Loblaw booked a bigger profit in the second quarter as the grocery giant continued to lure bargain-hunting shoppers to its discount chains No Frills and Maxi, the company said on Thursday. However, sales growth was strongest in the company’s pharmacy unit, where executives say the rise of generic GLP-1 weight loss drugs is having a hefty impact.

The Brampton, Ont.,-based retailer reported financial results for the three months ending June 20 on Thursday. The company says sales topped $15.3 million, up about four per cent from the prior quarter. Profit available to common shareholders jumped about five per cent to $751 million.

Loblaw says same-store sales, a closely watched retail industry metric, rose 1.6 per cent for its core retail food business. At the same time, the company behind Shoppers Drug Market reported its drug retail unit saw same-store sales gain 4.6 per cent, driven by a 7.5 per cent gain in pharmacy and health-care services.

“Specialty prescription growth continues to lead our pharmacy performance. Within this category, we are beginning to see the impact of GLP-1 drugs going generic. It’s still very early, but the initial indications are encouraging,” chief financial officer Richard Dufresne told stock market analysts on a conference call Thursday morning. 

“Lower generic drug pricing is being offset by higher volumes, and we expect higher revenue, higher gross profit dollars and higher gross margin rate,” he added.

The GLP-1 category includes brands like Ozemic and Wegovy. Health Canada approved the country’s first generic semaglutide injection in late April.

Loblaw executives say GLP-1 drug sales are up 40 per cent year-to-date, a pace they first noted in the prior quarter reported in May.

Speaking on Thursday’s conference call, Dufresne said the company’s No Frills and Maxi stores remain well positioned as customers continue to prioritize value amid sticky food price inflation.

“We continue to gain share in hard discount, and we are outperforming our peers in conventional,” he said. “Our internal CPI-like food inflation metric remains lower than Canada’s grocery CPI.”

According to Statistics Canada, headline inflation rate eased to 2.8 per cent in June. The federal agency said grocery price increases eased to 3.9 per cent last month, down from 4.3 per cent in May.

Toronto-listed Loblaw shares fell about 1.8 per cent in midday trading on Thursday. The stock has gained about 4.5 per cent year-to-date.