, 2023. These are included in the annual report, which was provided to shareholders and can be retrieved from the company's website or SEDAR. Are there any questions related to this matter, Andrew.

We've not received any, Galen.

Okay. Thank you very much. So we'll now move to the nomination and the election of directors. With us today seated in the front row are all of your director nominees. I'd ask that they please stand and be recognized. There are 7 nominees for election at this meeting, and all of these nominees are current directors of the company. Our management proxy circular contains detailed biographies, setting out the valuable qualifications and diverse backgrounds of the nominees proposed. To facilitate the introduction of the nominees, we refer you to the slide on the webcast and projected behind me. I'm pleased to report that based on the proxies received by the scrutineer in advance of the meeting, each director nominee received votes in favor from at least 97% of the votes cast. I declare the polls open on all resolutions. Before proceeding to voting, I'll address any questions related to the nomination and election of directors, first in person and then online. Andrew, are there any questions related to director nominees?

We've not received any, Galen.

Thank you.

Mr. Chairman, I don't have a question, but I just want to say that in my long crusade for better corporate governance in Canada, there are a few people on this list that I've encountered quite often. And as a shareholder here, and as a customer here because that also benefits me when you run the company well, that you have some wonderful people. And I have to say something, any audit committee that has Sabi Marwah on it is got to have just the best auditing there is. He's one man I could never stump. And Gord Nixon is another extremely accomplished person. And Barbara Stymiest and I crossed swords a few times. And those are the ones that I know very well, and of course, yourself. So the company is in good hands. And you have -- and one of the things that I set out to do almost 35 years ago, was to make Boards of Directors effective, not a lunch club, but a group of talented people who can actually stand up for the shareholders and the overall health of the business. And so you have a small board, but they're all contributing something really valuable to the shareholders of the company.

Thank you very much. Very much appreciate it. You're here. Okay. So could I please have a nomination for the election of those directors.

My name is Jeff Gobe, and I'm a shareholder. Mr. Chairman, I nominate the following persons for election as directors of the company to hold office until the next Annual Meeting of Shareholders or until they resign or their successors are duly elected or appointed: M. Marianne Harris, Nancy H. O. Lockhart; Sarabjit S. Marwah, Gordon M. Nixon, Barbara G. Stymiest, Galen G. Weston, and Cornell Wright.

My name is Katie McCullam, and I am a shareholder. Mr. Chairman, I second the motion.

Thank you. I'll now call for a motion to move that nominations be closed.

Mr. Chairman, I move that nominations to be closed.

Mr. Chairman, I second the motion.

Thank you. I'll ask shareholders or their appointees to cast their votes by completing their ballots or through the online portal. Just as a reminder, if you have already voted or sent in your proxy, there's no need to do anything unless you wish to change your vote. Again, if you're voting by ballot, in person, the scrutineer will collect all ballots at the end of voting on all items of business. So we'll now move to the next item of business, which is the appointment of the auditor. Are there any questions, Andrew, related to the appointment of the auditor?

We have not received any, Galen.

Okay. Thank you very much. I'll now entertain a motion for the appointment of the auditor and the authorization of the directors to fix the auditor's remuneration.

Mr. Chairman, I move that PricewaterhouseCoopers LLP be appointed as auditor of the company until the next Annual Meeting of Shareholders of the company and that the directors be authorized to fix the auditor's remuneration for the 2024 fiscal year.

Mr. Chairman, I second the motion.

Thank you. So if you've not already done so, I'll ask shareholders or their appointees to cast their votes -- completing -- oh, yes, go ahead.

Just a small thing. It's a blank ballot. It just says appointment of auditor. I think you could put the name of that distinguished company on ballot.

Fair enough. Fair enough. Andrew, will you take a note of that?

Note taken.

Okay. So I'll now ask shareholders or their appointees to cast their votes by completing those ballots or doing so through the online portal. The next item of business is the advisory resolution regarding the company's approach to executive compensation. The resolution is more fully described on Page 16 of the company's management proxy circular. Andrew, any questions on this one?

No questions on this one.

Okay. So I'll now entertain a motion to approve on an advisory basis the company's approach to executive compensation.

Mr. Chairman, I move that the advisory resolution regarding the company's approach to executive compensation as more fully described on Page 16 of the company's management proxy circular be approved.

Mr. Chairman, I second the motion.

Thank you. If you've not already done so, I'll ask shareholders or their appointees to cast their votes by completing their ballots or through the online portal. Thank you. This brings us to the end of voting on all items of business before the meeting, and I therefore declare the polls closed. Thank you for casting your votes. The scrutineers will collect any in-person ballots at this time. It looks like you're the only one, but I'm glad we have one. I'm very glad. Thanks. Okay. So that brings us to question period. But before opening it up, I wanted to take a moment to share a few personal thoughts on the unique situation at Loblaw, where we find ourselves in the national spotlight facing consistent criticism. I understand the attention and the concern. Food prices have increased by over 20% and when combined with so many other recent increases in living costs such as rent, mortgage and car payments, Canadian families are under more pressure than ever. As Canada's largest grocer, it's natural that Loblaw is singled out as a focal point for media, for government and for consumer frustrations. And the shareholders, you may be troubled by these often repeated stories. I'd like to assure you that your company has and will continue to act with integrity. We, along with the more than 1,500 independent business owners who make up our group, are not responsible for high food prices. In fact, Loblaw's internal inflation rate has been lower than Canada's CPI for food purchased from stores for the past 3 quarters. We've achieved this by working hard to do things more efficiently in every corner of our business, pushing back on unnecessary supplier cost increases and competing fiercely with some of the largest retailers in the world, like Walmart, Costco, Amazon. As I said last week at the Loblaw Annual General Meeting, allegations of grocers profit hearing on the back of inflation are untrue. Both the Bank of Canada and the Competition Bureau have studied this issue and have confirmed it. The simple fact that grocery prices have increased 10x more than grocery profit make the notion of profit hearing impossible. Instead, Loblaw is outperforming the industry because Per and his team are bringing lower prices and better value to customers every week. Unfortunately, the rhetoric continues even though it's untrue. You may be aware of a boycott of Loblaw, which serves as an example of this criticism. The organizers demanded we lower food prices by 15%. To put that in perspective, it equates to approximately 3x the total earnings of the company in a given year. The consequence of which would be the end of the Loblaw Enterprise, the loss of over 200,000 jobs and billions in annual investments into Canada's economy. Their frustration is understandable, but this kind of expectation portrays a misunderstanding of what's actually driving food prices higher in this country. It reflects a worrisome trend as Canadians trust in national institutions, including business, has steadily eroded in recent years. This is contributing to increasingly poor outcomes for the country, putting pressure on investment and reducing productivity. For all their challenges and imperfections, market-driven economies have a remarkable capacity to drive innovation, jobs and growth. But to do so, they need sound policies that encourage investment and a fair and balanced economy. Canada's private sector has some of the brightest mines, most capable resources and world-class organizations whose leaders are deeply motivated to help deliver on that goal for the country. But their voices are becoming less relevant as enterprise has become an easy target and social media's propensity to oversimplify and amplify these narratives is aggravating the situation at a time when rather than devisive misinformation, Canadians are in need of a shared vision of prosperity. No business is perfect, and we have made our share of mistakes. The most important thing is what you do about it. In our case, we try to acknowledge them and correct them as quickly as we can. My family has been responsible for our group of companies and its thousands of employees for over 142 years. We believe deeply that large business can and must have a positive impact on society. Our teams worked unbelievably hard to try and do that and by running a successful business with fairness and integrity by protecting our environment and by contributing to every community that we serve. I remain exceedingly proud of the organization for what it's achieved, its ability to overcome difficulties and the positive difference that it makes in the lives of Canadians. I'd now like to open the meeting for questions. Bob, I hope you have a question for the question period. And I know we have a couple of questions from our students.

So we're taking accounting at Bloor CI. And I was wondering, as the President of Loblaw Companies unlimited -- or sorry, Limited, how's the information and financial reports used in your decision-making?

Great question. So I think what I'll do is I'll ask Richard to answer that in order to start with. Go ahead.

Great question, actually. Like the financial information is crucial for all our decision making, like you look at how we use it. Every morning, we see sales. Every week, we see our margins and every month, we close a period for the whole of the enterprise. So this -- the use of financial information, it's our guide that allows us to build our plans and allow us to deliver on our targets year in year out because you have to remember that we are a business with very, very small margins. And so therefore, we cannot afford to make mistakes. So therefore, we need to plan and forecast as best we can. And that's, I guess, the benefit of having great financial information.

I know, for example, that everybody sitting in the second row wakes up in the morning, they look at their financial metrics every single morning, particularly when it comes to sales. It's what makes their day good one or a discouraging one. Okay. Next question.

My question is, is that we understand that some companies have introduced robots into their stores, they will do things like sweep floors and check shelves. Will Loblaw companies be introducing more automation in the near future?

Per, why don't you take that one?

Thank you. And again, a great, great question because we need to look at automation in a lot of the areas that we do. What are we going to do exactly whatever you mentioned there? I'm not sure yet, but we need to be on the front foot. For example, in our distribution centers, we have a few that's almost fully automated. We have also an automation coming up next year. But also in day-to-day and in small areas of the business, we need to look more to automation. But it's not only the physical, it's also looking into AI, how can we do more digital automation and thereby, make it better for our colleagues and for our customers. So yes, definitely, we are taking that advice and doing even more so going forward. Thank you.

Do we still have our robots at Leslie & Lakeshore that bring groceries out to people's cars?

No. No. No.We used to have some robots, that park groceries out to your car in the parking lot, but not anymore.

Okay. Go ahead.

So we understand that Loblaw has made a commitment to produce food waste about 50% by 2025. What are some areas that you see the greatest improvements happening?

Yes. Great question. So Per, why don't you answer that? Go ahead.

No, thank you. And as you know, food waste is the biggest contributor to climate change. So that's why food waste is one of our absolutely most and important focus areas. So we work with Flashfood but even as important, we work with our system so we can forecast, right? Because to avoid food waste, we need to have the right forecast. We need to predict what customers are buying tomorrow, what they are buying next week because the more accurate we are, the less food waste there we will have. And of course, we also donate a lot of food to charities. And even the food that cannot be eaten by human, we give that to [indiscernible] and other organizations that can use that. So this is important for us, and we will definitely hit our targets. So thank you for that.

It's really amazing work that's been done over the last number of years to reduce food waste. And my one call out to -- I'll call it out to everybody here, but particularly to the students who are here today watch what you might throw out in your own home because that's another big place where a lot of food gets wasted. So in the same way that the grocery stores need to do better in thinking about what they order, so that there's no waste. When it comes to fresh food, in particular, it's also important for us to be very thoughtful about what we buy, so that more of it ends up in our tummies and less of it ends up in the recycling bin.

My name is Ann Sutherland. I'm a beneficial shareholder. And I wondered what environmental initiatives you have planned for this year, especially with the way climate change is happening so quickly.

A terrific -- another terrific question. So am I answering this one -- Per, do you want to answer this? No, I'm answering. Okay. No, that's good. That's good. So well, the first thing maybe I can do is direct you to the Loblaw ESG report or even to the George Weston ESG report, which has the Loblaw report embedded in it. And you'll get a really detailed explanation of all of the things that we are doing. But it begins, first and foremost, with reducing our greenhouse gas emissions from power consumption. And there are really 2 big drivers of that. The first is the electricity that we use in our stores for refrigeration, heating and cooling and keeping the lights on. The second is what's actually powering our trucks. And so I'm delighted to say we've made incredible progress with our stores and reducing our emissions from our supermarkets. We have a couple of net 0 carbon supermarkets themselves. We're already changing our refrigeration systems to carbon dioxide driven. It sounds like that might be a bad thing, but it's actually much, much better than typical refrigerants. Refrigerant leaks generate 10, I think -- what's the number, Catherine, is it 10x the amount of emissions or maybe 1,000x more emissions than carbon dioxide. That's our biggest area of vulnerability and we've done amazing work to reduce that. We introduced 14 new electric trucks to bring groceries around. All short haul trucks. We haven't yet figured out how to replace a long-haul diesel engine for the big tractors that drive from one side of the country to the other. That may be one of the unsolved issues for us so far, but we remain really optimistic that a hybrid electric hydrogen truck may, in fact, be the solution for that. But -- and the last thing maybe I'll say is that that's what we call Scope 1 emissions, Scope 2 emissions -- wait, there's one more. I announced it at this meeting last year, where we have the world's biggest pump -- or the country's biggest pumped hydro project in Alberta, where we're going to convert all of Alberta from carbon emitting electricity to zero-emission electricity. And that's a partnership with TransCanada, the energy company, which is going to reduce our total Scope 1 and Scope 2 carbon emissions by 17% when that project gets up and running. And for Alberta, it will be almost 100% reduction. The biggest challenge that is a grocer we have, of course, is that we're at the end of the value chain. And so our Scope 1 and Scope 2 emissions represent about 3%, maybe a little less than 3% of the total emissions in the system that we are at the end of. And our commitment is to reduce our net -- our Scope 1, Scope 2 and Scope 3 emissions to net 0 by 2050, and that is a big task. What we are seeing from our manufacturers, particularly the big ones, are very ambitious carbon reduction strategies. So while I can't say that I'm certain that they're going to deliver on the results, I'm certainly very much more optimistic today than I was, say, 2 years ago, that the private sector is mobilizing around decarbonization in a very meaningful and high-impact way.

Yes, Mr. Chairman, I do have a few questions. But let's start with one on the environmental theme. I've done many things in my life where I've actually made any money of any significance was in real estate development and marketing. So I'm very interested in Choice Properties. But I'm very interested in what can be done with the many properties that you now own. And several years ago, I gave you a hard -- it's probably your father I gave it to a hard time about that Queen's [ Quay ] market being kind of an orphan out there in the middle nowhere where there's condos all over the place, but not with easy walking distance. And I was assured that, that wouldn't happen again. But I'm not sure that, that has been followed through because I looked at the graphics that you had up for Choice Properties. And I didn't see condo buildings and grocery stores combined, which I think is a very big thing to be done. I think in future, every site you look at, you should analyze to the fullest possible use for residential. And those massive warehouses, I didn't see any solar panels on that big picture of a mass of warehouse complex. And that's where they need to go. Or you could be growing some on those roofs. We're in the food business. So that is my primary goal here to say, that has to be a priority. And it's a way this company can serve the public interest and make money doing it too. And so that's question number one.

So let me answer question number one, and then you can go to question number 2. So yes and yes is the short answer. We are looking -- and Rael is here. He's going to be up here talking about Choice Properties next year if all goes well. And so I'm not going to get them to come up and speak about this today, but it is absolutely one of the things that they do every day. I know Mario Fatica in the back, that's his job along with Niall. Niall, is that you, back there, too? Okay, there you are, where they're looking at each of these sites, that have great supermarkets on them and trying to determine is there a way that we can increase density? Is there a way that we can create homes? Is there a way that we can create really wonderful high-density communities that are anchored, not just by the grocery store, right? Orit, you're here, too. She's working on this to make sure that the communities are not just supermarkets, but they have also micro economies associated with them to bring a little bit more, let's say, complexity -- a constructive positive complexity to the to the local communities that we can develop. So it is very much part of Choice Properties place-making strategy. And then just quickly on solar panels. So our biggest automated distribution center, which is under construction now that Per touched on, is going to have the largest solar installation in Canada on its roof.

Needless to say, the margins in condos are a lot better than the margins in groceries.

That's true, although not as good as you might think with interest rates as high as they are, but it's certainly something we discuss regularly.

Okay. Now I raised the issue of the Loblaw meeting being in person in the future. I have a suggestion would you -- something would you consider? Obviously, you are not going to get rid of the 2 company structure. It does allow you to legitimately control Loblaws without multiple votes, which I approve of. But I think there'd be a very simple formula that could solve a lot of problems and save money because it costs money to set this up. Have the meetings on the same day, have the Loblaw meeting in the morning, it's the one most likely to draw questions from shareholders. It's a broad shareholder base with Loblaws. Have a little lunch and then convene the George Weston meeting. And I think that would accomplish what needs to be done in terms of respecting the value of the in-person meeting for the person who really wants to be there for a good reason. And -- but then also not to waste shareholders' money. So would you please consider that?

Absolutely, we will consider it. In fact, we -- Andrew and I talked about it, that exact solution a couple of days ago. We still haven't worked out whether we can do it. My suggestion was that we have them at the same time and that we have the Weston shareholders down here and that we the Loblaw shareholders up there and they could vote separately. So we're really putting our creative sort of wheels working on this. It -- I think it's nice to have an in-person meeting, and that's certainly why I think it's so good to have this George one in person.

Okay. But it's the Loblaws that has the broad range and over the years, there have been some really fun meetings with lots of people out. You get stupid questions sometimes, but corporations these days invest a lot of money in getting feedback. And that feedback that's coming to you and it's feedback from shareholders. We've got a little more on...

I like the idea that Rael and the Choice Properties folks can also get a few questions at the same time. It seemed efficient to have all 3 in the room. But look, I totally take your point. And as we mentioned last week at the Loblaw meeting, the proposal was rejected, but we are looking hard at how to address the minority concern that was represented in their vote.

Okay. And my final question is kind of a big one. It has to do with Shoppers Drug Mart. I love Shoppers Drug Mart, always have -- that's been [indiscernible] managed company, and I have a history with them because of my newspaper business is seeing up close how they watch a market and jump in and do smart things. But the Optimum program is getting out of control. This past Saturday, I got 3 pitches for Shoppers Optimum in my e-mail, 3. And one of them was misleading. It said, get 20,000 bonus points, just open your PC Optimum app, shop, scan and earn asterisk. Well, I check the asterisk and didn't tell me anything at all. And then I went into about an 8 or 10 page e-mail, and then down near the bottom, well, I had to spend $80 to get 20,000 points. And that's not a good deal at Shoppers. You get a lot better deals than that. I think you're reaching the point where you're going to be annoying your serious best customers by overdoing it. Focus, focus, focus. The KISS principle, don't forget the KISS principle. But that's a general question. The specific question is that the systems fail and when they fail, you do not have a repair mechanism. I've got documentation on 2 examples where I had 20x points offers that didn't work. In one case, they said, oh, you didn't load it. Well, I have my receipt that says, yes, your points balance is unavailable. The system wasn't working that day and bring him a fancy proof, but that their system -- your system wasn't working. And much correspondence gets nowhere and sent several e-mails and no -- finally, no, you didn't register, you're not getting your point. And in another case, they said, well, we can't find the offer. And I printed a screen shot and sent it to them. They still didn't and these are significant amounts of money for we pensioners now. And if so that has to be addressed, make sure they work and have -- I mean you're really good if somebody doesn't get their 600 points. [indiscernible] to get a product and I didn't get my 600 bonus points, quick e-mail, fixed right away for $0.60. But I'd like to keep you disciplined. And over the years, I've been some company's favorite customer because I find the holes in their systems and they fix them.

Well, I was about to say something similar. Do you have a -- I'll answer that one now. But do you have another question?

No, that's it. Just simplifying the Optimum program and have a system for dealing with the big mistake because they're going to happen.

Yes. I mean, so a couple of things. You can be sure there's at least 2 people in this room who when we have big mistakes like that, know about it within the space of, call it, minutes, largely because people call. And one of the most difficult things to deal with is a wave of phone calls landing at our call centers at the same time. So you're right, the best way to fix that is to reduce the number of times it happens. And I don't know the details, but I know it's been a priority for at least a couple of years and that there has been vast improvement in terms of identifying offer misfiring or offers not firing issues in the business. And so I suspect we are hopefully kind of at the tail end of that. But you make a good point on where is the small print because our customer communication philosophy is that there shouldn't really be fine print that matters, that should be right up close, maybe not on the front page of an offer, but right on page away. So we will take that feedback. And then in terms of the overall PC Optimum program, the idea, okay, where we are trying to get to is a place where you get all your offers in your app on a regular basis, and they are simple and they are personalized and they are specific to you and so you don't need to be overwhelmed by what we would call mass offers that tend to go out to everybody. And you're right, getting 3 in a week is an awful lot.

3 in a day.

Or 3 in a day can also be an awful lot.

Well, just to wrap up -- I have never ordered online beauty products. And I get an awful lot of [ pictures ] on that beauty products. Nothing is going to help me.

Bob, thank you. I appreciate it very much.

Just something else to think about, too. There's a number of times that I see customers who don't have an Optimum card. So you might want to refresh how you're getting that message out to people that it doesn't cost anything and it's pretty [indiscernible] eventually, if you [indiscernible].

Bob, thank you so much. Thank you. It was really nice to see you, and I'm glad you made the visit. I'm very sorry about your communications or getting online to the Loblaw meeting last week. Okay. So we are now into voting results, aren't we? Okay. Andrew, do we have the votes in? Have we had enough time?

Yes.

Okay. So we have received preliminary voting results from the scrutineer on 3 items of business, the election of directors and the voting results show that each director nominee has received votes in favor from at least 97% of votes cast. So I accordingly declare that the proposed director nominees have been duly elected to hold office until the next Annual Meeting of Shareholders or until they resign or their successors are duly elected or appointed. On the appointment of the auditor, the voting results show that approximately 99% of the votes cast were in favor of the appointment of PwC as the auditor of the company. I declare that PwC is appointed as auditor of the company and that the directors are authorized to fix their remuneration. On the advisory vote on the company's approach to executive compensation, approximately 96% of the votes cast were in favor of the company's approach to executive comp. I declare this motion to be passed. The final voting results will be available after the meeting and posted to the company's SEDAR profile. As there is no further business, can I have a motion to terminate the meeting.

Mr. Chairman, I move that the meeting terminate.

Mr. Chairman, I second the motion.

Thank you. I now declare the meeting terminated. Now on behalf of the company, I'd like to thank our incredible colleagues and employees for their hard work over the last year and to all of you for taking the time to join us today. I wish you all the best, your families and hope those who are here in person will join us in the atrium for a few delicious treats, which, as always, come thanks to Mary, who's sitting in the second row and the President's Choice team. You're launching the insiders the report, May 16. Okay. So look out for the insiders report, I just went through a pre- -- I had a pre-look at it with the rest of the Board last week, and it is awesome, and there are a few great samples from this summer's program out there for you today. Thank you very much.