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Industry NewsEmpire Company's Michael Medline on earnings report: “Executing with excellence”

Empire Company’s Michael Medline on earnings report: “Executing with excellence”

screen_shot_2022-06-22_at_7-33-39_am-8680525Empire Company Limited’s Sobeys Inc. head office in Ontario. Photo: Stacey Newman

Despite inflationary pressures and ongoing supply chain disruptions, Michael Medline president and CEO of Empire Company Limited, says the company is focused on preparing for fiscal 2023 and beyond, including opening 10 new stores for different banners in Alberta and Ontario and strengthening its loyalty position with the unveiling of its new loyalty program. Medline made his statements following the release of the company’s fourth quarter and fiscal 2022 results.

“Despite another quarter with a multitude of external pressures, particularly inflation rates we haven’t seen in decades, our teams have been busy executing with excellence,” said Michael Medline, president and CEO, Empire. “At the same time, we have been busy preparing for fiscal 2023 and beyond, including unveiling our exciting new loyalty program. Improving our loyalty position is one of the final building blocks of the transformation journey we embarked on more than five years ago. Considering the inflationary period we are in, we will soon be giving our customers the opportunity to earn and redeem points for groceries through the Scene+ program which is even more relevant. Offering our customers great value is a priority for us. We’re thrilled to have reached this significant milestone and cannot wait to introduce this game-changing loyalty solution to our customers in the near future.”

Empire reported net earnings of $178.5 million compared to $171.9 million last year. Same-store sales excluding fuel decreased by 2.5 per cent compared to what Empire says were Covid-elevated sales levels last year. It expects same-store sales will grow in fiscal 2023 and that margins will continue to benefit from Project Horizon, a three-year strategy Empire launched in 2021 focused on business expansion and e-commerce acceleration.

Expansion plans

As part of Project Horizon, Empire opened multiple stores, including 40 discount banner stores in Western Canada and advanced expansion plans for Voilà, including the commissioning of new Calgary and Vancouver Customer Fulfillment Centres (CFCs). In the final year of Project Horizon, Empire plans to continue its expansion plans and expects to open four more FreshCo stores in Alberta. It also plans to open four new Farm Boy locations and two new Longo’s stores in Ontario.

Sales in the quarter, which ended May 7, 2022,  increased by 13.3 per cent “primarily due to the additional week of operations, the acquisition of Longo’s, higher fuel sales, increased food inflation and benefits from Project Horizon initiatives, including the expansion of FreshCo in Western Canada and Farm Boy in Ontario.”

Empire invested $237.4 million in the quarter and $767.2 million in its fiscal for capital expenditures and estimates for fiscal 2023, capital expenditure will be about $800 million with about half of the investment being allocated to new stores and renovations.

Online grocery sales have continued to grow compared to the prior year, although at a much slower pace than when COVID-19 began. In the fourth quarter of fiscal 2022, the company’s four e-commerce platforms experienced combined sales growth of 12 per cent versus prior year (2021 – 15 per cent). Empire says the increase was primarily driven by the acquisition of Grocery Gateway and “continued growth of Voilà, partially offset by declines in and due to elevated volume levels in the prior year during COVID-19 related lockdowns.”

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