(Stellarton) The Empire Company, which is the parent company of the Sobeys grocery chain, among others, and the IGA banner, saw its net profit increase by 8.5% during its last quarter to reach 134, 2 million, compared to 125.7 million a year earlier.
“Our team delivered strong results, in line with our expectations, given consumers’ cautious response to the impact of rising interest rates,” said Empire President and CEO Michael Medline, in a press release.
The Stellarton, Nova Scotia, company said third-quarter profit was 54 cents per diluted share, up from 49 cents per diluted share a year earlier.
Adjusted net profit for the period ended February 3 totaled 153.1 million, compared to 164.8 million a year earlier.
Sales increased from 7.48 billion to 7.49 billion during the same period.
They were driven by growth in its network of off-price stores and full-service grocery stores. On the other hand, these positives were offset by lower fuel sales, largely due to the sale of all its fuel retail sites in Western Canada in the first quarter of its 2024 fiscal year.
The grocer’s results were weaker than expected, said Irene Nattel, an analyst at RBC Dominion Securities, in a note. According to her, “value-seeking consumer behavior continues to be a headwind to its full-service network.”
Empire continues to try to maximize revenues from its full-line stores, which are losing traffic to lower-price banners, but at the same time it is increasing its presence in the discount sector, said Mr.me Nattel.
As of March 13, there were 47 FreshCo stores in Western Canada, Empire said in its release. The company has been expanding its discount banner since announcing in fiscal 2018 that it planned to convert up to a quarter of its Western Canada Safeway and Sobeys off-price stores.
Efforts to stabilize prices
Canada’s major grocers are facing pressure from Ottawa to stabilize food prices in their stores.
Empire said that during the quarter it “continued to comply with the federal government’s request to identify ways to further stabilize prices for consumers.”
As buyers are more price sensitive, Empire has ensured that it focuses on negotiations with its suppliers to guarantee competitive prices.
The company also said it recently launched an 11-week program to reduce or cap prices on approximately 1,000 items across several of its stores.
Empire’s two transformation strategies, Project Sunrise and Project Horizon, have been completed over the past six years, the company said. Now, it aims to grow profits over the long term through net profit growth and share buybacks.
The grocer plans to invest in its store network, renovating between 20 and 25% of its stores over the next three years. These renovations will include upgrades aimed at improving sustainability.
Empire also said it was focusing on digital and data initiatives, through the continued development of e-commerce and its loyalty program. This will also involve personalization, promotional optimization and improving the productivity of its stores by modifying the layout and adapting product assortments.
Labor spending, driven by wage hikes, jumped in the third quarter, Empire reported.
However, after ratifying new agreements with the United Food and Commercial Workers, the company offered a voluntary separation program to some long-time unionized employees at Safeway, B.C., which it said , will better manage labor costs and operating costs.
reference: www.lapresse.ca