Good morning, and welcome to the 68th Annual General Meeting of Loblaw Companies Limited. I'm Galen Weston, Chairman of the company. For this year's virtual AGM, our goal is to once again replicate as closely as possible the experience of a meeting held in person, including the opportunity to participate and for shareholders and proxy holders to vote and ask questions. I'm joined on this live webcast today by Per Bank, our President and Chief Executive Officer, Richard Dufresne, our Chief Financial Officer, and Nick Henn, our Chief Legal Officer and Secretary. The nominee directors, auditors, and other members of the Loblaw management team are also attending remotely. I'd now like to call to order this annual meeting of shareholders of Loblaw Companies Limited. I'll begin today's meeting by outlining how voting and questions will be addressed in this virtual 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 through the online platform. When we're ready to table an item of business for a vote, you'll see voting options appear on your screen. If you voted in advance of the meeting and you do not wish to revoke your previously submitted proxies, then you do not need to do anything. The scrutineers will tabulate all of the votes cast during the meeting, and we will report on the results of each resolution towards the end of the meeting. Please note that you cannot cast votes via telephone. This year, we've added additional methods for shareholders to engage with management during the meeting. Shareholders may ask questions through the online platform or via telephone.
If you wish to submit a question in writing, select the Message tab on the top of your screen. To ask a verbal question through the online platform, click on the Request to Speak icon beneath the broadcast. Shareholders that have joined the meeting via telephone may request to ask a question by pressing star one. 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 submitting 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'll address the questions directly related to a particular motion at the appropriate time of the meeting and save general questions until after the formal business has been completed.
If you're logged into the meeting 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 are, and duly registered proxy holders may actually do so. Nick Henn will read out any written questions received when requested, and either I, Per, Richard, or Nick will respond. We'll make every effort to answer all of your questions during today's Q and A 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. As I reflect on the state of our business, I must say I'm proud of the progress we've made over the last three years and the momentum which Per and the team have continued to carry forward.
Since 2021, there's been an increased sense of urgency and accountability at Loblaw. We refined our strategy, established a shorter list of priorities, and put a particular focus on consistent execution against our operational and financial frameworks. We've made excellent progress across our strategic pillars in retail excellence, in driving growth, investing in the future, and embedding ESG into everything that we do. I'm proud of what our management team and our colleagues across the country accomplished during that time. Let me extend my personal thank you to each and every one of them. Loblaw is in excellent shape today, but there is still a great deal to do. And for that reason, I'm thrilled that Per has joined our company. He brings a wealth of international retail experience, and we are already seeing the positive impact of his leadership all across our business.
It feels almost unnecessary to introduce Per today, since he has already met so many of you during his cross-country travels, from customers in our stores to backroom coffee chats with our colleagues, outreach to many large and small suppliers, and having built a reputation for sitting down unannounced for lunch with our office colleagues. No matter the setting, Per's authenticity and passion for serving our customers has been clear to all of you who have met him. As Chairman, I continue to believe that our company's success is rooted in a long-term view, which looks past individual quarters to create value for our stakeholders over years and decades. That long-term view is anchored in our purpose-led approach to help Canadians live life well and finds its strength in our people and collective culture.
With renewed energy and focus, Per and his management team are doubling down on that purpose as they serve Canadians, and I'd now like to invite him to provide an update on the business.
Thank you, Galen. I'm excited to have this opportunity to speak to you at my first Loblaw Annual General Meeting. As Galen mentioned, I've spent a lot of time interacting with our many internal and external stakeholders. I believe this is an important way to really understand an organization, and an equally important way to guide and maintain an organization's future success. As such, I have already met with many of our shareholders and the institutional investors who manage the pension and savings plans of many Canadians. I value today as an opportunity to also engage with all shareholders around the world, so please use the chat or dial-in features provided to ask your questions. From an operational and financial perspective, we delivered a very successful 2023.
While I was not here for most of the year, I'm very proud to report on the collective accomplishment of our 220,000 colleagues. I would like to start by thanking our colleagues from coast to coast for their hard work and service to our customers and communities, especially those in our stores who work on the front line to ensure we deliver the best value, service, and quality to Canadians. As colleagues and shareholders, and you as Canadians, we should all be very proud of our accomplishments and our company. Along with this network of over 1,500 independent business owners, Loblaw is Canadians' largest private sector employer. We touch the lives of most Canadians on a weekly basis.
We compete fiercely with some of the largest, most efficient retailers in the world, as well as several other very strong Canadian-based retailers, and we must continue to work smarter to be successful and to earn our customers' business every day. This success allows us to invest back into the country. Last year, we made CAD 2.1 billion in capital investments, providing thousands of jobs and supporting local businesses. We purchased more than CAD 1 billion of produce from Canadian farmers. We opened new stores and brought greater choice to more communities, and we contributed a CAD multi-billion-dollar tax base to help fund government services. Together with our customers and vendors, we also raised over CAD 13 billion to support women's health issues through the Shoppers Foundation for Women's Health.
Our President's Choice Children's Charity, as Canada's largest charitable direct-to-school food program, it raised over CAD 22 million to provide meals and snacks to hungry school children in our local communities. Our purpose to help Canadians live life well grounds everything we do. I know that it has been a difficult time for many. We have managed through a second year of very high global inflation. Although Canadian consumers have fared better than citizens of almost all of our peer countries, that doesn't relieve the pressure and frustration many Canadians are experiencing right now. Let me assure you that in every corner of the business, our colleagues are working hard to reduce costs and do things more efficiently. These efforts enable us to reinvest savings to offset the impact of price inflation in our stores.
In fact, our internal inflation rate has been lower than Canada's CPI for food purchased from stores for the past three quarters. We do this in part by purchasing back on unnecessary supply increases, carefully managing our costs, and focusing our promotions in areas that mean the most to Canadians. For example, our new Hit of the Month program offers Canadians unprecedented value on popular products, and we stay committed to our No Name product range, which provides up to 25% in savings compared to national brands. Despite these facts, there remains misguided criticism. There's a lot of misinformation being spread online and a proposed boycott of Loblaw and other grocers. Others have even gone so far to encourage theft. As I'm sure you agree, stealing is wrong in any scenario. Loblaw is not responsible for higher food prices. Inflation is a global issue.
Not one of that is specific to our company or our industry, and no matter what you might hear, Canada's grocery industry is, in my opinion, one of the most competitive in the world. Canadians are making it clear that Loblaw is meeting their needs. This has been reflected in the fact that our stores are attracting unprecedented customer traffic. They're buying more items, and our market share is growing. Moving forward, we'll keep looking for even more ways to help Canadians live life well, and we have begun 2024 well, and we have momentum. Consumers increasingly favor hard discount stores. Our Maxi and No Frills banners are gaining market share. Under Melanie Singh le adership, she has done well. We continue to build on last year's successes with a plan to open even more hard discount stores this year. Our conventional banners are outperforming their peers.
Frank Gambioli and his team have begun to implement changes to further improve our offering. Increased value and build more excitement for our customers is important. Jeff Leger and our associate pharmacists across the country are uniquely positioned to play an important role in providing care to our patients. We have made multiyear investments to improve the efficiency of our pharmacists, to enable our pharmacists to do what they do best, spend more time interacting and caring for their patients. Our beauty teams attract more customers with a unique product offering, fueling the profitability of our stores. Our digital team, under Lauren Steinberg, continues to enhance our e-commerce offering across our businesses, growing sales to more than CAD 3.3 billion last year. We are improving and growing our best-in-class PC Optimum loyalty program with more personalized and meaningful offers to drive the customer engagement.
I hope that you share my passion and excitement. Our team at Loblaw is delivering strong and consistent performance. We have conviction in our strategy and are well-positioned for future success. Before I ask Richard to discuss our financial results, I would like to spend a minute on our environmental, social, and governance initiatives. This week, Loblaw published its 17th ESG, highlighting our company's long-term view and aspiration to be a force for positive social and environmental change. Our approach is focused on two priorities, where we believe we can make the biggest impact fighting climate change and advancing social equity. Food waste is a great example. It's a very complex but important challenge to overcome in Canada. Food waste on farms, through our food distribution network, in stores, and in our homes, has an economic cost of almost CAD 50 billion.
At Loblaw, we have set an ambitious target to eliminate 100% of the food waste in our enterprise operation by 2030. Towards this goal, in 2023, we diverted 20% more food from landfill compared to last year. This includes working with partners like Flashfood and food charities to reduce the food that becomes waste, and redirecting remaining food waste to be used as animal feed, composted, or converted to biofuel. I hope you'll take the time to read this year's report and also proudly share our accomplishments with your friends and families. I'll now call on Richard to share his financial update.
Thank you, Per. I'm very pleased to report another year of consistent operational and financial results. Our businesses continue to perform well, reflecting our focus on retail excellence, and this has been reflected in the performance of our share price. Global forces have continued to increase food prices around the world. These include geopolitical instability in Europe, supply chain backups, extreme weather events, labor challenges, higher energy costs, and foreign exchange pressures. Amid these pressures, we held our internal food inflation below CPI in the second half of 2023 and saw our market share, customer traffic, and tonnage improve. The year was also marked by the growth in our pharmacy services as provinces across the country looked to pharmacists to play an increased role in providing care to Canadians.
The strength of our food and drug retail businesses, and our consistent focus on retail excellence and steady execution, allowed us to deliver another year of strong financial and operational performance. We recorded over CAD 59 billion in sales, with growth of 5.4% from the previous year. Food Same-Store Sales increased by 3.9%. We saw continued strength across all our banners, and in particular, at Hard Discount, as Canadians turned in record numbers to our Maxi and No Frills stores across the country. Our drug business delivered another strong year. Same-Store Sales were up 5.4%, lapping very strong growth of 6.9% in the previous year. Our higher margin front store business grew Same-Store Sales by 4.2%, lapping growth of 8.2% last year.
Pharmacy and healthcare services same-store sales grew by 6.8%, as acute and chronic prescriptions returned to pre-pandemic levels, and our pharmacy services continued to expand as we opened 74 pharmacist-led clinics. Our retail gross margin ended the year essentially flat compared to 2022. Successful execution against our strategic initiatives, such as scaling of the external freight business, combined with the growth in higher margin drug retail front store categories, offset higher shrink expenses. Stability in our gross margin is always a priority, and we are continuing to balance it carefully. Our retail SG&A spending rate also improved by 10 basis points in 2023. This reflected the careful management of costs across the organization and helped drive a 7.5% increase in adjusted consolidated EBITDA.
In 2023, our consolidated adjusted earnings per share for the year grew by 13.6%. Our retail free cash flow was CAD 1.7 billion on the year. We repurchased CAD 1.8 billion worth of common shares and invested CAD 2.1 billion of capital back into our business. Including buybacks and annual dividend increases, our total shareholder return has grown at an impressive cumulative average growth rate of 18% over the past five years. Our balance sheet remains strong, and we continue to improve our key return metrics. Our return on equity sits at 22.2% and our return on capital at 11.5%. Every day, our colleagues work hard to provide the best value, service, and quality to earn the loyalty of our customers.
We support these efforts by adhering to our financial framework of sales growth, stable, stable growth margin, and carefully managing our spending to deliver operating leverage and grow earnings per share. Our financial framework is designed to deliver 8%-10% earnings per share growth. We believe that delivering consistent operational and financial performance against this framework will continue to provide a foundation of value creation over the long term. I would now like to welcome Galen back to address the meeting.
Thank you, Richard. Thank you, Per. At the same time as the company's been achieving these successes, our industry has also faced unprecedented criticism, and I understand why. Food prices have increased by over 20%, and when combined with so many other recent increases in living costs, Canadian families are under more pressure than ever. As a well-known company and Canada's largest grocer, it is natural that Loblaw would be singled out as a focal point for media and government and, of course, consumer frustrations. As a shareholder, some of you may be troubled by these often repeated stories, and I'd like to assure you that Loblaw has and will continue to act with integrity. As Per and Richard made clear, Loblaw is not responsible for higher food prices. Inflation is a global issue, and it is not specific to our company or to our industry.
Allegations of profiteering on the back of inflation by grocers are untrue. Both the Bank of Canada and the Competition Bureau have studied the issue and confirmed this. That's because grocery prices have increased ten times more than grocery profits. That alone makes it impossible. Unfortunately, this rhetoric continues even though it's untrue, and Per referred to the proposed boycott of Loblaw, which is an example of this misguided criticism. The organizers demanded that we lower food prices by 15%. To put that in perspective, it equates to approximately three times the total earnings of the company in a given year. The consequence of which would have been the end of our enterprise, the loss of over 200,000 jobs and billions in annual investments. Their frustration is understandable, but this kind of expectation betrays a misunderstanding of what's actually driving food prices higher in this country.
Even more discouraging are those that Per mentioned, who have been promoting and even celebrating, stealing. There's a group of people who have been relentlessly propagating a narrative that they know is false, and it is now being used to justify theft on a grand scale. I'm optimistic and hopeful that Canadians reject the notion outright. The cost of living pressures in Canada remains significant, but as you've, as you've heard today, Loblaw is working hard to bring more value to customers through No Name, hard discount, new promotions, and pushing back on unjustified prices for manufacturers. And the result is that there's some good news when it comes to food prices. Inflation in our stores is now below 2%, down from 10% or so a year ago, and the company is finding even more ways to keep prices low. We make mistakes. Everyone does.
The most important thing is what you do about it, and in our case, we try to acknowledge them and correct them as quickly as we can. My family has been responsible for Loblaw for over 70 years. I believe deeply that a large business can and must make a positive impact on society. At Loblaw, the team works unbelievably hard to try and do that by running a successful business with fairness and integrity, by protecting our environment, and by making a positive impact in every community that we serve. I remain exceedingly proud of this organization for what it's achieved, how it faces into challenges, and the positive difference it makes in the lives of Canadians. I'll now proceed with the formal part of the meeting. I'd ask Nick Henn to act as the secretary of the meeting.
Computershare Investor Services, Inc. is acting as scrutineer of the meeting by way of its representatives, Melody Tong and Kate Stevens. Only shareholders of record at the close of business on March 11, 2024, or their proxies, are entitled to take part in and 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 notice of the meeting. 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 now declare that this annual meeting has been properly called and is duly constituted for the transaction of business. Today's agenda will consist of the submission of the company's 2023 annual financial statements, followed by four resolutions.
First, to elect the board of directors. Second, to appoint the company's external auditor for fiscal 2024, and to authorize the directors to fix the auditor's remuneration. Third, to consider an advisory resolution on the company's approach to executive compensation, and fourth, to consider the shareholder proposal that was received from the Accountability Board. We'll deal with the formal items of business first, and at the conclusion of that business, we'll move to our question period and the announcement of voting results. I should also note that during the meeting, we may pause from time to time to review messages from Nick Henn as we coordinate this virtual meeting. So thank you for your patience as we do so.
I would now like to place before the meeting the consolidated financial statements of the company, together with the notes and auditor's report to shareholders for the year ended December 30, 2023. These are included in the annual report, which was provided to shareholders and can also be retrieved from our website or SEDAR. Nick, were there any questions or comments submitted in connection with these financial statements?
No, Galen, we've not received any questions on the financial statements.
Are there any other questions, Nick?
Nope, there are no other questions.
We'll now move to the nomination and election of directors. There are 12 director nominees standing for election at this meeting. All of these nominees are current directors of the company. Our management proxy circular contains detailed biographies setting out their valuable qualifications and diverse backgrounds. 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 96% of votes cast. We'll now consider the election of directors. To facilitate the introduction of the nominees, we refer you to the slide on the webcast. I declare the polls open on all resolutions. Nick, were there any questions or comments submitted in connection with the nomination and election of directors?
No, Galen, we've not received any questions on this item.
Are there any other questions, Nick?
There are no other questions.
Could I please then have a nomination for the election of directors?
My name is Chris Berrigan , and I'm a Shareholder. Mr. Chairman, I nominate the following persons for the election as directors of the company to hold office until the next annual meeting of shareholders or until their successors are duly elected or appointed: Scott B. Bonham , Shelley G. Broader , Christie J.B. Clark , Daniel Debow , William A. Downe , Janice Fukakusa , M. Marianne Harris , Kevin Holt, Claudia Kotchka , Sarah Raiss, Galen G. Weston, and Cornell Wright .
My name is Katherine Thomas, and I'm a shareholder. Mr. Chairman, I second the motion.
Thank you. I'll now call on Chris to move that the nominations be closed.
Mr. Chairman, I now move that nominations be closed.
Mr. Chairman, I second the motion.
Thank you. I ask shareholders or their appointees to cast their votes through the online portal. As a reminder, if you've already voted or sent in your proxy, there's no need for you to do anything, unless, of course, you wish to change your vote. So we'll now move on to the next item of business, which is the appointment of the auditor. Nick, were there any questions or comments submitted in connection with the appointment of the auditor?
No, Galen, there are no questions on this item or any other questions.
I'll now entertain a motion for the appointment of the auditor of the company and the authorization of the directors to fix the auditor's remuneration.
Mr. Chairman, I move that PricewaterhouseCoopers LLP be appointed auditors 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. If you've not already done so, then, I will ask shareholders or their appointees to cast their votes 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 19 of the company's management proxy circular. Nick, were there any questions or comments submitted in connection with this advisory resolution?
No, Galen. We've received no questions on this item.
Thank you. 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 19 of the management proxy circular, be approved.
Mr. Chairman, I second the motion.
Thanks. If you've not already done so, I'll ask the shareholders or their appointees now to cast their votes through the online portal. The next item of business is the shareholder proposal submitted by the Accountability Board. The shareholder proposal and supporting statement are included in Schedule B of the company's management proxy circular. The Accountability Board have requested that the company facilitate moving their resolution to a vote. Nick, I would now ask that you read the proposal.
The proposal from the Accountability Board is as follows: Resolved, shareholders ask Loblaw to hold its annual meetings in person with virtual access added as a complement to, but not a substitute for, in-person meetings.
Thank you. The Board of Directors recommends that shareholders vote against this shareholder proposal. In line with the guidance from the Canadian Securities Administrators, the company has taken steps to ensure that shareholders have been provided adequate disclosure regarding how to access and participate in this virtual meeting, and an opportunity to actively engage with management through the online platform or through the telephone in a manner similar to previous in-person meetings. For further information regarding the Board of Directors' recommendation, please refer to Schedule B of the company's Management Proxy Circular. Nick, were there any questions or comments submitted in connection with this shareholder proposal?
No, Galen, we've received no questions in relation to this item.
I'll now ask the motion be made, that a motion be made to put the shareholder proposal to a vote.
Mr. Chairman, to facilitate the business of the meeting, I move that the shareholder proposal, as more fully described in Schedule B of the management proxy circular, be approved.
Mr. Chairman, I second the motion.
Thank you. If you've not already done so, I'll ask that shareholders or their appointees cast their votes through the online portal. Thank you. This brings us to the end of voting on the items of business before the meeting, and I therefore declare the polls closed. We hope that you walk away with a sense of our pride in our company, confidence in our strategy, and a commitment to our purpose to help Canadians live life well. None of this can happen without our extraordinary colleagues, and I want to thank them for their work during 2023 and for their work in the year ahead. We'll now open the meeting to questions.
Just as a reminder, submit your question or comment through the messaging tab at the top of the online platform window, or on the Request to Speak icon beneath the broadcast, or you can press star one on your telephone. As I mentioned earlier, we'll make every effort to answer all questions. However, in the interest of time, we will limit the question and answer period to around 20 minutes. So any unanswered questions will be addressed after the meeting by members of our management team. We'll make sure to get back to everyone. Nick, are there any questions?
Yes, Galen. We have a question from Daniel Jung, which I will read out. This is a general question. Loblaw Grocery Stores tested, tested out e-receipts a number of years ago, back in 2019. However, it was my understanding that there were issues which led to this being removed. This option is still available at Shoppers. Are there any plans to bring this back to grocery stores? Thanks.
Per, any plans?
No, we don't have any current plans, but I'll take that with me and consider.
Thank you. Okay, Nick, are there any other questions?
No, Galen, there are no other questions.
Okay, well, Daniel, thanks for being the one question today. We appreciate it very much. So shall we move on to the voting results? Have we got all the results? Okay, we have the results. We have received the voting results from the scrutineer on the four items of business. On the election of directors, the voting results show that each director nominee received votes in favor from at least 96% of votes cast. Accordingly, I 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 auditors, the voting results show that over 99% of votes cast were in favor of the appointment of PwC as auditor of the company.
I declare that PwC is appointed as the auditor of the company, and that the directors are authorized to fix PwC's remuneration. On the advisory vote on the company's approach to executive compensation, approximately 93% of the votes were cast in favor of the company's approach to executive compensation, and so I declare this motion to be passed. And finally, on the shareholder's proposal, the voting results show that over 74% of votes cast were against the proposal, and as there are a greater number of votes against than in favor, this motion is not carried, and the shareholder proposal is not passed. That said, given there were a significant number of voters in favor of the proposal, we will take this away, and the company will consider the feedback from shareholders as it plans for next year's AGM.
The final voting results will be available after the meeting and posted to the company's SEDAR profile. As there's no further business, could 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, and on behalf of the company, I'd like to thank you all for taking the time to join us today.