North West : 2023/06/07 - 1st Quarter ending April 30, 2023

THE NORTH WEST COMPANY INC.

Report to Shareholders

Quarterly Period Ended April 30, 2023

2023 FIRST QUARTER REPORT TO SHAREHOLDERS

Report to Shareholders

The North West Company Inc. reports its results for the first quarter ended April 30, 2023. Sales increased 7.5% to $593.6 million as a result of sales gains in Canadian Operations and the impact of foreign exchange on the translation of International Operations sales. Excluding the foreign exchange impact, sales increased 5.1% compared to last year and were up 0.9%1 on a same store basis.

First quarter net earnings decreased to $22.2 million compared to $28.2 million last year and net earnings attributable to shareholders were $20.9 million or $0.43 per share compared to $0.57 per share last year on a diluted earnings per share basis as we continue to cycle through the comparison against the impact of COVID-19-related earnings from last year. Adjusted net earnings2, which excludes the impact of share-based compensation costs, decreased $5.1 million or 16.4% compared to the strong earnings last year. This decrease is mainly due to the impact of a lower gross profit rate resulting from changes in sales blend, an increase in markdowns on general merchandise and cost inflation that was not fully passed through in retail prices combined with higher expenses.

The Board of Directors has approved a quarterly dividend of $0.38 per share, to shareholders of record on June 30, 2023.

On behalf of the Board of Directors:

Management's Discussion & Analysis

The following Management's Discussion & Analysis should be read in conjunction with the Company's 2023 first quarter unaudited interim period condensed consolidated financial statements for the period ended April 30, 2023 ("Interim Condensed Consolidated Financial Statements") and the audited annual consolidated financial statements and accompanying notes included in the 2022 Annual Report.

1. Excluding the foreign exchange impact
2. See Non-GAAP Measures Section of Management's Discussion & Analysis

2 THE NORTH WEST COMPANY INC. - FIRST QUARTER 2023

First Quarter Highlights

CONSOLIDATED RESULTS FIRST QUARTER

Key Performance Indicators and Selected First Quarter Information:

Sales First quarter consolidated sales increased 7.5% to $593.6 million led by sales gains in Canadian Operations and the impact of foreign exchange on the translation of International Operations sales. An increase in airline revenue in Canadian Operations and the impact of new stores were also factors. The exchange rate used for the translation of International Operations sales increased to 1.3545 compared to 1.2664 last year. Excluding the foreign exchange impact, consolidated sales increased 5.1%, with food sales increasing 3.4% and general merchandise sales decreasing 4.5% compared to last year. Similar to previous quarters, the impact of higher merchandise and freight cost inflation continued to result in changes in product sales blend as consumers allocated more of their spending to food and reduced purchases of general merchandise, although to a lesser extent than the first quarter last year. On a same store basis, sales increased 0.9%1 compared to the first quarter last year, as a 2.2% increase in food same store sales more than offset a 6.8% decrease in general merchandise same store sales.

Gross Profit Gross profit increased 5.0% as sales gains were partially offset by a 73 basis point decrease in gross profit rate compared to last year. The decrease in gross profit rate was mainly due to changes in sales blend, the impact of higher freight and merchandise cost inflation that was not fully passed through in retail prices and an increase in markdowns.

Selling, Operating and Administrative Expenses Selling, operating and administrative expenses ("Expenses") increased $16.6 million or 12.3% compared to last year and were up 109 basis points as a percentage to sales. The increase in Expenses is mainly due to cost inflation impacts including higher staff costs and fuel-based utility expenses, the impact of foreign exchange on the translation of International Operations Expenses and new store expenses. An increase in share-based compensation primarily due to mark-to-market adjustments resulting from changes in the Company's share price was also a factor. Further information on share-based compensation is provided in Note 14 to the Interim Condensed Consolidated Financial Statements. These factors were partially offset by the impact of $0.9 million in COVID-19-related costs last year.

1. Excluding the foreign exchange impact
2. See Non-GAAP Measures Section of Management's Discussion & Analysis

REPORT TO SHAREHOLDERS 3

Earnings From Operations Earnings from operations (EBIT) decreased to $33.8 million compared to $41.4 million last year and earnings before interest, income taxes, depreciation and amortization ("EBITDA2") decreased to $59.0 million compared to $64.9 million last year due to the gross profit and Expense factors previously noted. Adjusted EBITDA2, which excludes share-based compensation costs, decreased $4.9 million compared to last year and as a percentage to sales was 10.7% compared to 12.4% last year.

Interest Expense Interest expense increased to $4.5 million compared to $3.0 million last year mainly due to higher borrowing costs. Further information on interest expense is provided in Note 12 to the Company's Interim Condensed Consolidated Financial Statements.

Income Tax Expense Income tax expense decreased to $7.1 million compared to $10.2 million last year due to lower earnings and the impact of a decrease in the consolidated effective tax rate to 24.2% compared to 26.7% last year.

Net Earnings Net earnings decreased to $22.2 million compared to $28.2 million last year. Net earnings attributable to shareholders were $20.9 million and diluted earnings per share were $0.43 per share compared to $0.57 per share last year. Adjusted net earnings2, which excludes the after-tax impact of the share-based compensation costs, decreased $5.1 million compared to the COVID-19-related driven earnings last year due to the gross profit, Expense and interest factors previously noted, net of a lower effective tax rate.

Comprehensive Income Comprehensive income decreased to $25.2 million compared to $39.5 million last year due to a decrease in net earnings of $6.0 million and the impact of a $9.5 million net actuarial gain on the remeasurement of defined benefit pension plan assets and liabilities last year, partially offset by an increase of $1.2 million in the foreign exchange impact on the translation of International Operations. Further information on defined benefit pension plan obligations is provided in Note 19 to the Interim Condensed Consolidated Financial Statements.

1. Excluding the foreign exchange impact
2. See Non-GAAP Measures Section of Management's Discussion & Analysis

4 THE NORTH WEST COMPANY INC. - FIRST QUARTER 2023

CANADIAN OPERATIONS FIRST QUARTER

Canadian Operations results for the first quarter are summarized by the following key performance indicators:

Key Performance Indicators:

Sales Canadian Operations sales increased 8.4% to $341.7 million compared to $315.3 million in the first quarter last year and were up 2.2% on a same store basis primarily due to higher inflation, an increase in airline revenue and the impact of new stores. Food sales increased 5.3% and were up 3.4% on a same store basis but general merchandise sales decreased 0.6% and were down 3.4% on a same store basis compared to last year due to the previously noted inflation-related shift in consumer spending from general merchandise to food. The increase in airline revenue was largely related to higher third party cargo volumes and higher passenger revenues compared to last year.

Gross Profit Gross profit increased 2.5% as sales gains were partially offset by a decrease in gross profit rate primarily related to changes in sales blend as previously noted, the impact of higher freight and merchandise cost inflation that was not fully passed through in retail prices and an increase in markdowns compared to last year due to lower sell-through of general merchandise.

Selling, Operating and Administrative Expenses Selling, operating and administrative expenses ("Expenses") increased 9.9% and were up 38 basis points as a percentage to sales compared to last year mainly due to cost inflation impacts including higher staff costs and fuel-based utility expenses. These factors were partially offset by the impact of COVID-19-related expenses last year.

Earnings From Operations Earnings from operations (EBIT) decreased $5.5 million or 19.9% to $22.1 million compared to $27.6 million last year and EBITDA2 decreased to $38.7 million compared to $43.5 million last year due to the impact of the sales, gross profit and Expense factors previously noted. These factors were partially offset by higher earnings in North Star Air from third party cargo and improved passenger volumes. Adjusted EBITDA2, which excludes the impact of share-based compensation costs, decreased $3.9 million compared to last year.

(2) See Non-GAAP Measures Section of Management's Discussion & Analysis

REPORT TO SHAREHOLDERS 5