The company said those higher costs at Loblaw, which included transportation, had not been completely passed on to customers in the quarter.
Sales at Weston Foods, the company’s baking business, rose 3.7 percent to C$425 million in the quarter, helped by currency fluctuations and prices that rose 4.2 percent, even as volumes fell 1.3 percent.
Adjusted operating income from the division, which produces fresh and frozen baked goods at 40 facilities in North America, rose to C$59 million from C$57 million in the same quarter last year.
Last week, Loblaw’s earnings came in below analyst expectations. Canada’s biggest grocer has warned that spending on a program to upgrade its information technology and boost productivity will hurt earnings in the first half of 2012.
Margins at Canadian grocers are already under pressure as Wal-Mart Stores Inc (WMT.N) rapidly expands its grocery offerings in the country.
George Weston’s adjusted net earnings for the quarter ended March 24 fell to 89 Canadian cents a share from C$1.07 a year earlier.
Net earnings attributable to shareholders, including the impact of a forward sale agreement for shares of Loblaw and other items, rose to C$124 million (US$125 million), or 89 Canadian cents a share, from C$105 million, or 74 Canadian cents.
Sales rose 1.1 percent to C$7.22 billion.
Reporting By Allison Martell; Editing by John Picinich